Condo Hotel Purchase Financing

Florida Non-Warrantable & Condo Hotel Purchase Financing

ByAlex Carlcucci
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This BLOG On Florida Non-Warrantable & Condo Hotel Purchase Financing Was Updated And PUBLISHED On February 21st, 2020

Non-Warrantable and Condo Hotel Purchase Financing is back in the state as Florida as well as California, Texas, Michigan, New Jersey, Kentucky, Mississippi, Pennsylvania, Colorado, Virginia, Illinois, Washington, and dozens of other states in the nation after being dormant for almost 10 years.

  • After the subprime mortgage crisis and 2008 real estate and credit meltdown, non-warrantable and condo hotel purchase financing almost came to an abrupt halt.
  • Now with NON-QM Loans such as bank statement mortgage loans, asset based lending, and other types of non-traditional lending products being introduced into the market, non-warrantable and condo hotel purchase financing is making a major comeback
  • This holds especially true in all counties of Florida

In this article, we will discuss and cover Florida Non-Warrantable & Condo Hotel Purchase Financing.

Non-Warrantable And Condo Hotel Purchase

Real estate investors thinking of going through a non-warrantable and/or condo hotel purchase mortgage loan, please do due diligence and research before entering into a Condo Hotel purchase real estate contract.

  • Proper due diligence should be done
  • Not just to make sure that the condo hotel unit is in good shape but also investigate the history of the Condo Hotel complex
  • Find out when the Condo Hotel was built and whether there are any building violations
  • Lenders will want to know the financials of the condominium and/or condo hotel homeowners financials especially reserves
  • Any real estate investment such as higher risk non-warrantable and/or Condo Hotel purchase is a big investment
  • Investment condos such as non-warrantable and/or condotel condominiums are considered higher risk investments than single family homes
  • Investment condotels that are dependent on income are often considered a risky investment

If the Condotel unit is not consistently leased out consistently, it will not generate any income.

Condo Hotel Purchase Questionnaire

One of the biggest risk factors in a Condo Hotel purchase is to make sure that the Condo Hotel is not in any litigation:

  • I specialize in Condo Hotel purchase mortgage loans
  • One of the things that we require is a Condo Hotel questionnaire form that needs to be completed by the Condo Hotel Homeowners Association manager
  • It is a page long Condo Hotel questionnaire and one of the questions that is asked is whether the Condo Hotel is in litigation
  • Lenders do not want to see any financial distress or negative reserves with the HOA
  • One case I recently denied was the Condo Hotel’s parking garage was in the process of filing bankruptcy
  • Another Condo Hotel questionnaire that was denied
  • It was because the Condo Hotel was in litigation with the builder because there were major structural issues with the structure of the Condo Hotel

These litigation issues can be a big deal.

Condo Hotel Financing

Investors who are financing a non-warrantable condominium or condotel unit, they need to keep in mind that there is a two phase approval process:

  • Condominium complex needs to be approved as well as the individual condo unit.
  • The borrower needs to be qualified
  • Lenders will do extensive due diligence in the structural and financial well being of Condo Hotel purchase
  • Condo Hotel cash buyers should keep in mind that condotel financing is not readily available like warrantable conventional condominium financing from Fannie Mae and Freddie Mac
  • Cash investors should still  do own due diligence
  • Check for past and present building violations by the county building department
  • See the extent and seriousness of the violations and also ask the Condo Hotel management to disclose any pending litigation issues

If you are interested in a Condo Hotel purchase loan, please us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.

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