At San Diego Purchase Loans, we are proud to offer a wide variety of loan products that fit the needs for numerous buyers. For example, in specific resort and vacation areas, we can provide access to a mortgage product that allows for the purchase of “condotels.”
In most cases, loans for condotels have high interest rates, largely because the risk is inherently higher for loans on these properties. Because of this risk, they are not supported by Fannie Mae and Freddie Mac, which makes them more difficult to approve in many cases.
But there are options. If you work with our team, you can get low interest-rate condotel loans, allowing you to expand your investment portfolio with these potentially-lucrative properties. While we can’t guarantee a low interest rate for every single borrower, we can state, with confidence, that these loans generally offer interest rates lower than many other options.
The program we offer is the absolute premier in pricing within the condotel space, and it is available in some of the most popular vacation destinations across the country!
What is a Condotel?
This is not a household term, so it helps to clarify exactly what we mean by “condotel.” As you may have guessed, this term is a combination of “condo” and “hotel.” According to Investopia, this is a “condominium project that is operated as a hotel with a registration desk, cleaning service and more.” Units inside the facility can be individually owned, and owners can place the units into the rental program at their discretion.
From an ownership perspective, they are structured as a condo, as individual owners have title and legal possession of the individual units inside the building. (As opposed to a hotel, which as complete ownership by one party.) Usage, however, is more like a hotel, as guests can rent a room for a night, weekend, full week, or whatever timeframe fits their needs.
In almost all cases, condotels are sold as secondary homes, vacation homes, or investment properties. These types of purchases, however, often come with higher interest rates and sharper terms. For this reason, many people avoid purchasing condotels, missing out on potential diversity and profit for their portfolios.
Fortunately, we offer a solution to this problem.
Condotel Loans for Motivated Investors
Where are these Loans Available?
To be eligible for these condotel loans, the property in question needs to be located in an area specifically designated by TIAA. Eligibility is determined by zip code, but some properties in California cities are eligible. Mono (Mammoth Lakes), South Lake Tahoe, Squaw Valley, and Truckee are all California cities with eligible zip codes.
In Colorado, Aspen, Boulder, and Winter Park, among many destinations, are eligible for this program. Sun Valley, Idaho and Big Sky, Montana are also on the list, as are certain locations in Utah, New Mexico, Nevada, and Vermont.
Click Here for the complete list of available properties.
(Scroll down to “Property Eligibility” in the lefthand column and see “Resort Areas,” starting on page 5.)
Why are these Condotel Loans So Beneficial?
Many people will benefit from these low-interest-rate condotel loans. Above all, a person buying a resort condo for both personal use and profit will enjoy the benefits of these loans. Anyone who wants to refinance a resort condo as a primary residency or secondary home may also find these loans to be very useful.
If you have paid cash for a property, this option also allows you to recapture some of the money, up to 70% of the appraised value. This is an option if you have purchased the property within the past 6 months. This is not a cash out, but a different type of financing option.
People who plan to rent out the property will also benefit. While rental income will not be used to qualify, if your tax returns indicate minimal rental income on Schedule E, this will not (at least, not by itself) disqualify you from getting the loan. In this case, it will be considered in the financial analysis of your entire credit profile. This is a massive advantage, as even if you claim the rental income on the property, the investor will still consider the transaction and price as a second home.
These loans are also incredibly flexible, allowing you to use the appropriate financing for your unique needs. You can use, for example, a 5/1 adjustable-rate loan, or you can use a 7/1 adjustable-rate loan. 10-year fixed and 15-year fixed are also available, so you can select the exact loan structure that suits your personal and financial goals.
Eligible Borrowers and Properties
To use this excellent loan option, both you (the borrower) and the property itself need to be eligible. As we discussed above, the property in question needs to reside in a specified resort area, but you will need to be an eligible borrower as well. Besides the normal borrower qualification, you have to be a U.S. citizen to use this financing option. However, there is a clause that allows for permanent resident aliens to use this loan program. You also have to be a first-time investor.
Why Do Other Condotel Loans (and other Investment Financing) Have High Interest?
The interest you pay on a loan is dependent on many factors, so we can’t guarantee that you will get a low interest rate on this or any product we offer. However, it’s reasonable to say that in most cases these loans offer far lower interest rates than other options.
Loans for investments, quite frankly, have high interest rates because investment loans come with high risk. Statistically speaking, investment loans are more likely to default that residential loans. Because of many reasons, these loans are more likely to go into delinquency, so lenders charge higher interest to compensate for the risk. For this reason, you will find that most (but not all!) investment loans come with high interest rates.
Get the Right Loan for Your Investment Purchase
In addition to condotel loans, we offer a wide variety of top-quality financing options for numerous investment properties, including single-family homes, commercial space, and duplexes.
Contact our team today and discover how you can get affordable loans with reasonable interest rates on you next purchase.