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What is a Condotel in Myrtle Beach?

by Jerry Pinkas

 

Condotels Myrtle Beach for sale

If you are looking to purchase a condo in Myrtle Beach, SC you may have spent countless hours online doing research, looking at different properties and trying to decide what the best option is for you and your family. But while starting the search online may seem like a good idea, many people are misguided and have the misconception that all condos are the same. I mean, what can be different? It’s just a condo, right? Wrong! There are in fact different subcategories for specific condo units, subdivisions, complexes and resorts, and it is important to understand the differences so you can make an informed decision on what is the best fit based on what you are looking for. In today’s post, we are going to be talking specifically about condotel’s – what they are, what are some pros and cons of these specific types of units and the best route to take if in the end, you find yourself looking to purchase one. We hope today’s post clarifies some of the misconceptions and differences in condotel’s and traditional condo units to better help you make decisions today, or in the future down the road as you begin your search

 

What is a condotel?

It is so important to understand exactly what a condotel is because you may find yourself looking online at a unit, which just so happens to be a condotel, but the description may not come out and say that exact phrase. So understanding the qualities and characteristics of a condotel will help to better equip you when conducting research. A condotel essentially is a condo that can be rented either by the night, the week, the month or multiple months, and is similar to that of a resort as the building has a front desk where people can walk up to book or rent a unit. It is similar to a hotel in that many times the building actually looks like a hotel, but each individual unit is actually individually owned. Now the owner obviously gets a split of the nightly rate that is charged by the front desk, but the owner does not necessarily have to be involved in the booking process. Which is an ideal situation for anyone living out of state, travels for work or someone who simply would rather not take on the burden of personally dealing with the rental process. 

The front desk will usually also take care of all the cleaning for the unit including washing towels and linens, as well as any maintenance that pops up from time to time. And at the end of each month, the owner will get a statement showing how many nights the unit was rented during that time period and a check for their split of the rental income. Condotel’s work especially well in resort areas because they usually are located in popular vacation destinations and have a pretty consistent flow of people looking to rent units. And if the unit happens to be Oceanfront, that unit will not only be more appealing to renters, but you usually can also charge a premium for the desired location.

 

What are the pros of purchasing a condotel?

There are a few pros of purchasing a condotel that we wanted to point out in today’s post. First, as we touched on above, the front desk allows the rental process to be smoother, more efficient and less stressful. Also, that rental income you receive will help to offset costs of the unit on a monthly basis, such as your mortgage, rest estate taxes, homeowner’s association fees, etc. And if you have enough rental income each month to cover all your expenses on the unit and you live out of state, you have a second home in beautiful, sunny Myrtle Beach, SC that is being paid for by renters. Now that is a pretty sweet deal!


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What are the cons of purchasing a condotel?

And as with all pros, there are always usually a con or two mixed into the equation. As we talked about above, you may have a unit that is covered financially each month by renters. But, on the flip side of that pro, you may also find yourself having to book your time in your unit in advance. If the front desk or rental company rents out the unit during the time you were thinking of going, it can create some complications. So it is always good to plan your trips to your unit as much in advance as possible and give notice so there is a block and it is not rented out during that time. 

And on that same note, if you are wanting to maximize your rental income through the unit, you should try to book your stay at the unit during the slow/off-season as to not take away from the income during the peak season. You also may find it difficult to find a lender for a condotel, as most major banks will not finance these units. Luckily, we know some lenders around town that will work with you, and we can make those introductions as needed.

Myrtle Beach rental market

Are condotels a good investment in Myrtle Beach, SC?

If we are being honest, not all condotel’s are a good investment. The best units, obviously, are the ones who produce massive amounts of income on a monthly basis. And the truth is that there are some units in which we call alligators, that will end up eating you alive. Those are the bad/risky investments that we try to steer our clients away from. However, on the other hand, there are also condotel units in which are rental income machines and continue to produce high revenues for the homeowner’s week after week, month after month, and year after year.

That is why it is so important to have an experienced, knowledgeable realtor in your corner during the whole process. Our team here at Jerry Pinkas Real Esate Experts has been doing this a long time, we know the area, we know the comps and we know what to look for in units. Allowing us to help you identify which unit has potential and which to avoid like the plague is the best way to ensure that you not only have a good buying experience but also that you avoid the pitfalls that can be costly. Myrtle Beach, SC has numerous condotel units that are incredible and can be incredibly lucrative for you, but you have to know where to find them and what to look for. And that is where we come in.

Are Myrtle Beach condos a good investment

What should I do if I am interested in purchasing a condotel in Myrtle Beach, SC?

If you or someone you know is looking to purchase a condotel in Myrtle Beach, SC, give us a call today! Our experienced team here at Jerry Pinkas Real Estate Experts has helped numerous individuals, couples, families and even retirees find the perfect condotel, and we know we can do the same for you! We know there is a lot of information on the internet and while some of it is true, there is a lot of misleading information out there that people are consuming. Allow our team to sit down with you, dial into your needs and wants, show you properties and answer any questions that may arise. There is something to be said about having an experienced and knowledgeable real estate agent in your corner to give you the correct and accurate information you are seeking. We can help you avoid the pitfalls that can be costly, frustrating and extremely time-consuming. This is what we do, we do it every day and we are very good at it. We look forward to hearing from and working with you soon!

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What Is A Condotel In Myrtle Beach

by Jerry Pinkas

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.

What Is A Condotel In Myrtle Beach

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.

difference between a condotel and a condo

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.

condotel for sale

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.

Condotel vs 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.

Pros and cons of Condotel

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.

Condotel Video

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!

Myrtle Beach Cheap Condos For Sale

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.

best investment property in myrtle beach

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.

Financing a condo in Myrtle Beach

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

Best Realtor in Myrtle Beach

Condotels Myrtle Beach for Sale

Why pick average, when you can have an expert?

Which condo or condotel is right for you?

Give us a call 843-839-9870


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