Financing Resort Condos and Condotels Near the Parks

What makes a condo a “condotel” to a lender

Lenders look at how a project operates, not just what it is called. Features that commonly push a project into condotel or condo-hotel territory include:

• A front desk or registration area for guests
• A rental pool or program where the association or a management company rents units and shares revenue
• Requirements that owners use on-site management
• Daily housekeeping, room service or other hotel-style services
• Restrictions on how long owners can stay in their own units
• Units without full kitchens, or very small unit sizes

None of these make a project unfinanceable everywhere, but each can narrow the field. Some programs have specific condotel guidelines with their own requirements. Others exclude condotels entirely.

The association’s finances

For any condo, the lender reviews the association as well as the unit. Expect questions about the budget, the reserves, the share of owners behind on dues, any litigation and any special assessments. In resort projects, a single investor or entity owning many units can also be a concern for some programs.

Florida added requirements after 2022 that apply to many condo buildings. Under s. 553.899, Florida Statutes, condo buildings of three or more habitable stories are subject to milestone structural inspections, and associations face structural integrity reserve study requirements. Lenders look at whether those inspections and studies are done and whether they triggered repairs or assessments.

How dues and assessments affect your DSCR

Condo dues in resort projects can be significant because they often cover amenities, security, insurance on the building and sometimes utilities. Those dues count in the monthly payment used to calculate DSCR. A special assessment can raise them further.

Suppose a resort condo brings in $3,400 a month in accepted income. With a principal-and-interest payment of $1,900, taxes and insurance of $500 and dues of $700, the full payment is $3,100 and the DSCR is about 1.10. If an assessment adds $250 a month, the payment becomes $3,350 and the DSCR drops to about 1.01. Check your own numbers in the DSCR calculator.

Zoning and the rental program

Many resort condos near the attractions were built specifically for short-term rental use and sit on zoning that permits it. That helps the legal side of the file. The complication is usually not whether short stays are allowed, but how the project runs them. A building with a mandatory rental program behaves more like a hotel, and lenders review it that way.

If the condo is in unincorporated Orange County near the tourist corridor, the Orange County page explains the parcel checks. For Osceola County resort projects, see the Osceola County page.

Questions to ask before you buy a resort condo

1. Is there a front desk, a rental program or mandatory management?
2. Can I rent the unit myself, through my own manager or listing?
3. Has the building completed its milestone inspection, and what did it find?
4. Has the association completed its structural reserve study, and are reserves funded?
5. Are there current or planned special assessments?
6. What do the dues cover, and how have they changed?
7. Is there any litigation involving the association?

Townhomes and detached homes as alternatives

If the condo review looks difficult, many investors look at townhomes or detached homes in STR-zoned resort communities instead. Those usually avoid the condo project review, although HOA rules and dues still matter. The vacation rental purchase loan page covers what a purchase file needs.

Insurance on resort condos

On a condo, the association usually insures the building and common areas, while you insure the unit’s interior and your liability. Lenders look at both. They review the master policy for the project and want your own policy to cover short-term rental use. If the building is in a mapped flood zone, flood coverage may be required at the project level, the unit level or both. Ask the association for its current insurance certificate early, because a gap in the master policy can stall a project review even when the unit itself looks fine.

How we handle condo scenarios

When you send us a condo, we ask for the project name and the association documents early, because the project review is often the deciding factor. We will tell you which programs consider the project and what each needs to see. Start with the application form and include the community name.

Common questions