Florida is the densest condotel market in the country. Orlando-area resort condos (Reunion, Champions Gate, Encore) are theme-park-driven, with year-round demand and consistent occupancy. Miami Beach and Key West offer luxury and mid-tier urban condotels. Panama City Beach and Destin have purpose-built tower condotels (Edgewater, Calypso, Splash, Emerald Grand) with revenue-share rental programs.

Las Vegas is the #2 US market. Strip-adjacent branded residences (Trump, Vdara, Cosmopolitan, Mandarin Oriental, Signature) operate as resort-zoned hotel-condo hybrids - exempt from typical STR ordinances and supported by year-round Strip traffic.

Other notable markets: Scottsdale (W Scottsdale, Westin), Sedona (resort condotels at Hilton/Hyatt), Hawaii (most resort condos qualify as condotels), Bahamas-adjacent FL Keys, and a handful of NC mountain resorts.

Fannie Mae and Freddie Mac's warrantability tests automatically disqualify condotels: daily rentals violate the test, mandatory rental pools violate the test, hotel-style amenities (front desk, on-site management, room service) violate the test, and most condotels also fail commercial-space-ratio tests.

Specialty investor lenders fill the gap. They review the condo project documents, verify the rental program structure, examine the HOA reserve study, and underwrite the unit's rental cash flow. Pricing premium: 0.5-1.25% above standard DSCR. LTV typically capped 70-75% on purchase, 65-70% on cash-out.

Project review is the long pole - first-time condotel financing in a project takes 30-45 days; subsequent loans in the same project close in 21-30 days because the project review is reusable.

Revenue source: most condotels operate a hotel-style rental program where the building manages bookings and pays unit owners a percentage of net revenue. Typical revenue split: building keeps 40-50%, owner gets 50-60%. Some buildings allow opt-out to private STR management; others mandate participation.

Operating costs unique to condotels: HOA dues are large ($600-2000/month typical) and cover building services, master insurance, and amenities. Special assessments for hurricane repairs, FF&E refresh, and major capital are common - budget 1-2% of unit value annually.

Insurance: the master HOA policy covers building shell. You need HO-6 walls-in coverage. Hurricane-zone markets (Florida, Carolinas) have seen 30-60% insurance cost increases since 2022.

Cash flow math: gross revenue $40K, building takes 45% = $22K to owner, less HOA $14K = $8K to mortgage. PITI ~$2K/month = $24K/year. Math: $22K - $14K = $8K vs. $24K PITI = negative. Many condotels barely cash-flow at current pricing without strong nightly rates. Run conservative numbers.

HOA financial health is critical. Pull the HOA budget, reserve study, and 12-month financials before making an offer. Healthy HOAs reserve 15-25% of dues; underfunded HOAs hit owners with special assessments.

Pending litigation is a major risk flag. Some condotel projects have ongoing structural litigation (post-Surfside in Florida especially) that may impose major future assessments.

Insurance availability has tightened sharply post-Ian and Idalia. Some Florida condotel projects have lost master insurance and are operating with citizens-of-last-resort coverage. Check carrier and rating before committing.

Hands-off operation is the condotel selling point. Building manages bookings, cleaning, check-in, maintenance. Owner can be remote and uninvolved.

Personal use cap matters for IRS classification. More than 14 personal nights per year converts the property to a "vacation home" with reduced deductibility. Keep a use log.

Exit considerations: condotels have a thinner buyer market than residential condos. Holding periods often 5-10 years. Plan to sell to a buyer in the same investor pool - not a residential homeowner.