First Step In Condotel Loan Process Is Completing The Condotel Questionnaire
Condotel loans are a specialty niche mortgage product and is only offered by a few portfolio lenders. I specialize in financing condotel loans, both purchase condotel loans and refinance condotel loans in California, Florida and Illinois. There is a two step underwriting process with condotel loans. The first process is that the condo hotel project needs to be approved. It is a fairly quick and simply underwriting process. A one page condotel questionnaire needs to be completed by the HOA manager and submitted to condotel loan underwriter. The underwriter should come back with an approval within 24 hours. Cases where the underwriter denies the condo hotel project is when the condo hotel complex is under financial distress like a pending bankruptcy, bankruptcy, or massive foreclosures in the condo hotel complex. Other reasons condotel loans get denied is because the condo hotel complex has serious building code violation issues.
Two Phases Of Underwriting For Condotel Mortgage Loans
The second underwriting phase is the condotel unit loan borrower. Minimum credit scores required is 680 FICO credit scores. Debt to income ratios cannot exceed 40%. One year’s reserves of principal, interest, taxes, insurance, and hoa dues are required for both the condotel unit and the condotel borrower’s principal residence. Three months of those reserves need to be in cash and the balance can be in securities, IRA’s, 401K, and other liquid investment accounts. A maximum of 70% loan to value is required on principal, second, and vacation home condotel loans and 50% debt to income ratio is required for investment condotel loans.
Here is a typical condotel questionnaire that needs to be completed by the condo hotel homeowners association manager or representative.
Condo Hotel Project Name:
City State Zip Code
Has control of the project been turned over to the H.O.A.? Yes or No
Are the amenities complete? Yes or No
Is all construction or phasing complete? Yes or No. If yes, date turned over.
Are all common areas and recreational facilities associated with the entire project for the subject phase complete?
Yes or No.
If no, does the project have sufficient funds for completion? Yes or No
Is the project a cooperative? Yes or No.
Is the project a condominium hotel? Yes or No.
Is the project a timeshare or segmented ownership project? Yes or No.
Is the project a multi-dwelling unit condominium (in which ownership of multiple units is evidenced by a single
deed and mortgage)? Yes or No.
Does the condominium represent a legal but nonconforming use of the land (if zoning regulations prohibit
rebuilding to current density in the event of deconstruction)? Yes or No.
Is the project a conversion? Yes or No.
If yes, is the conversion a gut rehabilitation (where the renovation has stripped the property to the shell and all
HVAC and electrical components have been replaced)?
If the builder is in control of the project, or the H.O.A. has been in control for less than a year, please submit the Declarations, Bylaws, Insurance Certificate and Budget and Appraisal with the completed questionnaire.
Is the project built on a leasehold estate? Yes or No.
Total Number of Phases
Total Number of Units
Total Number of Units Rented (Investor)
Total Number of Units Sold
Total Number of Units for Sale
Total Number of Owner-occupied Units (Principal Residences and Second Homes)
Does any single entity own more than 10% of the total units in the entire project? Yes or No.
Highest number of units owned by one entity
Is any portion of the project designated for commercial use only?
If yes, what percentage of the project?
Property Use and Benefit Information:
Does the project allow daily rentals?
If yes, what percentage is available for daily rentals?
Does the project contain a rental desk?
Does the project participate in a mandatory rental pool?
Does the project provide food service?
Does the project provide daily Housekeeping?
Does the project provide blackout dates restricting the owner’s use?
Is the project the subject of current litigation?
Please provide a letter of explanation for any current litigation.
Property Financial Information:
What is the amount currently held in reserves for replacement or repair of major components?
Total number of unit owners currently over 30 days past due with their monthly H.O.A. fees.
Total dollar amount past due.
Are the taxes for the individual units included in the H.O.A. fees?
Projects in which the taxes are included in the H.O.A. fees are ineligible.
H.O.A. Contact name and Phone Number.
Condotel Loans Have Quick Underwriting And Approval Process
Unlike conventional and FHA loans, Condotel loans have less red tape and have quick turnaround times since they are portfolio loans and do not have the intensive guidelines Fannie Mae and FHA loans do.