What is a Condotel?
A Condotel can look like a hotel or condominium complex. Simply put, a condotel is a traditional condominium that has been designed or redesigned to function like a mini-hotel. This means they are generally located close to traditional tourist or resort areas and are available to rent using time and pricing guidelines similar to that of a traditional hotel. Amenities associated with the condotel as well as the physical properties of the condotel are all determined individually. Additionally, while vaguely similar, condotels are not a timeshare. Condotels are privately owned by an individual and are rented or shared at that person’s discretion.
California Mortgage Advisors Inc. has been helping customers finance vacation homes like condotels for over 20 years. Our Mortgage Advisors can assist you in selecting the best loan for your first home purchase, second home purchase, or refinance. Our Mortgage Advisors are available at (800) 927-6560 to answer your questions or click here to apply online.
The primary appeal of a condotel as an investment vehicle is that they require very little in the way of time or energy on the part of the owner. Many condotels are connected to a specific hotel group or simply part of a larger group of condotels. In most cases, there is an existing property management structure in place to take care of rental concerns and maintenance issues. They are also one of the few legitimate investment tools that can be enjoyed by the owner with little or no resulting depreciation. Condotel owners can spend as much time each year vacationing at their property without worrying about damaging their investment or reducing its long-term effectiveness.
Condotel Loan Difficulties
The primary issue when obtaining a condotel loan is that they are considered a non-warrantable structure. This is a dramatic way of saying that these types of structures cannot be financed through Fannie Mae or Freddie Mac. This classification is the result of several historical and current factors, but the main reason is that too many subpar properties were purchased using loans obtained through questionable lenders. The practical impact is that most borrowers can’t obtain conventional mortgage financing for the purchase of a condotel. This is surprising and frustrating for many potential borrowers because it means they are being denied access to a loan based on the nature of the property they wish to purchase. However, CMA can help.
California Mortgage Association Condotel Loan
We place our faith in individual borrowers and not in far-reaching governmental guidelines. While our Mortgage Advisors are always available to help borrowers find the best loan based on their unique situation, there are a few generalized concerns when it comes to a condotel loan.
Slightly Higher Interest Rate
Interest rates for any type of loan are based in large part on individual financial circumstances and the current state of the market. However, based on the nature of a condotel loan, individual borrowers can expect a slightly higher interest rate for a condotel loan when compared to a traditional mortgage.
Sizable Down Payment
Like many other non-traditional loan types, a condotel loan from CMA requires that the buyer provide a down payment towards the purchase of the property in question. Again, the amount will depend on a variety of factors, but borrowers should expect a minimum down payment of 20% and higher.
Income and Asset Analysis
At California Mortgage Advisors Inc., we take our responsibility to provide responsible loans very seriously. We want to fully fund each customer’s loan. However, regardless of customer desires, not every property purchase makes long-term financial sense for the applicant. As such, our Mortgage Advisors will examine individual income and asset records carefully to create a condotel loan package that best suits the customer’s personal financial situation.
At California Mortgage Advisors Inc., we genuinely believe that we offer our customers the best mortgages in the industry. We have offered a variety of loans since 1993, which means our Mortgage Advisors have successfully matched tens of thousands of borrowers with loans tailored to meet their needs and unique financial situations. Our Mortgage Advisors are available at (800) 927-6560 to answer your questions or click here to apply online.