How Condo Hotels Work in Florida: Rentals, Owner Use and Financing

Ashton Coleman, Broker Associate, ONE Sotheby's International Realty
305.978.7704 | AColeman@onesothebysrealty.com

How do condo hotels work in Florida? You own a deeded unit inside a building that also runs as a hotel. A hotel operator handles the front desk, housekeeping and amenities, and you may place your unit in a rental program when you are not using it. The rules change from building to building, and those rules decide whether a condo hotel fits your goals.

I work with investors on condo hotels, and I see the same mistake often. Buyers compare views and prices, then skip the documents. This guide covers what a condo hotel is, how rental programs and owner use work, why financing is different, and what to ask before you make an offer.

What a Condo Hotel Is

A condo hotel unit is real estate. You hold title, pay property taxes and pay association dues like any condo owner. The difference is the building. It operates with hotel services, often under a hotel brand, and the declaration of condominium and the rental agreement set how units can be used.

That design is the reason condo hotels exist. Many standard condo buildings in Miami and Fort Lauderdale limit short-term rentals. A condo hotel is built for nightly stays. It is also not the same as buying an entire hotel, which is a commercial transaction with its own valuation and financing. I explain that difference in my guide to buying an entire hotel in FloridaMore Info.

Rental Programs and Owner Use

Two questions decide most of the experience. First, is the rental program voluntary or required? Some buildings let you opt in and out. Others tie the unit to the operator. Second, how many days can you use the unit yourself? Some programs set blackout dates or cap owner stays, and some buildings do not allow a primary residence.

Ask for three years of unit-level statements that show gross revenue, operator fees, building expenses and the net paid to the owner. Those numbers matter more than a sales brochure. I do not quote yields from marketing material, and you should not rely on them.

On Miami Beach, buyers often start with buildings such as The Setai, W South Beach, Fontainebleau and Mondrian South Beach. Each one has its own program and its own use rules. You can browse current options on our Miami condo hotels for saleMore Info page, or compare the Broward side on our Fort Lauderdale condo hotels for saleMore Info page.

Why Financing Is Different

Condo hotels often cannot use standard conventional loans. The Fannie Mae Selling Guide lists several features that make a project ineligible. These include a building run as a hotel, limits on when owners can occupy their units, mandatory rental pooling, and rental or revenue-sharing agreements that restrict occupancy through blackout dates or occupancy limits. You can read the rule in the Fannie Mae Selling GuideMore Info.

When a building has these features, buyers usually turn to cash, portfolio loans or non-QM loans. Those loans often need a larger down payment and carry a higher rate than a conventional condo loan. Lender terms change often. Get a pre-approval for the specific building before you write an offer, because a lender may approve one condo hotel and decline another.

Legal, Tax and Association Points

Securities rules. Under a 1973 SEC releaseMore Info, a condominium offering can count as a security when it is sold with emphasis on income from the promoter's management, includes a rental pool, or requires the owner to keep the unit available for rental. That rule mainly affects developers and sellers, but it shows how closely a rental program can tie to the purchase itself. Have an attorney read the rental agreement.

Taxes. Florida generally taxes rentals of six months or less, and counties add their own tourist taxes. The operator often collects them, but you should confirm who files and how rental income reaches your tax return. Speak with a CPA before you buy.

The association's health. Request the budget, the reserve study, any special assessments and any milestone inspection or structural integrity reserve study the building has completed. A large hotel building has large repair costs, and owners share them.

Who a Condo Hotel Fits

A condo hotel fits a buyer who wants a second home with hotel services and accepts limits on use. It also fits an investor who accepts that the operator controls day-to-day management. It fits poorly if you want full control of rentals, unlimited personal use or a conventional mortgage. If hotel-brand design and service matter more to you than rental income, compare branded residences in Miami and South FloridaMore Info, which often work differently.

Questions to Ask Before You Make an Offer

• Is the rental program voluntary or required, and can I leave it?
• How many days can I use the unit, and are there blackout dates?
• What fees does the operator take, and what do the last three years of unit statements show?
• Which lenders have financed this building?
• What are the current dues, reserves and special assessments?

If you want to see current condo hotel options, browse the MiamiMore Info and Fort LauderdaleMore Info pages, or contact me and I will help you compare buildings.

Condo Hotel FAQs

How do condo hotels work in Florida?

You own a deeded unit in a building that also operates as a hotel. A hotel operator provides services, and you may rent the unit through a rental program when you are not using it. The declaration and the rental agreement set the rules for each building.

Can I live in a condo hotel full time?

Often not. Many buildings limit how long owners can stay, and some do not allow a primary residence. Check the declaration and the zoning for the specific building before you assume you can live there.

Can I get a mortgage on a condo hotel?

Sometimes, but rarely a conventional one. Fannie Mae lists hotel-style features, owner occupancy limits and some rental pooling as reasons a project is ineligible. Buyers often use cash, portfolio loans or non-QM loans, so confirm financing for the specific building first.

Do condo hotels make money?

Some do and some do not. Income depends on the building, occupancy, the operator's fees and your own use days. Ask for actual unit statements, not projections.

What is the difference between a condo hotel and a regular condo?

A regular condo is mainly for owners and long-term residents, and many buildings limit short-term rentals. A condo hotel runs hotel services and is designed for nightly rentals.

This article is general information, not legal, tax or financial advice. Consult a licensed attorney, CPA and lender before you buy.

Contact Ashton Coleman
305.978.7704 / AColeman@onesothebysrealty.com
ONE Sotheby's International Realty