Thinking about a Miami Beach pied‑à‑terre that can also generate income when you are away? Condo‑hotels offer that hybrid appeal, combining private ownership with professional hotel operations. The model can be rewarding if you understand how usage rules, rental programs, financing, taxes, and building governance work together. In this guide, you will learn the essentials, what to verify in each building, and how to move forward with confidence. Let’s dive in.
What a condo‑hotel is
A condo‑hotel is a condominium where individual units are sold to private owners, while a professional operator runs the property as a hotel. You can occupy your residence part of the year, and when you are not using it, your unit can join the hotel’s rental program. Units are deeded to you, and common areas and amenities are managed by the association and the hotel operator.
Condo‑hotels differ from branded residences. Branded residences may look similar, but many are marketed as private homes with optional services, not as hotel inventory. In Florida, condo projects are governed by Florida Statutes Chapter 718, and the building’s declaration, bylaws, and any Hotel Management Agreement set the specific rights and obligations.
Owner use and access
Owner‑use rules vary by building. Some projects require a minimum number of personal‑use days, while others limit how much you can occupy during peak seasons. Blackout dates and advance reservation procedures often apply around major Miami Beach events.
You usually have access to the hotel’s services, such as housekeeping, concierge, and room service. Fees for those services are typically billed per use. Always request the owner‑use policy and blackout calendar in writing before you buy.
Rental programs explained
Mandatory vs optional
Condo‑hotels generally offer two paths. In a mandatory rental program, your unit must be available to the hotel when you are not in residence. In an optional program, you can choose to enroll or not, or you can pursue owner‑controlled rentals if permitted by the documents. The hotel‑managed path centralizes marketing, reservations, and housekeeping, while owner‑controlled rentals require you to manage operations within the rules.
How revenue is split
Revenue can be calculated in different ways. In a gross revenue split, you receive a percentage of gross room revenue, with defined exclusions. In a net distribution, the operator deducts direct expenses first, then distributes the balance. Some programs pay based on your unit’s actual performance, while others pool revenues across similar units and pay pro rata.
To evaluate potential income, request historical rental statements for the specific unit and compare them with the operator’s pro forma. Confirm whether figures are audited and how the program treats fees, taxes, and maintenance.
Fees that affect payouts
Several fees can reduce gross revenue before distributions. Common items include management fees to the hotel operator, reservation and booking costs, housekeeping and linen charges, marketing fees, and utility or energy allocations. Ask for a sample owner statement that clearly shows each deduction so you can forecast net proceeds.
The hotel management agreement
Why it matters
The Hotel Management Agreement, along with the condominium documents and rental program rules, governs daily operations and owner economics. It defines service standards, operator fees, and your rights as an owner. You should also review the offering plan and any owner addenda that clarify rental participation and services.
Developer control and changes
Developers often negotiate the management agreement and may retain association control for a period. The agreement may run for years and can be assignable if the hotel operator is sold or if there is a foreclosure. Understand who can terminate the agreement, when it can change, and what protections you have if the operator transitions.
Financing condo‑hotels
Warrantable vs non‑warrantable
Many Miami Beach condo‑hotels are considered non‑warrantable by Fannie Mae and Freddie Mac due to hotel services, rental pools, investor ratios, or developer control. That usually means standard conforming mortgages are not available. You will likely use a portfolio lender, a private bank jumbo loan, an investor product, or cash.
Loan types you may use
Common options include portfolio loans from local banks, jumbo loans from private lenders, and DSCR loans that underwrite income rather than your personal DTI. Asset‑based loans and bridge financing can also work for unique timelines. Expect larger down payments, higher credit standards, and lender reviews of condo documents, association financials, and the management agreement.
Lender checklist before you offer
Before you write an offer, obtain a pre‑approval that specifically states the lender will finance a condo‑hotel, and better yet, the building you are targeting. Ask the lender for its condo project checklist, including owner‑occupancy ratios, budget reserves, and any special assessments. Clarify down payment expectations and whether interest rates differ for non‑warrantable loans.
Taxes, licensing, and reporting
Tourist and sales taxes
Short‑term rentals in Miami Beach are subject to state and local transient taxes. In a hotel program, the operator typically collects and remits these taxes, but you should verify which taxes apply at the state, county, and city levels. Confirm how taxes are shown on owner statements and whether they affect your revenue share calculations.
Income taxes and statements
Rental income is taxable. You can usually deduct ordinary expenses and may be able to depreciate the unit, though rules are more complex if you mix personal use with rentals. Operators typically issue 1099s or similar year‑end statements. Consult a CPA who understands hospitality and short‑term rental rules to structure your reporting properly.
Local licensing in Miami Beach
Miami Beach has specific rules for short‑term rentals and hotels. Units participating in a hotel rental program are usually covered under the hotel’s licenses, but you should confirm your responsibilities in the condo documents. If you plan any owner‑controlled rentals, verify building policies and any city registration requirements before you proceed.
Insurance and coastal risk
Master policies vs HO‑6
Your building’s master policy covers common areas and the structure as defined in the declaration. You are generally responsible for an HO‑6 policy for interior finishes, improvements, personal property, liability, and, if desired, loss of rental income. Ask how master policy deductibles are shared and whether deductible exposure can be passed to owners through assessments.
Flood and wind coverage
Miami Beach oceanfront properties face flood and hurricane risks. Flood insurance may be placed through the NFIP or private carriers, and many luxury buildings use private markets for broader coverage. Lenders will require appropriate flood and windstorm insurance, so confirm the master policy’s scope and whether you need additional coverage.
Business interruption and liability
If your unit joins the hotel program, consider coverage for lost rental income during repairs or storm closures. Confirm how the policy treats guest‑related liability and what coverage the operator carries. Make sure the insurance plan aligns with your usage and income goals.
Association health and assessments
Reserves and capital projects
Hotel properties have complex systems and amenities that drive higher operating and capital needs. Review the reserve study, current budget, and the last two to three years of financials. Ask about past and planned special assessments, particularly those tied to mechanical systems, exterior work, elevators, HVAC, and pool areas.
Operating allocations
Some condo documents allocate certain hotel operating costs to an account funded by rental revenue rather than direct owner assessments. Others may assess owners for specific items. Understand how the building allocates these expenses, how often fees are reconciled, and how they affect your net rental income.
Miami Beach market realities
Seasonality and events
Miami Beach enjoys year‑round tourism, with seasonal peaks in winter and sharp demand around major events like Art Basel Miami Beach. Occupancy and average daily rates can swing by season and by year. Build conservative projections that reflect this variability rather than a single high season snapshot.
Brand and rate premiums
Well‑known hotel brands and experienced luxury operators often command higher rates and better visibility. The operator’s sales, marketing reach, and service quality directly influence rental performance. Review the brand’s track record and request building‑level performance context when available.
Volatility and expectations
Even top properties have year‑to‑year volatility driven by macro travel trends, event calendars, and renovation cycles. Compare pro formas with actuals, and factor in maintenance cycles that can take units offline. A measured expectation will help you align ownership goals with real performance.
Due diligence checklist
Use this checklist to streamline your review:
Documents to request
- Condominium declaration, bylaws, rules and regulations.
- Hotel Management Agreement and rental program agreements.
- Offering plan and developer disclosures.
- Association financial statements for the last 2 to 3 years, current budget, and the reserve study.
- Minutes from recent association meetings.
- Past 12 to 36 months of unit‑level rental statements, and building rental pool data if available.
- Operator pro forma assumptions and any audited comparisons.
Operations and fees
- Exact owner‑use rules, blackout dates, and reservation lead times.
- Revenue method, gross versus net, pooled versus unit‑specific.
- All operator fees, marketing charges, booking costs, housekeeping and linen pricing, and utility allocations.
- Refurbishment standards between guests and who pays.
Financing and risk
- Building warrantability status and which lenders finance it.
- Typical down payment and rate ranges for that building.
- Any outstanding special assessments or planned capital work.
Legal and compliance
- Any litigation involving the association, developer, or operator.
- Local licensing status for the hotel program and any owner obligations.
Insurance and exposure
- Master policy coverage, deductibles, and owner HO‑6 requirements.
- Potential deductible pass‑throughs after storms.
Exit and liquidity
- Resale history of similar units, days on market trends, and buyer profile.
- Any rental restrictions, transfer fees, or minimum hold periods.
How to move forward
Start by clarifying your primary goal. Are you seeking a lifestyle asset with occasional income, or is consistent cash flow the priority? Your answer will shape which buildings and rental structures fit best.
Next, shortlist buildings that match your usage needs, then line up lender guidance for those specific projects. Collect the key documents, verify the rental program math, and model a range of outcomes, including seasonal scenarios. Coordinate with a real estate attorney, a lender experienced with condo‑hotels, and a CPA who understands short‑term rental taxation.
If you want concierge guidance, market access, and a streamlined purchase process, connect with a local boutique team that knows Miami Beach condo‑hotels and the Collins Avenue luxury corridor. For a private consultation or to review building‑specific documents and opportunities, reach out to Denis Smykalov. Book an Appointment to get started.
FAQs
What is a Miami Beach condo‑hotel?
- A condo‑hotel is a condo building run as a hotel where you own your unit, can use it for personal stays, and may place it in a hotel‑managed rental program when you are away.
How often can I use my condo‑hotel unit?
- Usage rules vary by building, so you should verify minimum and maximum owner‑use days, blackout periods, and reservation procedures in the rental program documents.
How do condo‑hotel rental splits work?
- Programs pay owners using either a gross revenue split or a net distribution after expenses, and the method can be unit‑specific or pooled across similar units.
Can I get a conventional mortgage on a condo‑hotel?
- Many condo‑hotels are non‑warrantable, so buyers often use portfolio or jumbo loans, DSCR financing, or cash, with larger down payments and tighter underwriting.
What taxes apply to condo‑hotel rentals in Miami Beach?
- Short‑term rentals are usually subject to state and local transient taxes, and rental income is taxable, so confirm how taxes are collected and consult a CPA on reporting.
What insurance do I need for a condo‑hotel unit?
- The association’s master policy covers the building as defined by the declaration, while you typically carry an HO‑6 policy for interiors, contents, liability, and rental income loss.
What should I review before buying into a condo‑hotel?
- Request the HMA, rental program rules, association financials, reserve study, unit‑level rental history, pro formas, and details on fees, assessments, insurance, and licensing.
