Lenders Slow to Understand Hotel Condos

Few US Lenders will mortgage the 41,000 condo hotel units coming to market by 2008.

(PRWEB) February 26, 2006 -- Few US Lenders will mortgage the 41,000 condo hotel units coming to market by 2008. Vacation Finance, America's First Second-Home Lender www.vacation-finance.com is one of the few lenders who will mortgage the new breed of Hotel Condos. "We saw this opportunity over 4 years ago, that baby boomers want more than just a second home, they want a resort lifestyle experience. The best way to afford this is through hotel condo ownership" said Bob Waun, CEO Vacation Finance, who will be presenting at the up coming JMBM Hotel Developer's Conference in California in March, "Fannie Mae won't buy mortgages on condo hotel, so we had to develop our own mortgage market for these loans."

Hotel Condos are often less than 600 square feet, without full kitchens, and are part of commercial hotel operations; all factors which challenge traditional mortgage lenders.

Industry statistics suggest that there could be between 40,000-90,000 new condo hotel units coming to market by 2008. "There is a bulging demand for consumer mortgage financing, and lenders will eventually come to understand this opportunity" said Waun "the first wave of projects have just started to fund in the last 7-10 months, we are excited to be on the leading edge of the trend."

Mainstream media has begun to embrace the trend. "Savvy consumers are just beginning to realize the benefits of this kind of ownership" said Caryn Jensen, Broker with Keller Williams "my clients have been buying condo hotel for personal use and investment."

Not every hotel can become a successful condo hotel project. "Only hotels in desirable second home areas, and that work as a hotel first, should be converted" according to Waun. Still there is an explosion of projects being announced for conversion or construction, because the economic model is so alluring. "If a hotel would sell for $100,000 a room as a whole hotel, it may sell for $175,000 sold in pieces as a condo hotel. In markets where a residential second home condo, without hotel services and amenities, is at a similar $175,000+ price, the win-win value proposition is simple" Waun is bullish on the future of this baby boomer demand market and has published several papers on the subject.

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