With new projects going up around the country, condotels are having a moment.
Condo-hotels, as they’re also known, went through a boom in the 1990s. The idea back then was that investors and second-home owners would want to own a property without the hassle of renting it out. Enter the condotel, which took care of marketing and management, so unit owners didn’t have to do it themselves.
Three decades later, Airbnb and VRBO have ushered in a new era of condotels. In tourist destinations such as Miami, developers have been building towers specifically designed as short-term rentals. Thousands of new short-term-rental units have been completed or are under construction, and the developers of those projects are looking to repeat the formula in other parts of the country.
Opportunities for Brokers
For you and your clients, this boom presents a new opportunity. The new breed of condotels allows unit owners to use the condo if they want. When they’re not using it themselves, owners can put the unit into a rental pool operated by the developer, or market the units themselves on platforms such as Airbnb and VRBO.
Even as the condotel space gains momentum, the mortgage market isn’t keeping pace. Fannie Mae and Freddie Mac continue to impose strict rules on condo lending. While the newest short-term rental buildings are being constructed to the latest building standards, the reality remains that condo loans can be difficult to qualify for through the conforming mortgage market.
For buyers of condotel units and non-warrantable condos, the underwriting guidelines are especially onerous. The condotel ownership structure just isn’t a fit for agency loan programs.
That’s part of the reason so many condo transactions happen without mortgages. In Florida, a major market for condos and condotels, 51% of condo units sold in 2024 were bought with cash, compared to just 28% of single-family homes, according to the Florida Association of Realtors.
That statistic illustrates a real need in the marketplace when it comes to condotel financing. On one side of the ledger, the indicators for condotel demand couldn’t be stronger: The U.S. economy is booming, domestic and foreign tourists are spending heavily and hoteliers and short-term rental owners are thriving. Despite all of that, real estate investors who make condotels part of their portfolios have to jump through hoops to get financing, and in many cases, they have little choice but to pay cash.
In another blind spot, traditional underwriting guidelines overlook how well-built and well-managed these new buildings are. Much of the reluctance to finance condos stems from the reality that older buildings have been poorly maintained for decades. But condotels are quite new, and their professional management means they’re less susceptible to cost-cutting than most condos. What’s more, from housekeeping and room service to fitness and wellness centers, these properties provide a best-in-class hospitality experience.
To close the gap in the condotel market, and to meet the needs of your clients, LendSure has gone all-in on condotel financing. Where the agencies see risk and decline to underwrite these properties, we view condotel mortgages as a no-brainer. The buildings are generally new and well-maintained. And unit owners have strong financials and generate solid rental income. So, while mainstream lenders shun condotel loans, LendSure is actively seeking these deals. Whether your client is financing a condotel unit near the beach, in the mountains or close to a casino, we can help get the deal done.
Qualifying For Condotel Financing
Our program lets you extend financing for your clients’ condotels – with the program options and service levels that you’ve come to expect from LendSure. Here are a few of our underwriting guidelines for our condotel program:
- Industry-leading Bank Statement Program – LendSure will calculate the income for you and provide an extensive, common-sense pre-qualification, usually within 24 hours
- Up to 75% LTV for Purchase Loans
- Up to 70% LTV for R&T Refinances (740 minimum credit score)
- Up to 65% LTV for Cash-Out Refinances (740 minimum credit score)
- Investment Property and Second Home Only
- Condotel must have a full kitchen and a minimum living space of 600 square feet
Our knowledgeable Account Executives have the expertise in condotel and non-warrantable condo loans and can help you find solutions for your borrowers so you can close more deals each month.
Are you ready to grow your business? Conforming loan approval guidelines can be restrictive, but we want to offer our mortgage broker partners the education, tools, support, and guidance they need in order to say “yes” to more of their clients. This ensures happy borrowers and opportunities for bottom-line growth. What are you waiting for? Let’s get started!
THE LENDSURE WAY
It’s simple. We make loans that make sense. We’re not in-the-box lenders. Of course, there are numbers ratios, and data to consider, but we know that behind every file, there’s an individual with a unique circumstance seeking a loan. We work hard to offer our common-sense take on lending to borrowers seeking funding for the home of their dreams, another addition to their investment property portfolio, or refinancing of a currently owned property.
Are you ready to benefit from a common-sense approach to lending? Contact us today to learn more about condotel loans and how partnering with LendSure Mortgage Corp. can help grow your bottom line. Ready to find out your clients’ buying power?
