condotel?

[LordofTexas]

I had to appraise (over the period of 6 months) a +/-30 unit project in Hermosa Beach, California once. Like stated, utter nightmare. I charged 3 times the going rate for condos for each appraisal until about 20% of the project closed. At that point I had substantial data to justify my adjustments on a much less addendum intense basis and felt comfortable.

One main clause in the deeds of this project was that NO owner could occupy THEIR unit for more than 6 weeks of the ENTIRE year. There was a front desk, amenities, and to make the nightmare truly hellacious; it was on a strech of one of the nicest beaches in Southern California in the heart of their cultural center. The first 6 I did that week were not even worth the $1200 fee I got for each and every one. The income stream and comparables I had to use and cross analyze could be argued by even a trainee. At the time, (15 years ago); no other appraisers I knew had done one.

At least now you have documentation. Just be sure to read all their CC&Rs or suffer later.

Lordy

 

[timd354]

I had to appraise (over the period of 6 months) a +/-30 unit project in Hermosa Beach, California once. Like stated, utter nightmare. I charged 3 times the going rate for condos for each appraisal until about 20% of the project closed. At that point I had substantial data to justify my adjustments on a much less addendum intense basis and felt comfortable.

One main clause in the deeds of this project was that NO owner could occupy THEIR unit for more than 6 weeks of the ENTIRE year. There was a front desk, amenities, and to make the nightmare truly hellacious; it was on a strech of one of the nicest beaches in Southern California in the heart of their cultural center. The first 6 I did that week were not even worth the $1200 fee I got for each and every one. The income stream and comparables I had to use and cross analyze could be argued by even a trainee. At the time, (15 years ago); no other appraisers I knew had done one.

At least now you have documentation. Just be sure to read all their CC&Rs or suffer later.

Lordy

I don't believe that many condotels can even be considered residential properties as many of hem, as stated above limit owner use to a few weeks a year and many of them are operated just like any other hotel....I have a friend who owns a condetl unit and he cannot even alter or change the furniture and decorating in the unit and cannot keep any personal property in the unit except during the few weeks when he is actually using the unit (except in a small locked off closet area). Additionally, all rentals must be handled through the central reservation system and rental pool. Properties like this certainly much more commericial than residential in nature and should not be appraised by someone without the requisite licensing level and experience to appraise commercial properties.

 

[Couch Potato]

Fannie is quite restrictive

There isn't a central res system. The maid service is the same kind of service that comes with the weekly cottage rentals, it's probably not the type that will come in a fluff your pillows when you go out for lunch. Once you check out, they will come and clean up just like you rented a 10 bedroom oceanfront house for a week. I don't know about the nightly rental, that is a new one around here but I don't think it would qualify as a condotel just because of that.

For Fannie Mae purposes the only requirement to disqualify the condo is being marketed for nightly rental or any one of the other conditions (a few of which are listed below):

Fannie Mae considers projects with any of the following characteristics to be non-residential hotel-type projects and therefore, ineligible projects:

• projects with units that are marketed for sale based on the availability of short term rental rates;
• projects with a significant level of hotel-type services such as, but not limited to, the availability of a registration service to support short-term rentals, daily unit cleaning services, food and beverage services, and central or integrated telephone service;
• projects that restrict the owner's ability to occupy the unit; or
• projects with non-incidental business operations owned or operated by the owners' association such as, but not limited to, a restaurant.

Extreme caution should be exercised when appraising any short-term rental property. The report should make it very clear the nature of the subject in question. You want your appraisal to be the reason Fannie noticed the property was ineligible should that be the case. If it is not obvious in your report, you could be in problems down the road.

 

[Kevin Mc]

If I never recieve an order for another one, my life will be ok. Nightmares, especially in my market where I believe there are two within 100 miles. Good luck.

 

[Joanne Rauenzahn]

Countrywide used to allow condotels - limited to 80% LTV I think it was - I had ONE ended up in portfolio as he wanted 90% and was a wealthy bank customer