What Is A Condotel In Myrtle Beach, SC
There is a lot of bad advice on the internet about condotels. I hear countless stories of confusion and people being ripped off by real estate agencies, who don’t have correct or ineffective information. Because I’m a good citizen of the real estate world, I’ve decided to give this information to the general public so they don’t get in trouble when buying a condo in Myrtle Beach, SC.
So what’s the difference between a condotel and a condo
When people start looking at condos on-line, the common misconception, all condos are the same and their arn't any other categories for properties in a complex. The fact is most consumers have no idea that they may, in-fact, be looking at a condotel property listing. Nowhere in the listing or description does it use the word condotel. If you’re the average person, it’s impossible to know what you’re looking at. There are several big issues you will discover. For example; when you go to your hometown lender, (whom you may have dealing with for years) and then you tell them you’re buying a ‘condo at the beach’. They say great! ...fill out this application and you get a pre-approval letter. The problem arises when you take that pre approval letter to your real estate agent in Myrtle Beach. If find a property you wish to purchase, then get the seller to agree to a price, take the contract to the lender… everything seems normal and smooth. Until, you find out, usually the week before closing, the underwriter for the lender, says they don’t do condotels, they only finance condos! Seen it happen hundreds of times with unexperienced real estate agents and consumers. Many national, big named banks will not finance a condotel. Locally, we have a handful of local lenders, with very competitive rates, that know the market and will finance these properties. Having the Jerry Pinkas Real Estate Experts help you when you’re looking can save you thousands of dollars and tons of aggravation.
How can you tell if it’s a condotel
A condotel is a property that can be rented by the night, week or month. So you say; most properties at the beach are that way. Well, when you look closer, some of the condominium projects have a front registration desk. Just like a condo, but run like a hotel. The property may run with housekeeping, cleaning service, linens towels etc. Each “unit” or condo is owned individually. The unit owners have the option to put their condo on the hotels rental program where it is rented out like a hotel room. Reservations are booked on line and even walk up customers can rent the room by the night, week or month.
Pros and cons of Condotel ownership.
Pros include rental income that may help offset the costs of ownership; like mortgage, homeowners association fees and real estate taxes etc. As an owner, you’ll also have the advantage of rental rates going higher with inflation,(extra income) and the potential price appreciation of the condo.
On the down side, even though you own the unit you may have to “book” your time in advance. Once you put it on a rental program, you have hired the rental company to rent it out, and you may have to block your personal time. (so no one uses your unit during your vacation time) Also many rental contracts read you cannot use your unit any more that 2 or even 3 weeks during the peak season. (See the individual agrement) As an example; if you’re purchasing at the beach, peak season (highest rental dollars/income) come in during the summer months. So if you’re looking for income, the more you use your unit in the summer, the less income you will have. Many people let people renting their condo “pay for their place at the beach” with big rental dollars coming in during the summer and banking money for the slower seasons. Many owners will use their condo personally in the shoulder seasons or off seasons.
Are Condotels in Myrtle Beach a good investment?
The truth is, not all condotels are good investments! The best condos give off massive amounts of income! Some units are what we call alligators and they will eat you alive. On the other hand, some units are Rental Machines and continue to produce high revenues, year after year and historically increase in value with both high rental income and condo unit appreciation.
What are condos in Myrtle Beach so Cheap?
With 65 miles of pristine beach and hundreds of resort complexes near the beach, there are well over 10,000 oceanfront resort and golf condos in the area. Basic rules of supply and demand, have kept prices low. But it won’t stay this way for long. Prices and rental income are going up. The lure of the beach and ocean is strong! Many baby boomers and retirees are using their investment for income and diversifying into rental income!
Rentals, Income & Management Fees
The main thing that makes a traditional condo different from a condotel is the setup of short term rentals. A typical condotel is going to feel like a hotel, with rent on a short term basis, one night, a week, weekend, etc.
A front desk or a check in/out facility on site, daily maid services, central phone system, electronically programed key systems, linens and towels and even the furnishings have the feel of a hotel.
In the best resorts and properties have occupancy rates that exceed 80% annually, and produce fantastic rental proceeds for the owners.
HOA fees are typically budgeted and setup as all-inclusive HOA fees. The interior electric, water/sewer, cable, internet, insurances and more, are all covered in your monthly condo/HOA fee. If you never used your property, or had it booked year round, or lived in your unit full time, you would pay the exact same monthly fee either way.
It is not uncommon to find rental management companies with commission in the range of 20-40% range with condotels. Onsite operations with huge marketing budgets, daily maid services, maintenance and 24hr front desk staff take acre of any situation that arises very quickly.
Financing a Myrtle Beach Condotel
Financing exists! It may be hard to find it, with all the changes in the programs on a weekly and monthly basis, but that is why you need an expert to guide you. Today condotels are not Fannie Mae approved properties, they are what the lenders & banks call “non-warrantable”. Meaning, your typical mortgage broker or lender cannot provide you with a loan. The reason they don’t finance; most banks are backed by an entity like Fannie Mae, and these properties don’t meet government backed loans. With limited amounts of condotel financing, many people end up paying cash, or do a home equity loan, find creative financing or work with a local expert that can guide them through the process. Jerry Pinkas Real Estate Experts helps their clients be the pro in the market.
Who is the best Realtor for buying a condo in Myrtle Beach
If you would like to know more about condotels, or if you are thinking about buying one, you absolutely must work with a real estate professional that understand the ins and outs of the local market. Knowing the difference between a rental machine and an alligator… is a skill. We put our money where our mouth is! We personally own units at the beach, we have helped thousands of people make educated decisions and helped many avoid the pitfalls that are costly. This is what we do. We do it every day and we’re good at it.
Pick up the phone and call 843-839-9870
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