What are Gustan Cho Associates are experts in non-qm loans and alternative financing Mortgage Guidelnes

Condo Hotel And Non-Warrantable Condos Mortgage Guidelines

A Condo Hotel or Condotel is a unit of a Hotel that a private person can purchase it as an investment and use it as a primary as well as a vacation home.

  • The majority of hotels are owned by one entity, whether it is a corporation, a group of investors, or private party
  • A Hotel can allocate a percentage of the Hotel for private owners and designate it as Condotels
  • Although the private investor owns the individual Condo Hotel, they have no say so in the management of the Hotel’s Management policy
  • Unit owners must abide by their rules and regulations
  • Most Condo Hotels do not allow the owner to occupy the premises full time
  • But they do allow them to use their Condotels during the non-peak season
  • Condotel and non-warrantable condos are difficult to finance
  • Only portfolio lenders can approve condotel and non-warrantable condos

In this article, we will discuss and cover Condo Hotel And Non-Warrantable Condos Mortgage Guidelines.

Apply Now

Difference Between Condo Hotel And Non-Warrantable Condos

What are Condo Hotel And Non-Warrantable Condos Mortgage Guidelines

 

The big difference between a regular hotel and condo-hotels is that a hotel typically has one owner, either individual or corporate, but condo hotels are sold off unit by unit.

  • Therefore, a 1,000 room hotel with a combination of condo-hotel units could have as many as 200 condotel unit owners
  • A hotel guest will likely never know that the hotel has tons of owners
  • This is because every room in the rental program will look identical to every other
Talk To a Loan Officer Click Here

How Condotel Units Work

Condo hotel units are sold as primary, second, or investment condominium units.

  • There are condo hotels where the condo-hotel homeowners association limit the unit owner’s usage of the unit because of their unit
  • For example, a condo-hotel HOA may restrict a condotel owner that they can only use the condotel 11 out of the 12 months of the year
  • This requirement depends on the individual condo-hotel complex

As the owner of a condo-hotel unit, you may place unit into the hotel’s rental program:

  • By doing so, it will be maintained and rented out for you, just like any other room in the hotel
  • As an owner, you receive a share of the revenue that the rental of your room generates
Call Us: Click Here

Non-Warrantable Condominiums

What are Advantages Of Owning A Condo Hotel And Non-Warrantable Condos

 

When a condominium complex has more than 51% of the condo units owned by investors and not owner-occupant condominium unit owners, then it is considered as a non-warrantable condo.

  • Fannie Mae and Freddie Mac will not purchase non-warrantable condos and does not meet conforming guidelines
  • Non-Warrantable Condo unit owners need to seek NON-QM Loans which are portfolio loans
  • This is because they will not qualify with conventional loans
Apply Today: Click Here

Advantages Of Owning A Condo Hotel And Non-Warrantable Condos

The advantages of owning a Condo Hotel or Condotel are the following”

  • Hassle-free ownership and hotel living without the costs;
    • no landlord issues but need to abide by the condo hotel HOA
  • Rental income of the condo-hotel unit to offset some or maybe all housing expenses
  • Vacation home where the condo owner gets rental income when the condo unit is not being used
  • Market values of condotels have plummeted after the 2008 real estate and market collapse
  • Condo hotel units have not appreciated due to lack of financing
  • However, Condo Hotel And Non-Warrantable Condos Financing is back and the likelihood of appreciation is strong once financing is back
  • Pride of hotel ownership without being a millionnaire–” I own a piece of a Trump Tower in Chicago.”
Apply For a Mortgage: Click Here

Disadvantages Of Owning A Condo Hotel

What are Disadvantages Of Owning A Condo Hotel

 

The following are the disadvantages of owning a Condo Hotel or Condotel:

  • Condotel unit owner’s pets may not always be welcomed at the condo-hotel complex
  • The unit may not always be available when the unit owner wants it due to advance reservations
  • Unit is subject to the same market downturns as other housing markets
  • Bad news such as Hurricanes, terror alerts in the U.S., warmer winters in the Midwest and on the North, gas prices
  • Other economic factors may affect the rate of occupancy of the condo-hotel complex which means that the condominium may not always be occupied
  • The HOA has many rules and regulations governing the condotel and condo-hotel complex so these unit owners will have limited control
  • Not too many lenders finance Condo Hotel And Non-Warrantable Condos
Call Us

Condo Hotel And Non-Warrantable Condos Financing:

If you are interested in getting pre-approved on a Condo Hotel And Non-Warrantable Condos or are interested in refinancing your Condotel Mortgage, you can apply here at APPLY NOW.

Here are the basic Condotel Mortgage Application Process;

  • Click on the APPLY NOW icon
  • Once you have submitted your application, I will email you a Condotel Questionnaire which needs to be filled out by the Homeowners Association Manager and email it back to us at gcho@gustancho.com
  • Once you and the Condotel are qualified, your Condotel Mortgage Application will be processed and underwritten
  • 5/1 ARM or 7/1 ARM-based on the CMT index ( Cost Maturity Index ).
  • Maximum Loan to Value cannot be greater than 75% on Condotel Financing
  • Maximum Loan to Value cannot exceed 80 & LTV on Non-Warrantable Condos.
  • Non-QM Loans:
    • Bank Statement Loans, one day out of bankruptcy and foreclosure with no waiting period.
  • Jumbo Mortgages down to 600 FICO 
  • Asset Depletion Loan Programs
  • Foreign National Loan Programs
  • We do require that you have one year reserves which can be cash, stocks, bonds, or retirement funds (Only 60% of the retirement funds are counted)
Get a Fast Quote: Click Here

Similar Posts