Thinking about buying a condo-hotel in Myrtle Beach but unsure how the financing works? You are not alone. Condo-hotels can be fantastic for personal use and rental income, yet they come with lending rules that are different from typical condos. In this guide, you will learn what lenders look for, common down payments, how rental income is treated, local tax and insurance factors, a practical due-diligence checklist, and a remote-friendly path to move forward with confidence. Let’s dive in.
What is a condo-hotel
A condo-hotel is a condominium where owners can use their unit and also place it in a centralized rental program that operates like a hotel. The building often features a front desk, housekeeping, and revenue distribution to owners. Many units function as short-term rentals, and common areas can include hotel-style amenities like lobbies, spas, restaurants, or meeting rooms. This hotel-like operation is what makes financing different from standard residential condos.
Why financing condo-hotels is different
Lenders classify buildings based on risk. Projects with heavy short-term rental activity, hotel services, or large commercial spaces can be viewed as higher risk. That classification affects whether a building is “warrantable” for conventional financing or only financeable by portfolio, non-QM, or private lenders.
Underwriters focus on things like owner-occupancy levels, the share of units in rental programs, commercial square footage, HOA delinquency, single-entity ownership, litigation, and whether the HOA maintains adequate reserves. Flood risk and insurance coverage also matter in coastal markets like Myrtle Beach.
Can you use conventional, FHA, or VA
Some condo-hotel projects may qualify for conventional (Fannie Mae or Freddie Mac) loans, but many do not meet agency project rules. FHA and VA both require project approval and typically favor predominantly residential, owner-occupied condos. As a result, FHA or VA financing is rarely available for condo-hotel properties. If a project is not agency-eligible, you will likely use a portfolio bank, a non-QM lender, private financing, or cash.
Typical down payments, rates, and reserves
Down payment needs vary by lender, your profile, and the building:
- If the project is warrantable as a second home, some conventional options may start around 10 to 20 percent down for qualified buyers.
- For condo-hotels, expect 20 to 30 percent down when conventional financing is available. Many portfolio or non-QM lenders require 25 to 40 percent down.
- If the purchase is purely investment-focused or the lender must rely on rental income, down payments of 25 to 50 percent are common.
Rates for condo-hotels are often higher than for standard condos due to added risk. Lenders also look closely at HOA reserves and may require you to show several months of mortgage payments and HOA dues in cash reserves. If the HOA budget shows weak reserves, expect more scrutiny or higher reserve requirements.
How lenders view rental income
Rental income is a key topic for condo-hotel buyers. Here is what to expect:
- Some lenders will consider short-term rental income if you can document a track record, such as 12 to 24 months of third-party management statements.
- If you are a new owner with no rental history, many lenders will not count projected rental income for qualification.
- Short-term rental revenue can be volatile. Underwriters tend to rely on proven, verifiable income rather than estimates.
Local factors that affect approval and cash flow
Myrtle Beach is a coastal resort market with many condo-hotels and short-term rentals. That brings a few local realities into the financing process:
- Short-term rental income is subject to state and local sales and accommodations taxes. Owners typically must register and remit these taxes with the appropriate authorities.
- Many oceanfront buildings sit in FEMA flood zones. Lenders often require flood insurance, along with hazard and wind coverage that meets their limits.
- Wind and hurricane insurance premiums can be higher for coastal buildings. Premiums and deductibles can affect your cash flow and debt-to-income calculations.
- Building age, hurricane history, and any structural or code issues can draw extra underwriting review. Be ready with recent inspections and HOA disclosures.
Your due-diligence checklist
Gather documents early. Lenders and savvy buyers look for the same fundamentals:
- Governing docs: CC&Rs, bylaws, and amendments.
- HOA financials: current budget plus 2 to 3 years of income and expense statements.
- Reserves: a recent reserve study and the HOA’s reserve funding policy.
- Meeting minutes: last 12 to 24 months to spot discussions on repairs or assessments.
- Occupancy stats: owner-occupancy levels and how many units are in the rental program.
- Delinquencies: current report showing the percentage and amount of unpaid assessments.
- Insurance: master policy certificates for hazard, wind, and flood; confirm lender-required limits.
- Management agreement: terms of the rental program, revenue splits, and owner usage rules.
- Rental history: trailing 12 to 24 months for the unit or comps, including occupancy and gross rents.
- Legal matters: documentation of any pending or recent litigation.
- Commercial space: a breakdown of non-residential square footage and hotel-type services.
- Special assessments: status, purpose, and funding plan.
Red flags to watch for
- No reserve study or underfunded reserves.
- High concentration of units owned by one entity.
- Ongoing or significant litigation involving the HOA or developer.
- Elevated HOA delinquency rates.
- Substantial commercial space or timeshare components that push the project out of agency eligibility.
- Management agreements that restrict owner access or lack clear revenue reporting.
Smart questions for the HOA or manager
- Does the HOA allow owners to opt out of the rental program, and what are the tradeoffs?
- How are rental revenues calculated and when are owner payouts made?
- Can owners rent independently or only through the building’s program?
- What are average occupancy rates and seasonal ADR trends?
- What capital projects were completed recently and how were they funded?
Financing paths when agency loans do not fit
- Portfolio or local bank loans: underwritten to the bank’s rules with flexible criteria, often in exchange for larger down payments.
- Non-QM lenders: more flexible with short-term rental income and project types, but often higher rates and points.
- Private or hard-money bridge loans: faster closings and easier approvals at a higher cost. Useful if you plan to refinance after you build rental history.
- Seller financing: sometimes available, usually at higher rates and with careful legal review.
- Cash: avoids project eligibility hurdles and can improve your negotiation leverage.
Strengthen your approval and offer
- Present a strong profile with solid credit, low debt-to-income, and ample cash reserves.
- Provide documented rental history for the unit or close comps, plus a transparent management agreement.
- Offer a larger down payment or escrowed reserves if the project has weak HOA reserves.
- Start insurance quotes early for hazard, wind, and flood so you know true carrying costs.
How Mitchell supports you remotely
Buying from out of state is common in Myrtle Beach. Here is a remote-friendly workflow Mitchell uses to help you move fast while reducing risk:
Step 1: Clarify goals
A 20 to 30 minute call to align on use case, budget, target buildings, timeline, and tolerance for rental program rules.
Step 2: Build your file
Mitchell coordinates with your chosen lender on document needs and helps you organize income, asset, and liability items for pre-approval.
Step 3: Screen buildings early
Mitchell requests key HOA and management documents and flags issues like owner-occupancy levels, commercial space, reserves, delinquencies, litigation, and insurance limits.
Step 4: Match lender to project
Based on your profile and the building, Mitchell helps you and your lender determine whether conventional, portfolio, non-QM, or private options are realistic and what down payment or reserves are required.
Step 5: Deep-dive due diligence
Mitchell guides a thorough review of the HOA packet, reserve study, and management agreement. If concerns arise, you can adjust terms, add reserves, or pivot buildings before you invest in appraisal and inspections.
Step 6: Coordinate appraisal and insurance
For condo-hotel valuations, appraisers often reference similar condotel sales and, where applicable, operator income. Mitchell helps coordinate timing for appraisal, HOA estoppel items, and flood and wind insurance quotes.
Step 7: Smooth closing and handoff
Before closing, confirm that the lender’s insurance and flood requirements are met, and that rental program documents are properly transferred post-closing. Mitchell keeps everyone aligned so your first owner payout and guest bookings start on time.
You can finance a condo-hotel in Myrtle Beach with confidence when you understand how lenders view these buildings, what down payment and reserves to expect, and which documents prove project strength. If you want a clear, remote-friendly plan tailored to your goals, connect with Mitchell Adkins for guidance from search to closing.
FAQs
What is a condo-hotel and how is it different from a typical condo
- It is a condo that operates with hotel-style services and a centralized rental program, with many units used as short-term rentals rather than owner-occupied homes.
Can I buy a Myrtle Beach condo-hotel with 10 percent down
- Sometimes, if the project is warrantable as a second home and you are highly qualified, but many condo-hotels require 20 to 40 percent down or more.
Will lenders count short-term rental income to qualify me
- Some will consider documented history from a professional operator, but many will not use projected income for new owners without a track record.
Do I need flood insurance for a condo-hotel near the ocean
- If the property is in a FEMA flood zone and there is a loan, lenders commonly require flood insurance in addition to hazard and wind coverage.
Are FHA or VA loans realistic for condo-hotel purchases
- Rarely, because these programs require condo project approval and typically favor predominantly residential, owner-occupied projects.
What HOA documents should I request before I make an offer
- Ask for CC&Rs and bylaws, the current budget and recent financials, reserve study, meeting minutes, delinquency report, insurance certificates, rental program agreement, and any litigation or special assessment details.
