What Is a Condotel? Miami Beach Buyer Guide

Thinking about a Miami Beach getaway that can help pay for itself? If you have heard the term condotel and wondered how it works, you are not alone. Many second‑home and international buyers look at condotels for rental flexibility without running a full vacation rental. In this guide, you will learn what a condotel is, how hotel programs operate, the Miami Beach rules to verify, financing and tax considerations, and the key documents to review before you buy. Let’s dive in.

Condotel basics

A condotel is a condominium that also operates like a hotel. You own your unit, and when you are not there, you can place it in a hotel rental program that markets and books it like a hotel room. Guests check in at the front desk, and the hotel operator handles reservations, housekeeping, and guest services.

A traditional condo is primarily residential. Short‑term rentals may be limited by the condo documents or local law. In a condotel, transient rentals and hotel services are part of the model, which changes how lenders, insurers, and local rules apply.

How hotel programs work

• You sign a hotel management or rental agreement that sets pricing rules, marketing, furnishings, and revenue splits.
• The operator uses a central reservation system. The front desk handles bookings and guest services, not you.
• You will see fees such as management commission, housekeeping and linen turnover, marketing, and booking platform fees. Taxes and assessments are taken out as required.
• Owner use is often limited. There may be a set number of owner‑use days, blackout dates during peak season, and minimum stay rules.

Condotel vs. do‑it‑yourself short‑term rental

• Convenience: You avoid daily hosting tasks. The operator handles operations and marketing.
• Control: You give up control over pricing and many policies. Furnishings and finishes may have to match brand standards.
• Income split: You receive a share of rental income after the operator’s fees and taxes. Always focus on net proceeds, not just gross.
• Costs: Hotel‑style services and amenities can mean higher monthly fees and service charges.

Miami Beach rules to verify

City and county requirements shape how condotels operate. Before you buy, verify the property’s licenses, taxes, and allowed uses.

Licensing and transient taxes

• Confirm whether the building is licensed as a hotel or registered as a condominium with hotel operations. City licensing affects the ability to run transient rentals.
• Ask who collects and remits transient occupancy, resort, and state sales taxes on stays. Many operators handle collection, but you should confirm in writing how taxes are reported and how gross versus net income is treated.
• Review the condominium declaration to confirm that transient rentals and hotel operations are permitted. Some buildings require registrations or permits under City of Miami Beach ordinances.

Zoning and building status

• Confirm zoning and any conditional use permits that allow hotel‑type operations in the building.
• Request the certificate of occupancy and any recorded declarations that govern hotel functions, retail components, or shared facilities.

Flood zone and elevation

• Miami Beach includes high‑risk coastal flood zones. Lenders and insurers will look at FEMA flood maps and the building’s elevation certificate.
• Flood insurance can be required if the building sits in a FEMA flood zone.

Usage, fees, and income

Every condotel has its own rules. Read the hotel management agreement and condo documents closely.

• Owner use: Many programs limit the number of nights you can stay, set blackout dates in peak season, and require minimum rental periods when your unit is in the program.
• Revenue split: Revenue is shared based on the management agreement. Distributions are typically monthly or quarterly. Verify how refunds, chargebacks, and maintenance downtime are handled.
• Required standards: Units often must meet brand standards for furnishings, finishes, and upkeep. Some projects require participation in the rental pool for an initial period.
• Total fees: In addition to HOA dues, expect management commissions, housekeeping and linen fees, marketing fees, and portions of booking platform costs. Add property taxes, insurance, and potential assessments to your carrying costs.

Financing for condotels

Lenders treat condotels differently than standard condos. Because of hotel operations and transient use, many government‑backed programs and GSE guidelines impose restrictions.

• Conventional loans: Fannie Mae and Freddie Mac have condo project eligibility rules. Projects with significant hotel services or transient use may be ineligible.
• FHA and VA: These programs typically exclude hotel‑style projects. If you hope to use FHA or VA, confirm project approval early.
• Portfolio and specialty lenders: Some local banks and private lenders finance condotels with larger down payments, higher rates, and stricter underwriting.
• Income for qualifying: Lenders may discount or ignore projected hotel rental income unless it is well documented and recurring.

Steps to prepare your financing

• Pre‑qualify with a lender experienced in condotels before you make an offer.
• Ask for written confirmation that the specific project and unit meet the lender’s program rules.
• If you are an international buyer, expect higher down payments and added documentation. You may need an ITIN, a U.S. bank account, and verifiable sources of funds. Many international buyers choose all‑cash for speed and certainty.

Taxes and reporting

Condotel rentals create several tax touchpoints. Plan ahead so you are not surprised at filing time.

• Rental income: Income from the hotel program is taxable U.S. income and must be reported on your U.S. tax return.
• Nonresident owners: U.S.‑sourced rental income for nonresident aliens has special withholding and filing rules. Some owners elect to treat rental income as effectively connected with a U.S. trade or business so they can file on a net basis. This requires the correct IRS filings.
• Sales and transient taxes: Guests pay transient occupancy and state sales taxes. Many operators collect and remit these, but confirm in the management agreement who is responsible and how reporting works.
• Property taxes: Your unit is assessed by Miami‑Dade County. Short‑term rental or non‑primary residences generally do not qualify for homestead exemption.

Insurance and risk

Coastal properties in Miami Beach face higher hurricane and flood exposure than the national average. This affects budgets and lending.

• Master policy: The association typically carries a master property policy. Ask for coverage limits and the wind and hurricane deductibles.
• Unit coverage: You may still need an HO‑6 policy for interior improvements, personal contents, and loss assessments.
• Flood insurance: If the building is in a FEMA flood zone, lenders often require flood coverage. Confirm whether the master policy includes it or if you must purchase separate flood insurance.
• Budget impact: Rising insurance costs can affect HOA dues and assessments. Review recent financials and reserve studies.

Buyer due diligence

Go beyond glossy brochures. A thorough document review will tell you how the building performs and where the risks are.

Key documents to request

• Condominium declaration, bylaws, and rules that address hotel operations and transient rentals.
• Hotel management agreement and rental program contract, including fees, revenue splits, enrollment terms, and termination rights.
• Association budgets, financial statements, reserve studies, and board meeting minutes from the past 12–24 months.
• Actual occupancy and revenue history for the rental program, not just pro formas.
• Insurance policies and deductibles for wind, hurricane, and flood, plus unit owner responsibilities.
• Litigation disclosures for the association and the operator.
• Licensing documents, certificate of occupancy, and zoning and land‑use permits.
• Documents showing who collects and remits transient and sales taxes.
• Title report, including any commercial leases, easements, or brand declarations.
• Flood zone determination and elevation certificate, if available.

Essential questions to ask

• Is the unit currently enrolled in the hotel program? Is enrollment voluntary or mandatory?
• How many owner‑use days are allowed? What are the blackout dates and minimum stay requirements?
• What is the full fee stack charged to owners? How often are distributions made?
• Who collects and remits all transient and sales taxes? How are gross and net proceeds reported to owners?
• Are there current or expected special assessments?
• What share of units is in the rental pool, owner‑occupied, or controlled by a single investor or the operator?
• Do any documents give the operator unusual control over condo governance or finances?

Red flags to watch

• Long mandatory enrollment in the hotel program with heavy penalties for opting out.
• No transparent rental history or reliance on optimistic pro formas.
• Low reserves or a pattern of special assessments.
• Operator with a limited track record or open disputes with owners.
• High concentration of unit ownership that could sway governance and cash flow decisions.

Run your numbers

• Focus on net revenue after all fees, taxes, dues, insurance, and debt service.
• Compare net performance to similar short‑term options and to long‑term rentals.
• Stress test seasonality by modeling slower months and higher insurance costs.
• If you need a loan, secure lender approval tied to the specific project before you commit.

Is a condotel right for you?

A condotel can be a smart solution if you want hotel‑level convenience, brand standards, and hands‑off rental management. You trade some control and income share for turnkey operations and on‑site services. In Miami Beach, strong tourist demand can support occupancy, but success depends on the building’s operator, fee structure, and true net performance.

If you value longer personal stays, maximum pricing control, or simplified financing, a traditional condo or a condo that allows short‑term rentals without hotel operations may fit better. Your best next step is to line up financing options, review the full document set, and compare net scenarios before you shortlist buildings.

Ready for a clear, data‑forward conversation about Miami Beach condotels and which buildings match your goals? Connect with Maruja Lina Gil, PA for multilingual guidance and a disciplined due‑diligence process backed by advanced credentials and a track record in South Florida’s coastal markets.

FAQs

What is a condotel in Miami Beach?

• A condotel is a condo building that operates with hotel services, allowing you to place your unit in a hotel rental program with centralized bookings and on‑site management.

How do condotel rental programs pay owners?

• The operator collects revenue, deducts agreed fees, taxes, and costs, then distributes your share on a set schedule, usually monthly or quarterly.

Can I finance a Miami Beach condotel?

• Financing is possible with portfolio or specialty lenders, but expect higher down payments, stricter terms, and limited eligibility under many conventional, FHA, or VA programs.

What taxes apply to condotel rentals in Miami Beach?

• Guests typically pay transient occupancy and state sales taxes, and rental income is taxable; confirm who remits taxes and how income is reported under your management agreement.

What insurance do I need for a condotel unit?

• The association usually carries a master policy, but you may need an HO‑6 for interiors and contents plus flood coverage if required by your lender or the building’s flood zone.

Are condotels eligible for homestead exemption?

• Condotel units used for short‑term rentals or as second homes generally do not qualify for the homestead exemption in Miami‑Dade County.