Can A Condotel Be Completed On A 1073?

[timd354]

Performing a Condo hotel unit on a 1073 residential condominium form would

The one I did recently was not a condo hotel unit. They were condo units with bylaws/ HOA allowing weekly rental and owners could opt to put their unit into the rental pool, with management hired to provide housekeeping, rental of units etc in exchange for a percent of the rent. No hotel ownership of any of the units nor common area.

A project with short term rental pool run by the HOA who hired management to provide housekeeping and rent the units would very likely be considered to be a condo-tel by the GSEs, resulting in a repurchase request if the loan defaulted or otherwise came to their attention through the QA process.

 

[J Grant]

One of the assignments was an REO assignment for a lender who had taken a unit back. They knew what they had and what they had lent on.

 

[DTB]

Condo hotels are not remotely comparable to a "traditional" condo and there is no correlation between prices at all. The reference to "traditional" condos is also not appropriate in that once again condominium is a form of ownership NOT a type of property. Condo hotel buyers are not the same as timeshare buyer either. Each of these are distinctly different types of properties, ownership interests and ownership rights.

You would not use a self storage facility to compare to warehouse properties, nor would one use a regional mall to compare to a strip center.

That's why I asked the ??

From a distance they all appear similar in some ways for one who may be looking for a part time seasonal residence along with some income.
As far as "traditional" condos, I also know it is a form of ownership not type of property. However, if you ask 100 people what a "traditional" South Florida beachfront condo looks like...it is a high rise with balconies. Kind of like a South Florida beachfront hotel.

 

[Proactive]

A project with short term rental pool run by the HOA who hired management to provide housekeeping and rent the units would very likely be considered to be a condo-tel by the GSEs, resulting in a repurchase request if the loan defaulted or otherwise came to their attention through the QA process.

Easy to figure out what you have with the attached Fannie announcement. If it looks like a duck...

 

[J Grant]

Ineligible for Fannie loans. If a lender wanted to make a portfolio/private money loan on them I would assume they could.

 

[Ms. Janet]

We also have this nifty state website that you can look up a Condominium Project and see if they have a hotel license. If they do, it's a pretty good bet the project is a condotel. I'd recommend checking that out going forward JGrant. You can get yourself in a pickle with a lender and FREAB.

 

[timd354]

Performing a Condo hotel unit on a 1073 residential condominium form would

The one I did recently was not a condo hotel unit. They were condo units with bylaws/ HOA allowing weekly rental and owners could opt to put their unit into the rental pool, with management hired to provide housekeeping, rental of units etc in exchange for a percent of the rent. No hotel ownership of any of the units nor common area.

A project with short term rental pool run by the HOA who hired management to provide housekeeping and rent the units would very likely be considered to be a condo-tel by the GSEs, resulting in a repurchase request if the loan defaulted or otherwise came to their attention through the QA process.

Ineligible for Fannie loans. If a lender wanted to make a portfolio/private money loan on them I would assume they could.

A portfolio lender probaly could make loans secured in such projects, but tread carefully when appraising projects that have any sort of short term rental pool and make sure that you fully disclose the nature of the project, including the short term rental pool and what is and is not allowed.

 

[Meandering]

Tim,
Would you also recommend that that type of appraisal not be done on a GSE form, so that some lender who is not paying attention, doesn't sell it to the secondary market anyway?

 

[timd354]

Tim,
Would you also recommend that that type of appraisal not be done on a GSE form, so that some lender who is not paying attention, doesn't sell it to the secondary market anyway?

I really don't care much about forms, I care about reports. I also don't care about lenders who are not paying attention as it is certainly not the appraiser's fault if the lender/intended user does not bother to read the report. I think that just about any form can be used to report an appraisal of just about anything with enough modifications and additions. Regarding the situation described by jgrant, I don't know whether or not that proejct is really a condo-tel (much more information would be required in order for me to make an intelligent conclusion), I just know that the GSE's would likely conclude it is an ineligble project based on the short term rental pool ran by the HOA.

 

[Meandering]

Thanks for your input Tim,

Always appreciated.