Orlando has no shortage of housing options when it comes to purchasing a vacation home. Buyers can choose from two and three bedroom townhomes to 7 or 8 bedroom luxury villas, and everything in between.
One popular option for buyers who want to rent out their property is a condo hotel. Condo hotels sell individual units to home buyers, giving them vacation homes that provide the services, features, and amenities found in luxury hotels. Condo hotels even provide rental programs for homeowners, so you don’t have to spend precious time and money finding rental guests for your unit.
Financing Challenges for Condo Hotels
One of the drawbacks of a condo hotel is finding the financing to pay for it. Because these properties are typically purchased as second homes, many banks are reluctant to write a loan. That’s because the lender is taking on more risk, since the borrower is assuming an additional financial obligation.
However, bankers also realize that the typical second home buyer has a higher net worth and/or income than a typical single home buyer. As a result, this is the type of customer they would like to have.
Plan on Making a Large Down Payment
One thing that will help you with securing a loan is to put down as large a down payment as you can comfortably afford. Some lenders will require a down payment of 25-30 percent. If you are a foreign buyer, U.S. lenders may require a down payment of 35 percent. Banks may also set limits on the LTV (loan to value) ratio of the property. These limits may vary depending on whether you’re purchasing the property for use as a second home, or strictly as an investment.
Lenders typically want to see detailed information about the Orlando vacation home in addition to your personal income data and credit history. They will often visit the location and require the following information before approving your loan:
- Number of units
- Square footage of each unit type
- Breakdown of units per purchase price
- Rental rates by unit type
- Rental agreement for condo hotel program
- Management company
A good real estate agent who specializes in the Orlando area is likely to be familiar with lenders who can offer the most affordable or flexible financing for your condo hotel purchase.
Team Donovan works with U.S. and foreign buyers of vacation homes in the attractions area, including condo hotels like The Grove and The Point Orlando, and is happy to assist you with financing options. Contact us today at 407-705-2616 to schedule a free consultation.