Is a condotel a high rise condo with a hotel on the bottom floors and hotel service for the condos? We are getting a few of those around here, but I have never had to appraise one. I probably just jinxed myself.
Most states are fairly specific on the scope of practice is for non-generals. The main dividing line seems to be the development of Income Approach...not a GRM, which has extremely limited application, but direct cap, yield cap, DCF analysis, etc. I'm not familar with condotels, but if they are valued on an individual basis, and are typically valued by the Sales Comparison Approach or a GRM analysis, I don't think it would be outside the scope of practice of a CR.
I can understand your concerns, but like anything else if the appraisers are honest, ethical and competent, I don't see any issues with it. A well prepared and supported Income Approach is probably the crux of any appraisal on a unit like that. The thing to look out for are the seasonal rentals, extraordinary costs, restrictions, etc. It's much like a short term rental property--but slightly more involved, IMO. If a cert general is involved, even better, however, many on this Forum will disagree.
But then have you EVER read a consensus on this Forum?
I've never looked at one but I'll be interested to hear how your board finally reasons it out.
I'd be concerned that the rental income would be more sensitive to the health of the overall project and a wider range of external factors than the unit value in a plain condo would be, making me lean more towards needing a CG.
I agree with Joyce that they are very much like a short-term residential rental, but then I think those should be cosigned by a CG too. The typical residential appraiser lacks the skill to do a condotel, and most lack the knowledge needed to understand they don't know how to appraise them. An adequate job cannot be done without a knowledge of how to appraise a hotel, IMHO. They are a divided ownership interest in a hotel. Why would a residential appraiser not need a cosigner when appraising a hotel?
My opinion is that a condotel is just a condo with a timeshare element. I don't see anything particularly vexing about this that would require a CG signature. Some on our board see it differently. I really need to see a report to see what all the hubbub is about.
Correct me if I am wrong but I believe in a CONDO/HOTEL isnt the primary use of the unit for income purposes, and are their not restrictions as to occupancy? I know I would not feel competant to perform an appraisal on said units ( as a Certified Residential Appraiser). When I looked into purchasing one out of state I was told that their are restrictions as they are basically for owners to have as an income stream, not really for personal use as a second home. I don't believe lending regs or requirements should play a part in this. FHA says an FHA approved appraiser can perform an appraisal on limited mixed use but we both know that it takes a Certified General to perfom that appraisal in Illinois. I feel if the primary or probable use is commercial in nature (HOTEL) than it should be a Certified General Appraiser to complete. Just My Thoughts.