What is a condotel?
A condotel, also known as a condo hotel, hotel condo, or a contel, is a building which is legally a condominium but which is operated as a hotel, offering short-term rentals, and which maintains a front desk, cleaning service and more.
The units are usually individually owned. The owners of units can also choose to have their unit rented in the hotel’s rental program. This allows them to rent it out to paying guests when it is not being used by the owner.
Condotels are often sold as secondary residences rather than primary residences. Realtors can and should be used when purchasing a condotel to help you understand all of your rights and responsibilities.
Understanding Condotels
Condotels can be rented out for short-term stays and are often found in tourist hotspots. Each unit can be rented to others, but it is private property. The owner has full access to the unit at all times, as long as it isn’t being occupied by a short-term renter.
Condotels are designed like hotels and resorts. Condotels offer a variety of amenities to suit travelers, including concierge services, housekeeping, a pool and other recreation facilities.
A buyer signs a contract when they purchase a condotel unit. This agreement outlines the terms of ownership for their building. This agreement is similar to the agreements found in gated communities that have homeowner’s associations. Condotel owners agree to terms that maintain the property as a resort. This sometimes means that there may be restrictions on living in a condotel full-time. The owners are responsible for all taxes, fees and insurance as well as maintenance and improvements to their home.
Condotel ownership
Condotel ownership has its pros and cons. The rental income from the unit can offset the cost of ownership if it is rented to visitors and travelers. The property management company will manage the rental process and claim a portion of the rental payments. The management company and the owner may split the rental income equally, or the owner may receive a greater share.
Pros of condotel ownership
- You will own the unit and be issued a deed.
- You are in complete control of when others stay.
- There is potential to make rental income from guests.
- All year round, you have access to resort-style facilities
Cons of condotel ownership
- Variable rental income can be influenced by tourism popularity.
- Taxes, insurance, fees, and improvements are paid by the owners.
- The building’s rental agreement may have strict regulations that must be followed by the owners.
What are the responsibilities for condotel owners?
Condotel owners share similar responsibilities as those who own apartments in cities. They are responsible for following the building’s regulations and paying to maintain their unit. This includes any taxes, insurance, or fees. Owners are responsible for paying monthly utilities (such as gas, internet and electric) regardless of whether they’re staying in the unit.
Can you finance a condotel?
Owners can finance condotel units. However, it is more difficult than buying a single-family house. Condotels are rarely eligible for traditional loans so buyers need to be ready to get non-traditional financing or pay cash.
What does the condotel management do?
The Condotel’s onsite management has two main duties: managing units and coordination of stays. In addition to facilitating guests’ stays and bookings, housekeeping falls under the onsite management. Condotel units can be run like passive income by having staff who take care of guests’ daily needs.
Are condotels timeshares?
Condotels are not timeshares. Condotel rooms can only be owned by one person, while timeshares can be owned or leased to dozens of people.
Owners of timeshares pay for their use of the property. Because they are competing for time slots, most owners only have the opportunity to visit their property for about a week per year.
Condotel owners, on the other hand, have complete control over who stays in their condotel and can choose to stay for the entire year. With this new trend, the property owners are only limited by their ownership agreement.
Who is the owner of the condotel room?
Each condotel unit is owned by the individual, and comes with a deed. The deed allows them to operate as homeowners, but there are restrictions that they must follow due to their agreement with the building. Owners can decide when and for how long they want to stay in their room during the year, provided they adhere to their rental agreement.
Condotels: Key points
These are the common characteristics of all condo hotels:
- Owners may arrange for short-term rentals of their units.
- The owners are bound to the terms of their building’s rental agreements and responsible for any maintenance and fees related to their unit.
- These properties will include a check in desk, housekeeping, concierge services, and many other amenities that are found in traditional hotels.
- Owners can reserve times when they are not staying in their unit but most condotel owners use it as a vacation home.
