Thinking about a condo-hotel in Delray Beach but not sure how it really works? You are not alone. Condo-hotels blend lifestyle and income, yet the rules, fees, and financing can feel confusing at first glance. In this guide, you will learn how the model operates, what to expect for owner use and returns, the key legal and lending issues, and how to evaluate options near Atlantic Avenue. Let’s dive in.
What is a condo-hotel?
A condo-hotel is a building where individual units are sold as condominiums and operated as hotel rooms when you are not using them. You hold a deeded unit and follow the condo’s CC&Rs, while the hotel operator manages nightly rentals through a centralized reservation system. You usually receive a share of rental revenue after management fees, operating costs, taxes, and reserves.
Unlike a traditional condo or a stand-alone short-term rental, a condo-hotel provides a front desk, housekeeping, and professional marketing through brand channels. Your use of the unit is often limited by the management agreement. The tradeoff is convenience, turnkey operations, and hotel-level amenities.
How owner use works
Owner use rules are set by the project’s management agreement and condo documents. Many models cap owner use days per year or require advance reservations. Some have blackout dates or priority windows to keep peak periods available for hotel guests.
When you are not in residence, your unit typically must be in the rental pool. Unused owner days often return to the pool so the operator can maximize occupancy. The exact process for booking owner stays and the limit on consecutive nights will be written into the owner manual and reservation rules.
Rental pool and revenue splits
Your unit’s nightly bookings run through the hotel’s system. The manager collects gross revenue, deducts management and operating fees, applicable taxes, utilities or pass-through costs, and reserves if required. Your payout reflects net proceeds after these deductions, and it varies with occupancy and average daily rate.
You should expect seasonality in Delray Beach. Winter and spring see higher visitation and stronger rates, while shoulder seasons can be softer. Local events and holidays can lift performance as well.
Services and amenities
The value proposition includes hotel services and amenities. You can expect a staffed front desk, housekeeping, concierge, on-site food and beverage, fitness, and often a pool or valet. These services enhance your experience but are funded through operating budgets and HOA assessments.
Income and costs to expect
Revenue from a condo-hotel is variable. It depends on demand, the operator’s performance, pricing, brand distribution reach, and broader tourism trends. Treat pro formas as estimates, not guarantees, and lean on verified operating history when available.
Recurring costs typically include monthly HOA assessments, management and booking fees, utility pass-throughs, and reserve contributions. Condo-hotel assessments are often higher than conventional condos because they help fund hotel-level services. Owners also carry an HO-6 policy and consider liability coverage due to transient guests.
Transient occupancy taxes apply to nightly rentals and are usually deducted from revenue or remitted by the operator. Confirm how taxes are handled in the rental pool agreement. Property tax classification and rates should be verified before purchase.
Financing and legal basics
Lenders treat condo-hotels differently than standard condos because of the hospitality component. Conventional conforming programs may not accept certain condo-hotel projects or can require extra project approvals. Many buyers use portfolio loans, local banks, or cash because financing can carry higher rates, lower loan-to-value ratios, or added conditions.
Your loan type depends on your intended use and the project’s rules. Some lenders classify condo-hotel units as second homes, while others treat them as investment properties. Work with a lender familiar with condo-hotels early in your process to map realistic terms.
Documents to review closely
- Condominium declaration, CC&Rs, and HOA budget and financials
- Hotel management agreement and any franchise agreement terms that affect owners
- Rental pool agreement, owner reservation rules, and owner manual
- Audited operating statements or third-party-verified P&L and occupancy/ADR history
- Special assessments, reserve funding, litigation status, and resale restrictions
Local rules to confirm
City and county requirements can affect licensing, transient occupancy tax collection and remittance, and life-safety standards. Confirm Delray Beach rules that govern nightly rentals and any registration or inspection requirements. Verify current TOT rates and whether the property collects and remits centrally.
Who condo-hotels fit
Condo-hotels often suit second-home buyers who value turnkey living and want to offset costs with rental income. They can also work for lifestyle buyers who prioritize brand standards, security, and amenities. Investors may find the hybrid of hospitality income and real estate appreciation appealing if they accept revenue variability.
Key advantages
- Professional management, marketing, and guest services
- Potential to generate income without self-managing
- Access to amenities that enhance owner enjoyment
Key risks
- Financing can be limited, which may affect resale and appraisals
- Income depends on hotel performance and seasonality
- HOA and operating costs are often higher than standard condos
- Limited control over pricing, marketing, and daily operations
- Operator or brand changes can impact performance and experience
Delray Beach context
Delray Beach is a coastal destination with a lively downtown and strong tourism appeal. Proximity to Atlantic Avenue’s dining, retail, and walkable beach access is a major value driver for short-term stays. Seasonal patterns, especially winter and spring peaks, influence occupancy and average daily rate.
Evaluating an Aloft or similar project
If you are considering a unit tied to a branded operator near Atlantic Avenue, use this focused checklist:
- Ownership and rights: Confirm that the unit is deeded, and note easements or use encumbrances. Ask about owner concentration and any developer-held inventory.
- Management and franchise: Review term length, renewal and termination rights, and who pays for rebranding if the franchise changes.
- Rental pool economics: Identify the manager’s percentage of gross revenue, all expense deductions, reserve policies, and definitions of gross vs. net.
- Owner use policy: Document annual owner days, blackout periods, booking windows, and limits on consecutive nights.
- Fees and assessments: Get current HOA assessments, budget line items, and any planned special assessments. Clarify which utilities and services are included.
- Revenue history: Request audited or third-party-verified P&L, occupancy, and ADR trends for the specific property and comparable hotels.
- Taxes and compliance: Confirm TOT handling, property tax classification, and required city registrations.
- Insurance and liability: Understand master coverage, deductibles, your HO-6 requirements, and liability exposure related to transient guests.
- Resale logistics: Note any right of first refusal, transfer fees, and how booking history is shared with future buyers.
- Construction and delivery: For new or pre-construction units, confirm completion guarantees, escrow protections, and timelines.
Your step-by-step path
- Gather the full project document set from the listing agent or developer.
- Speak with a lender experienced in condo-hotels to confirm available programs, rates, and down payment scenarios.
- Verify local licensing and TOT requirements with the appropriate city and county offices.
- Check property tax details with the county appraiser.
- Hire a real estate attorney to review management, franchise, and condo documents, especially if relying on any revenue guarantees.
- Compare verified historical performance against your personal use plan and cash flow goals.
Buying or investing in a Delray Beach condo-hotel can be a smart lifestyle play if you know the rules, the costs, and the operator behind the scenes. If the location fits your beach-and-dining routine and the numbers align with your expectations, you can enjoy turnkey ownership with a path to offset expenses.
Ready to explore available buildings, review actual budgets, and map lender options side by side? Reach out to The South Ocean Group for local guidance, document reviews, and a clear game plan from tour to closing.
FAQs
What is a condo-hotel and how does it work?
- It is a deeded condo unit operated as a hotel room when you are not using it, with centralized bookings and shared rental revenue after fees and taxes.
How many days can I use my unit each year?
- Owner use limits vary by project and are defined in the management agreement; expect caps on annual days, booking windows, and possible blackout periods.
How is rental income split in a condo-hotel?
- The manager collects gross revenue, then deducts management and operating fees, taxes, and reserves before distributing your share as net proceeds.
Can I get a conventional mortgage on a condo-hotel?
- Some projects do not meet conforming guidelines; many buyers use portfolio loans, local banks, or cash due to stricter underwriting and lower loan-to-value.
What recurring costs should I expect as an owner?
- HOA assessments, management and booking fees, utility pass-throughs, insurance, reserves, and transient occupancy taxes tied to nightly rentals.
What should I verify before buying near Atlantic Avenue?
- Confirm owner use rules, rental pool economics, HOA budget and reserves, audited revenue history, local licensing and TOT, and terms of the management agreement.
The South Ocean Group is here to help you compare buildings, decode the documents, and secure the right financing path. Let’s make your Delray Beach plan real.
