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Non-QM 101 – Condotel Loans

May 31, 2023
Condotel loans are now available through LendSure - with all the program options and services you've come to expect.

From beachfront properties in Florida to mountain resorts in Colorado, condotels are a common form of property ownership in tourist areas.

Legally, a condotel is structured as a traditional condominium; individual unit owners own the apartments. Operationally, the properties function as a hotel with nightly occupancy rates.

What is condotel investment?

A condotel is a type of property ownership that combines “condominium” and “hotel.” A condotel, or condo-hotel, typically is a property in a vacation destination. A unit owner often uses the unit for a few weeks out of the year and then puts the condo unit into the hotel rental pool for the rest of the year.

Why would an investor buy a condotel?

Owners of condotel units hope to benefit from value appreciation. But they have the added bonus of income from rentals. Because condotels boast hotel-style amenities and a full staff, renting out the unit is comparatively simple. The owner doesn’t have to market the property on Airbnb or VRBO – instead, the hotel operator handles the bookings on the owner’s behalf.

In the best-case scenario, a condotel owner gets a sweet vacation pad for a couple of weeks out of the year and also receives more than enough rental income to offset the costs of ownership.

Challenges of getting condotel loans

It’s no secret that condo loans can be difficult to come by, even for unit owners living in condos as their primary residences. The tragic 2021 collapse of an oceanfront condo near Miami led Fannie Mae and Freddie Mac to further tighten up condo lending.

For buyers of condotel units and non-warrantable condos, the underwriting guidelines are even stricter. The condotel ownership structure simply isn’t a fit for agency loan programs.

How to get condotel and non-warrantable condo loans with LendSure?

LendSure recognized an opportunity in the condotel financing market. While the agencies refuse to make loans on these properties, we see condotel mortgages as smart businesses. After all, these buildings are generally new and well-maintained. And unit owners have strong financials and generate solid rental income. So while most lenders avoid condotel deals, we welcome them.

How To Qualify For Condotel Financing?

Now you can offer borrowers financing for their condotels – all with the program options and service levels that you’ve come to expect from LendSure. Some underwriting guidelines of our condotel program:

  • Industry-leading Bank Statement Program – LendSure will calculate the income for you and provide an extensive, common-sense pre-qual usually within 24 hours
  • 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)
  • Investment Property and Second Home Only
  • Condotel must have a full kitchen and a minimum 600 square feet

Our knowledgeable Account Executives are experts 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? Conventional 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!

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.

Contact Us: (888) 707-7811