Thinking about an oceanfront place you can enjoy and also rent when you are away? In Myrtle Beach, that often points to a condotel. The model can offer convenience and income potential, but it also comes with unique rules, fees, and lender requirements. In this guide, you’ll learn what a condotel is, how it differs from a traditional condo, how financing and management work, and the key steps to take before you buy. Let’s dive in.
Condotel basics
What a condotel is
A condotel is a condominium unit located inside a building that operates like a hotel or resort. You own your unit and share the common areas through the condominium association. A professional operator typically runs front-desk check-in, housekeeping, and a centralized reservation system for nightly guests.
In Myrtle Beach, many oceanfront towers fit this model. They often include onsite dining, valet or structured parking, and resort-style amenities. Most owners can place their units into a nightly rental pool and receive a share of the revenue.
How it differs from a traditional condo
Condotels are designed around short-term rentals, while conventional condos focus on owner-occupants or long-term tenants. A condotel usually has a centralized management company and a hotel-like operation. You may see revenue-sharing arrangements, hotel-style fees, and specific owner-use rules or blackout dates. HOA budgets can be higher due to staffing and services like housekeeping and concierge.
The bottom line is control and cash flow work differently. You still hold a deeded unit, but management agreements, rental programs, and any franchise standards affect your usage and net income.
How rentals and management work
Rental programs and owner use
Most condotels offer a rental pool operated by a hotel or management company. The agreement sets how your unit is marketed, how guests check in, and how housekeeping and maintenance are handled. Owner-use rules can include advance notice for personal stays, minimum days in the rental program, or blackout periods during peak season.
Fees and revenue splits
Expect a clearly defined revenue split and a list of deductions. Common line items include:
- Management fee based on gross or net revenue
- Housekeeping, utilities, and routine maintenance
- Marketing and reservation fees
- Franchise royalties if a brand is involved
- HOA assessments and reserve contributions
- Special assessments for capital projects
Your net payout depends on nightly rates, occupancy, seasonality, and the fee structure. Myrtle Beach has strong tourism, but revenue varies by building, unit type, and operator performance.
What to request from the manager
Ask for transparent, project-specific data before you commit. Helpful items include:
- Historical occupancy by month and season
- Average daily rate (ADR) and revenue per available unit (RevPAR)
- Two to three years of gross and net revenue for comparable units
- Detailed statements showing payout timing and deductions
- Upcoming capital projects and reserve usage history
Financing a condotel
Why lenders view condotels differently
Short-term rental income is less stable than long-term leases. Projects may be classified as hotel or mixed-use, and management or franchise agreements can add complexity. For these reasons, many government-backed programs limit or exclude condotels, and conventional loans apply stricter project reviews.
Common loan options
- FHA: FHA generally excludes hotel-style projects unless strict criteria are met. You must verify whether the project is FHA-approved.
- VA: VA eligibility can exclude projects that function primarily as hotels. Confirm whether the project is on the VA approved list.
- Conventional (Fannie Mae/Freddie Mac): Project reviews are required. Eligibility depends on owner-occupancy ratios, financials, insurance, and more. Some lenders may require larger down payments.
- Portfolio or private loans: Many buyers use regional banks or specialty lenders that finance condotels on a case-by-case basis. These usually require higher down payments, higher rates, and more documentation.
What lenders will ask for
Be ready to provide project and unit-level details. Common requests include:
- Condominium declaration, bylaws, rules, and master insurance
- Management and rental program agreements with revenue splits
- HOA budget, reserve study, and recent financial statements
- Delinquency rate, special assessments, and owner-occupancy ratio
- Evidence of compliance with local lodging taxes and licensing
- Flood-zone determination and insurance binder if applicable
Pro tip: Involve a condotel-experienced lender early and confirm the specific tower and unit meet program rules before you make an offer.
Local taxes, licensing, and insurance
Lodging and occupancy taxes
In Myrtle Beach and Horry County, nightly guests are typically charged state and local lodging taxes. The operator usually collects and remits these taxes. These rates affect your net revenue, so include them in your projections. Requirements can change. Verify current registration and remittance steps with city and county authorities.
Zoning and licensing considerations
Most oceanfront condotels operate in hotel/resort zoning. Still, local rules can evolve around short-term rentals, business licensing, or visitor fees. Confirm current requirements for the building you are considering.
Flood zones and insurance
Many oceanfront towers sit in FEMA Special Flood Hazard Areas. Lenders require flood insurance in these zones. The association typically carries master coverage for common areas, while you carry an HO-6 or similar policy for interior finishes, personal property, liability, and loss of use or rental income. Oceanfront exposure can increase premiums, so build realistic insurance costs into your budget.
HOA health and project risk
Red flags to watch
Lenders and buyers look closely at association strength. Pay attention to:
- Adequacy of reserves and any recent reserve study
- Budget stability and history of special assessments
- Delinquency rate for owner dues
- Any pending litigation involving the association or management
- Owner concentration by a single entity
- Clear use restrictions and rental rules in the declaration
Insurance and reserves
Request the master insurance certificate. Confirm coverage for wind, flood, fidelity bond, and liability for common areas. Ask what the master policy covers versus owner responsibility. Understand planned capital projects, reserve targets, and how they could affect future assessments.
Due diligence checklist for Myrtle Beach buyers
Before you make an offer
- Confirm lender eligibility for the specific tower and unit
- Review the condo declaration, bylaws, rules, and all management or franchise agreements
- Obtain HOA financials: current budget, balance sheet, P&L, and most recent reserve study
- Request historical occupancy, ADR, RevPAR, and two to three years of gross and net revenue
- Verify current lodging tax rates, registration, and remittance requirements
- Determine the FEMA flood zone and likely flood insurance needs
- Review the association’s master insurance and owner coverage requirements
- Ask about any pending or recent litigation and special assessments
Before closing
- Get written lender confirmation that the project and unit are approved
- Complete title work and review condo-related exceptions
- Review closing costs, escrow requirements, and any rate adjustments tied to project risk
- Learn owner-use procedures, blackout periods, and owner reservation rules
After you buy
- Consult a CPA about reporting rental income, occupancy taxes, and depreciation
- Secure HO-6 or comparable coverage for interior improvements, liability, and loss of rental income
- Budget for seasonality and set cash reserves for assessments and off-peak months
Is a condotel right for you?
A condotel can offer turn-key rental management, resort amenities, and potential income in a strong tourism market. You trade some control for convenience, and revenue will vary with season and competition. Financing often requires larger down payments and more documentation than a traditional condo.
If you want a hassle-reduced way to enjoy Myrtle Beach while offsetting costs with nightly rentals, a condotel could fit well. If year-round occupancy, full autonomy over rentals, or the lowest possible fees are your priorities, a conventional condo might suit you better.
Ready to explore Myrtle Beach condotels with confidence? Reach out to the local team that lives this market every day. Connect with Chasing The Tides Group LLC for a clear plan, vetted options, and a smooth path from search to closing.
FAQs
What is a condotel, and how does it work?
- A condotel is a deeded condo unit inside a building that operates like a hotel. A professional manager runs check-in, housekeeping, and reservations, and you can place your unit in a nightly rental pool for revenue sharing.
How is a condotel different from a traditional condo in Myrtle Beach?
- Condotels focus on short-term rentals with centralized management, hotel-style services, and specific owner-use rules. Traditional condos usually cater to owners or long-term tenants and may not allow nightly rentals.
Can I live full-time in a Myrtle Beach condotel?
- It depends on the building’s declaration and the rental program. Some projects limit owner-use days or have blackout periods, so review the governing documents and management agreement before you buy.
Are FHA or VA loans available for condotels?
- FHA and VA often exclude hotel-style projects. Eligibility is case-specific, so verify whether the particular project is approved for your loan type before making an offer.
What insurance do I need as a condotel owner?
- The association typically carries a master policy for common areas. You usually need an HO-6 or similar policy for interior finishes, personal property, liability, and, if appropriate, loss of rental income. Flood insurance may be required in FEMA flood zones.
Who collects and pays lodging taxes on rentals?
- In most condotels, the operator collects and remits state and local lodging taxes on guest stays. Confirm current tax rates and reporting rules with Myrtle Beach and Horry County authorities.
