What is a Condotel - Definition and Examples

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Published Date: November 1, 2023

What is a Condotel - Definition and Examples | Pacaso (1)

A condotel is a condo that operates more like a hotel. Individuals own each unit, although the complex shares amenities like lobby registration and a cleaning service. When owners are away from the property, they have the option to make income by renting their condo out for short-term vacation stays.

Understanding condotels

Because units can be rented for short-term stays, condotels are usually found in tourism hotspots. Each unit is privately owned with the option to be rented out to other individuals. Owners have access to the unit any time that isn’t already reserved for paid, short-term stays.Condotels are modeled after resorts and hotels. Amenities are designed to appeal to travelers: concierge services, full staff, housekeeping, pools and hot tubs, and fitness and recreation facilities.When a buyer purchases a condotel unit, they sign an agreement outlining the terms of ownership in their building. It’s a lot like the contracts found in gated communities with homeowner’s associations. Condotel buyers agree to conditions that keep the property operating like a resort, which sometimes means there are limits to living in a unit full time. Owners are responsible for taxes, fees, insurance, maintenance and home improvements.

Takeaway

All condotels share these qualities:

Owners can arrange for people to rent short-term stays in their unit.
Owners are beholden to their building’s terms for rental agreements and are responsible for all maintenance and fees for their unit.
Management provides amenities for short-stay visitors and owners.

In more detail:

What are the responsibilities of a condotel owner?

Condotel owners have similar responsibilities to people that own an apartment in a city. They must follow the regulations of their building and pay to maintain their unit, including any taxes, insurance or fees that come with ownership. Utilities for the unit (like gas, internet, electric and cable) are charged to owners on a monthly basis, regardless of who’s staying in the unit.If an owner plans to rent their unit, they need to communicate those dates to the onsite management.

What does the condotel management do?

Condotel onsite management has two primary duties: maintaining units and coordinating stays. Housekeeping falls under onsite management, as well as facilitating guest stays and bookings. Having staff deal with guests’ day-to-day needs ensures that condotel units operate like passive income.

What are the pros and cons of condotels?

Pros of condotel ownership

You own the unit and receive a deed.
You have full control over when other people stay.
You have potential for rental income from visiting guests.
You have access to resort-style amenities year-round.

Cons of condotel ownership

Rental income is variable based on tourism popularity.
Owners pay taxes, insurance, fees and improvements.
Owners must abide by regulations in the building’s rental agreement, which can be strict.

Are condotels timeshares?

No, condotels are not timeshares. Condotel rooms are privately owned by one individual, while timeshares are properties that can be owned or leased by dozens of people (or more).Timeshare owners pay for the time that they stay at their property. They’re competing for time slots with the other owners, so most only get to visit for a week or so per year.By contrast, condotel owners have full control over when other people stay in their unit and can stay for the majority of the year if they want. They’re only limited by the conditions in their rental agreement.

Who owns the condotel room?

Individuals own their condotel unit, which comes with a deed. They operate as independent homeowners with some restrictions based on their agreement with the building. As long as they’re in line with their rental agreement, owners can choose when and how long they’d like to stay in their room throughout the year.

Can you finance a condotel unit?

Yes, owners can finance condotel units, but it’s more complicated than buying a single-family home. Condotels rarely qualify for traditional loans, so buyers should be prepared to secure a non-traditional loan or pay in cash.

How is Pacaso different from a condotel?

Pacaso offers co-ownership of a single-family home using a fully managed LLC. You’ll own your property along with a small group of up to eight co-owners who purchase 1/8 to 1/2 of the home. Monthly owner expenses (utilities, local property management, cleaning, maintenance, insurance, taxes, etc.) are handled by Pacaso and are passed through to owners at cost. And scheduling is both easy and equitable, using our SmartStay system on the Pacaso app. Learn more about buying your second home through Pacaso.

Kayla Moses

Author

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