What Is a Condotel in Myrtle Beach?

December 25, 2025

Thinking about an oceanfront condo you can enjoy and rent when you are not here? You are not alone. Many Grand Strand buyers want flexible use plus rental income, but the rules and financing can be confusing. In this guide, you will learn what a condotel is, how it works in Myrtle Beach, how financing and insurance differ from a typical condo, and what due diligence protects you before you buy. Let’s dive in.

What a condotel is

A condotel is a condominium unit inside a building that runs like a hotel. You own your unit and a share of common elements, but the property offers hotel-style services and an on-site rental program. You can use the unit yourself and also rent it short term to guests.

Typical condotel features include a centralized front desk and reservations, housekeeping on guest turnover, and resort-style amenities like pools, restaurants, and spas. A rental management or operating agreement explains how your unit is marketed, how bookings work, and how revenue is split.

How condotels differ from condos

While a traditional condo is set up mostly for long-term residential use, a condotel is designed for short stays. Operations look and feel like a hotel. You will often see 24/7 front-desk service and daily housekeeping options that standard condo buildings do not provide.

Governance also differs. Condotels may have additional rules in their CC&Rs, such as owner-use calendars, blackout dates, or required participation in a rental program. Financially, you may receive a portion of rental revenue after management fees, taxes, and HOA assessments. Lenders also underwrite condotels differently than standard condos.

Owner use and rentals

Common rental programs

Voluntary rental pool: You can opt in to the on-site program and receive your share of revenue.
Mandatory program: Some buildings require participation, often for a minimum term with a set split.
Hybrid: You can combine independent renting during certain periods with the on-site program, subject to rules.

What to confirm before you buy

Is rental participation optional or required? Are there penalties for opting out?
Fee structure: management commission, reservations, marketing, housekeeping, and guest taxes. Are fees fixed or a percentage of gross revenue?
Revenue timing: when owner distributions are paid, whether reserves are withheld, and if numbers are gross or net.
Owner control: can you set minimum stays, reject certain bookings, or list on third-party platforms?
Transfer rules: does the rental agreement bind future buyers? When can it be terminated?

What this means for your use

Myrtle Beach demand is highly seasonal. Summer weeks book early and carry higher rates. Off-season occupancy and nightly rates are lower. Owner-use calendars and blackout dates may limit personal stays in peak periods, so read the documents closely if you plan to use your unit during summer.

Financing and down payments

How lenders classify condotels

Lenders may treat a condotel as a second home, an investment property, or in some cases as a hotel-style commercial asset. The classification depends on the building’s operations, rental program, and how the project fits agency and lender guidelines.

Agency programs like Fannie Mae, Freddie Mac, FHA, and VA apply specific condo project standards. Many condotels do not meet those standards, so some popular low-down-payment options are not available. Local banks and portfolio lenders sometimes offer dedicated condotel loans.

What this means for you

Expect larger down payments and more conservative loan-to-value ratios than for a typical residential condo.
Rates may be higher and available programs fewer than you might see with a standard condo loan.
Lenders may discount or exclude projected rental income unless there is a reliable history. For certain loan types, the lender may focus on property cash flow instead of your personal income alone.

Steps to take now

Ask lenders upfront whether the specific building is treated as a residential condo, a condotel, or a hotel.
Prequalify with a lender that finances condotels on the Grand Strand before you tour or write offers.
Get written guidance on required down payment and whether rental income can count toward your qualification.

Insurance and taxes

Insurance basics

In a condotel, the building’s master policy can look more like a hotel policy. It may not cover your unit’s contents, upgrades, or certain liabilities. You will likely need an HO-6 policy for the unit, plus endorsements that address frequent rentals and liability limits the building requires. If the property is oceanfront or in a mapped flood zone, lenders typically require flood insurance, and you should confirm the flood zone and elevation for the specific unit.

Taxes and reporting

Short-term rentals are usually subject to local transient occupancy or hotel taxes. In most condotels, the management company collects and remits these taxes and deducts them before paying you. Rental income is taxable. You may be able to deduct mortgage interest, a portion of HOA dues tied to rental use, management fees, repairs, and depreciation. If you provide substantial services yourself, tax treatment can change, so consult a qualified tax professional.

Accounting and statements

Ask for audited or management-prepared financials for the association and rental program. Confirm how gross rental revenue is defined and what is deducted before your payout. Request sample owner statements so you can see how fees, taxes, and reserves affect net income.

Due diligence in Myrtle Beach

Documents to review

CC&Rs, bylaws, and rules and regulations
Rental management agreement and any mandatory rental addenda
HOA budgets, balance sheet, reserve study, and meeting minutes for the past 12 to 24 months
Unit-level rental history and recent owner distribution reports, if available
Litigation reports for the association or developer
Insurance summaries for the master policy and owner requirements
Any condo project certifications or lender letters about project classification

Building and unit checks

Reserve study and plans for major capital items like roof, elevators, HVAC, and seawall
Special assessments, recent or planned, including facade work and hurricane hardening
Flood zone status, elevation certificate, and current insurance estimates for the unit
Unit condition and whether it meets the standards required for the rental pool

Rental performance and seasonality

Annual occupancy rates and the yearly pattern of demand
Historical average daily rate and revenue per available unit, if provided
Full commission and fee schedule, including marketing and reservation costs
Owner-use calendar, blackout rules, and peak season restrictions

Local rules to confirm

Transient occupancy tax rates and who remits them
Short-term rental licensing, business license needs, and safety compliance
Coastal building standards and FEMA guidance that affect oceanfront properties

Benefits and risks

Benefits

Professional marketing and front-desk reservations can drive higher gross rental revenue compared with self-managed units
On-site housekeeping and guest services simplify ownership
Resort amenities make units attractive to visitors and repeat guests

Risks

Higher fees and commissions reduce net income compared with the gross numbers you may see in marketing materials
Financing can be more limited, with larger down payments and fewer program choices
Demand in Myrtle Beach is seasonal, with strong summer peaks and quieter off-season months
Mandatory rental rules or owner-use limits can reduce your flexibility
Oceanfront properties face higher insurance costs and flood exposure

Your next steps

Clarify your goals. Decide how you plan to use the unit, how often you will visit, and your target for net income.
Talk to lenders early. Confirm classification, down payment needs, and how rental income will be treated.
Request documents. Gather CC&Rs, rental agreements, HOA financials, and sample owner statements.
Verify insurance. Check the unit’s flood zone, elevation, and required coverages. Get quotes for HO-6 and flood.
Review rental history. Study occupancy, rates, and seasonal patterns for the building and similar properties.
Inspect the building and unit. Pay attention to reserves, planned projects, and any special assessments.
Bring the right team. Consider a lender, real estate attorney, and tax professional familiar with Grand Strand condotels.

When you are ready to compare buildings and run real numbers, reach out to The Klas Team to schedule a free market consultation. We will help you match the right condotel to your goals and navigate financing, documents, and timelines with confidence.

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