What Is a Condotel? Here’s What You Should Know

If you’ve ever imagined owning a place that feels like a vacation home while also bringing in rental income, a condotel might be exactly the opportunity you have been looking for.

A condotel, short for “condo hotel,” combines the comfort of a condo with the amenities and rental potential of a resort. For many buyers, it offers the best of both worlds. You can enjoy your time there whenever you choose, and when you are away, the property has the potential to work for you.

What Exactly Is a Condotel?

We can define condotels as a privately owned condo located inside a hotel-style building. These communities often provide features like pools, gyms, concierge services, and on-site management.

Because condotels are considered a hybrid of hospitality and residential real estate, they fall outside traditional lending guidelines. That is why having a lender who understands the structure and requirements of these properties is essential. Our loan programs are designed to give you options that fit both your financial goals and the unique characteristics of the property you choose.

Eligible Properties

Atlantic Bay’s financing options cover a variety of property types, including:

• Condotels that are part of approved projects

• Warrantable and non-warrantable condos, depending on program guidelines

• One-to-four-unit investment properties

• Investment use properties that are not intended as primary residences

This flexibility means more room to explore the right fit for your plans, whether you want a steady rental property, a vacation spot you can enjoy part time, or a blend of both.

Loan Features

Here are several features that might be available to you.

• Loan amounts that generally range from 150 thousand to 1 million for condotels, with some options up to 3.5 million depending on the property

• Down payments as low as 25 percent

• Credit score requirements beginning around 700, with some programs allowing lower scores

• DSCR requirements starting at 1.00 when short-term rental income is used

• Purchase, rate-term refinance, and cash-out refinance programs

• DSCR-based loan options with no personal income documentation

• Fixed rate, adjustable rate, and interest-only terms

These options make it possible to structure your financing around your goals and the performance potential of the property, and not just traditional lending requirements.

Understanding DSCR (and Why It Matters)

We mentioned DSCR, which is your Debt Service Coverage Ratio. It helps determine whether your rental income can support the mortgage payment.

Expert Tip

A DSCR of 1.00 means that the rental income equals the expenses.

Some programs allow for lower or no-ratio options, which can be helpful if income documentation from short-term rentals is limited or if you are purchasing in an area with strong future rental potential.

DSCR financing focuses primarily on the property itself. That approach can give investors more flexibility than traditional loan programs that rely heavily on personal income.

Common Documentation You May Need

Requirements vary by program, but here is a general idea of what you might expect to provide:

• An appraisal with a market rent schedule

• Proof of reserves equal to three to six months of payments

• Short-term rental statements from platforms like Airbnb or VRBO, when needed

• Documentation for your down payment

• Ownership titled individually or in an LLC or corporation, depending on the program

This is not a comprehensive list, so your Mortgage Banker can walk you through exactly what’s required so you know what to expect early in the process.

So, Is a Condotel “Right” For You?

A condotel can be a smart choice if you want a place to enjoy yourself and all you’ve accomplished, the opportunity to generate short-term rental income, or an investment that supports both personal use and earning potential.

And for many buyers, it offers a rare mix of lifestyle benefits and financial flexibility. If you’re curious about how a property like this could fit into your long-term plans, now is a great time to explore your options. Let’s talk about your goals and find the path that gets you there. Your next great destination might begin with a single conversation with our team!