What A Miami Condotel Is And How It Works

Thinking about a Miami condo that can help offset costs when you are not there? If you want hotel-style service and the ability to rent by the night, a condotel might fit your plan. The model can be rewarding, but it comes with unique rules, fees, and financing considerations you should understand before you buy. In this guide, you will learn what a Miami condotel is, how rentals and income work, the local regulations that matter, and a clear checklist to vet buildings with confidence. Let’s dive in.

What a Miami condotel is

A condotel is a condominium that operates, in whole or part, like a hotel. You own the unit, and the building offers hotel-style services such as a front desk, housekeeping, and a centralized reservation system. Many Miami condotels let you place your unit into a rental program that markets and rents it on a nightly or short-term basis.

Here is how condotels differ from standard condos:

• Hotel services on site, often with professional or brand management.
• Centralized bookings, guest services, and housekeeping available.
• Formal rental program agreements that outline revenue splits, owner use, and restrictions.

There are several operating models in Miami:

• Full hotel-operated: You enroll in the hotel program. The operator handles bookings, housekeeping, and guest services. Income is shared per contract.
• Owner-managed short-term rentals: Some buildings allow you to self-manage and list on platforms, subject to building rules like minimum stays and calendar control.
• Hybrid: You can choose whether to join the hotel program. Some buildings require enrollment for certain floors or periods.

Branded residences may offer luxury amenities under a well-known name, but not all branded buildings allow nightly rentals. A branded condotel pairs the name with a true hotel-style rental program.

How nightly rentals work

In a hotel-operated program, your unit becomes part of the building’s reservation inventory. Guests book through the hotel channel, and the operator schedules housekeeping and handles check-in. If owner-managed rentals are allowed, you or your manager handle marketing, guest communication, and cleaning according to building rules.

Income flow typically looks like this:

1. Gross rental revenue from bookings.
2. Operating costs deducted for housekeeping, laundry, guest supplies, and in-stay utilities.
3. Platform or OTA commissions if applicable.
4. Management fees and any incentive fees.
5. Reserve withholdings and applicable taxes.
6. Net proceeds distributed to you, usually monthly or quarterly.

Expect formal rules on owner use, including:

• Limits on personal-use days and possible blackout dates.
• Booking priority rules when you place the unit back into the rental pool.
• Minimum stay requirements and how far in advance you can reserve your own unit.

Miami rules and taxes to know

Short-term rental rules vary widely across Miami-Dade County. The City of Miami, Miami Beach, Coral Gables, and other municipalities each enforce their own codes. Miami Beach has historically used stricter limits than the City of Miami. On top of that, individual condo declarations can be more restrictive than municipal rules, and the condo documents control what you can do in the building.

Before you buy, verify the following with the appropriate offices and the association:

• Municipal code and licensing where the property sits. Some districts require permits or business tax receipts, while others restrict or ban short stays.
• Miami-Dade County tax and revenue requirements for transient lodging.
• Florida Department of Revenue registration for state sales tax on short-term rentals.

On the tax side, plan for:

• Transient occupancy and local tourist development taxes on short stays, which are typically collected and remitted by the manager or owner.
• Federal income tax on rental income, including rules for deductions, depreciation, and personal-use limits as outlined by IRS guidance for residential rental property.

Enforcement can include fines, removal of listings, or association action. Always confirm the building’s current rules and the local licensing steps before you rely on potential rental income.

Financing and insurance: what to expect

Financing a condotel is more complex than a standard condo. Many mainstream lenders are cautious because of hotel-style operations and variable income.

What most buyers see in Miami:

• FHA and VA options are often limited for condotels, and many projects are not approved.
• Some condotels do not meet standard Fannie Mae or Freddie Mac project criteria, which can push you toward portfolio or jumbo loans.
• Lenders commonly classify condotels as investment properties, with higher rates and larger down payments. It is common to see 20 to 30 percent down or more.
• Cash purchases are frequent in the luxury segment because of lending limits and investor preference.

Underwriting often requires:

• Historic rental statements, management reports, or signed rental contracts to support income.
• Conservative appraisals that weigh both comparable sales and, for investors, income assumptions.

Insurance considerations include:

• An HO-6 policy for your unit with endorsements for short-term rental use if required.
• Building master policy details, including any exclusions for commercial activity.
• Flood insurance needs, since many Miami locations fall within flood zones.

Income, costs, and performance

Your returns depend on location, seasonality, brand strength, and management. Miami’s peak season often runs in winter, with major events and conventions boosting demand in prime urban and beach areas. Luxury condotels can command higher average daily rates because of amenities and service levels, but revenue can be more volatile.

Typical fee structures:

• Full-service short-term management often costs 20 to 40 percent of gross revenue when owner-managed rentals are allowed.
• Hotel-operated programs use structured fees, which can include base management fees, incentive fees on operating profit, and marketing or reservation system charges.

Cost items to plan for:

• Monthly HOA assessments, which are usually higher than standard condos due to staffing, amenities, and services.
• Reserves and potential special assessments tied to heavier wear and tear.
• Marketing and platform costs when you or your manager list the unit.

Ask for the timing of owner distributions and how reconciliations work. Historical occupancy, rate, and revenue statements are essential for setting realistic expectations.

Pros and cons at a glance

Pros:

• Potential for higher nightly income than long-term leases in peak periods.
• Turnkey operations with professional staff for absentee owners.
• Flexibility for personal use, subject to building rules.

Cons and risks:

• Tighter lending and larger down payment requirements.
• Higher HOA and management costs that reduce net returns.
• Income volatility from seasonality and event-driven demand.
• Regulatory risk if rules or association policies change.
• Heavy reliance on management quality and brand performance.
• Additional insurance and liability considerations for short-term guests.

Your due diligence checklist

Request and review these items before you shortlist a building:

1. Condo documents: declaration, bylaws, rules, any master leases, and active rental program agreements.
2. Rental program contract: fees, incentive structures, owner booking rules, term, termination rights, and reporting schedule.
3. Building financials: audited statements if available, current budget, year-to-date performance, reserve study, and special assessment history.
4. Unit income history: at least 12 to 36 months of gross revenue, occupancy by month, average nightly rate, and past owner distributions.
5. Building occupancy profile: owner-occupancy ratio and how many units are in the rental program vs owner-managed.
6. Litigation status: any pending lawsuits involving the association, management, or developer.
7. Insurance certificates: building master policy, coverage limits, exclusions, and any separate liability requirements for hosts.
8. Local compliance: copies of permits, business licenses, and tax registrations, if required for short stays.
9. Lender eligibility: whether the project has a track record with lenders or any agency approvals.
10. Marketing channels: which hotel or OTA platforms are used, cancellation policy, and data on direct vs OTA bookings.
11. Comparable sales: recent condotel comps to gauge liquidity and pricing trends.

From long list to shortlist

Use a simple process to move from ideas to offers:

1. Define your criteria: target neighborhoods like Downtown, Brickell, South Beach, Edgewater, or the Design District, plus your price range, minimum personal-use days, and preferred management model.
2. Identify candidate buildings: focus on those with active hotel programs or written rules that allow short-term rentals.
3. Screen building health: look for solid reserves, transparent rental program terms, clean litigation history, and reliable income reporting.
4. Engage specialists early: a mortgage broker who finances Miami condotels, a local real estate attorney for contract review, an accountant familiar with short-term rental taxes, and an insurance broker with condotel experience.
5. Model conservative returns: build pro formas that include realistic occupancy, average daily rates, HOA dues, management fees, marketing costs, taxes, and reserves.

Work with a local expert

A condotel can be a smart way to blend lifestyle and income in Miami, but the details matter. The right building, the right contract, and the right financing can make all the difference. If you want a curated shortlist and a clear path from analysis to closing, connect with a concierge-minded advisor who understands both luxury living and rental performance.

Ready to explore Miami condotels with clarity and confidence? Reach out to Krystal Bernhardt PA - Island Signature Real Estate Group to start your tailored search.

FAQs

What is a Miami condotel and how is it different?

• A condotel is a condo that operates like a hotel, with on-site services and a rental program for nightly or short-term stays, unlike standard condos that focus on long-term use.

Can I use my condotel personally and still rent it?

• Usually yes, but personal use is subject to the building’s rules, including possible limits on days, blackout dates, and booking priority guidelines.

Are Airbnb-style listings allowed in Miami condotels?

• Only if both the condo documents and local municipal rules allow it; some buildings require you to use the hotel program and restrict independent listings.

How do condotel taxes work in Miami?

• Short stays generally trigger transient occupancy and local tourist taxes, plus federal income tax on rental income; confirm registration, collection, and remittance requirements before renting.

Can I get a mortgage on a condotel unit?

• Financing is possible but more limited; FHA and VA approvals are often scarce, and many buyers use portfolio or jumbo loans with larger down payments.

What insurance do I need for a condotel in Miami?

• Most owners carry an HO-6 policy with any needed short-term rental endorsements, rely on the building’s master policy for shared areas, and add flood insurance if required.

What typical fees cut into condotel income?

• Expect HOA dues, housekeeping and operating costs, management fees or commissions, platform costs if used, and withholdings for reserves and taxes.

How do I evaluate a building’s rental performance?

• Request 12 to 36 months of occupancy, average daily rate, and distribution history, and compare net income using conservative assumptions in a pro forma.