Real Estate Investments July 15, 2023

Understanding the Difference Between Condos and Condotels

Introduction: When it comes to purchasing a property, especially in popular vacation destinations or urban areas, two terms often come up: “condo” and “condotel.” While both may seem similar at first glance, there are significant differences between the two. In this blog post, we will delve into these differences to help you understand what sets condos and condotels apart.

  1. Definition and Ownership: A condominium, or condo for short, refers to a private residence within a larger building or community of units. Condo owners have individual ownership of their units and share ownership of common areas and amenities, such as hallways, pools, gyms, and parking lots, with other unit owners.

On the other hand, a condotel, also known as a hotel-condominium or a condo-hotel, is a hybrid property that combines elements of a hotel and a condominium. In a condotel, individual units are typically owned by individuals who use their units as vacation homes while allowing a management company to rent out the units to guests when they are not in use.

  1. Usage and Rental Income: The primary distinction between condos and condotels lies in their usage and rental income potential. Condo owners typically reside in their units or may rent them out to long-term tenants. These rentals are generally subject to local regulations and may have minimum rental periods.

Condotels, on the other hand, are designed to operate as hotels. The management company oversees the rentals, and owners have the option to place their units into a rental program. This allows condotel owners to generate rental income from their units while they are not using them. The income is typically shared between the owner and the management company.

  1. Amenities and Services: Both condos and condotels often offer amenities such as swimming pools, fitness centers, restaurants, and concierge services. However, condotels tend to provide additional hotel-like services, including housekeeping, room service, and 24/7 front desk support. These services cater to guests who stay for short periods, providing a more hotel-like experience.
  2. Financing and Insurance: Financing options and insurance requirements can also differ between condos and condotels. Obtaining a mortgage for a condo is generally straightforward, as lenders consider them similar to traditional residential properties. Condotels, on the other hand, may have more stringent financing requirements due to their commercial aspect.

Insurance for condos typically involves individual unit coverage and liability coverage for common areas. In condotels, the management company usually carries insurance for the overall property, while individual owners may need to secure additional coverage for their personal belongings and any potential liability.

Conclusion: In summary, while condos and condotels share similarities in terms of living spaces and shared amenities, their distinctions lie in ownership, usage, rental income potential, services, and financing. Condos offer individual ownership, long-term residency options, and more flexible rental arrangements, while condotels provide a hotel-like experience with the potential for rental income but may come with stricter financing requirements.

Understanding the differences between condos and condotels is essential when considering a real estate purchase or investment. It allows you to make an informed decision based on your lifestyle, financial goals, and preferences.