With home prices still on the rise, borrowers are looking for alternative (and more affordable!) options to purchase. One popular choice in today’s market is Condotels. These property types are the best of both worlds: not only do they offer vacation-level comfort, but they also provide buyers with potential rental income.
While it may be a more lucrative option for buyers, the process of securing a condotel loan has gotten stricter in recent years. Traditional lenders like banks are more hesitant to finance these property types. And when they do, they often require higher down payments and complex documentation. If you want to tap into this growing segment of the mortgage industry, you’ll want to partner with a reliable alternative lender.
At Lendsure, we’ve designed a condotel loan program that provides fast and flexible financing for a wide range of borrowers. Our goal is to give you the “yes” you and your clients have been looking for.
Condotels Explained
Condotels are hybrid properties (part condominium, part hotel) that blend aspects of both residential and commercial property elements. They operate as a hotel with individually owned units. One of the main characteristics is that they serve as a dual property. Since these are primarily sold as secondary homes, owners can choose to use them as vacation homes and rent them out when they’re not in use. This allows them to receive rental income, helping offset ownership costs like mortgage fees and property taxes.
Financing Condotels
Securing financing for condotels differs greatly from traditional mortgages. For instance, if you’re purchasing a single-family home, a lender will require basic income documentation and may be more lenient with their criteria. Condotels, on the other hand, require a more in-depth analysis since they are considered riskier investments.
Besides higher down payments and interest rates, you can expect a lengthier appraisal process. In addition to evaluating the individual condo, lenders will also examine the structural integrity of the building. After the condominium collapse in Surfside, Florida in 2021, Fannie Mae placed stricter restrictions to ensure properties are safe and secure.
Some of the factors a lender now considers are the property’s age, location, and whether the building requires repairs. Other considerations are management quality, amenities, and finances.
Benefits of Condotels
While the process of financing a condotel may be strict, it’s well worth it for some borrowers. For one, it gives them income potential. While the condo is not occupied, your clients can choose to rent it out. This allows them to generate more income to help offset certain mortgage costs. Another major benefit is the amenities that come with a unit. Since they are technically located in a hotel building, borrowers can take advantage of the luxury-level services. From housekeeping and room service to fitness and wellness centers, these properties provide a unique living experience.
Closing Condotels with Lendsure
Traditional banks may hesitate to fund condotel loans, but that doesn’t mean there isn’t a solution. At Lendsure, we’ve created a flexible loan program that makes it easier for borrowers to secure funding for these property types.
When you choose to partner with us, your client can take advantage of our industry-leading Bank Statement Program. The way it works is easy – borrowers can forgo tax return documentation and instead submit 12 to 24 months of personal or business bank statements. This is especially helpful if your clients are small-business owners or self-employed and have trouble providing traditional income docs.
Besides flexibility, our team of experts also provides fast funding. We do the hard work for you and calculate your income. Then, we’ll send an extensive, common-sense pre-qualification typically within 24 hours!
Other highlights include:
- Up to 75% LTV for Purchase Loans
- Up to 70% LTV for R&T Refinances (740 minimum FICO)
- Up to 65% LTV for Cash-Out Refinances (740 minimum FICO)
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 commonsense approach to lending? Contact us today to learn more about non-QM loans and how partnering with LendSure Mortgage Corp. can help grow your bottom line.
