Thinking about a condo-hotel in Destin for both income and a place to stay at the beach? You are not alone. Many buyers love the idea of hotel-style services with hands-off management and guest demand driven by Emerald Coast tourism. In this guide, you will learn how condo-hotels work, what to check in Florida and Okaloosa County, and how to model returns and risks before you buy. Let’s dive in.
What a condo-hotel is
A condo-hotel is a condominium operated like a hotel. You own your unit, can use it, and can place it in a rental pool for short stays booked through the on-site operator. The property typically has a front desk, housekeeping, amenities, and centralized marketing to transient guests.
You are subject to the condo association’s declaration, covenants, and bylaws. If you opt into the rental program, you will sign a rental-management agreement that spells out revenue splits, fees, owner-use windows, and booking rules. Read it line by line.
How the rental program works
Most condo-hotels run a hotel-style rental pool. The manager markets the property, sets rates, handles bookings and guest services, and remits owner proceeds after deducting fees. Revenue splits vary by project and can include a percentage of gross revenue plus fixed charges.
Expect rules on owner use. Many programs set blackout dates, minimum stays, or peak-season restrictions. Ask for a written summary of booking priority, cancellation policies, and how rate changes are handled.
Legal and licensing basics in Florida
Florida has two key frameworks to know:
- Florida Condominium Act, Chapter 718. This law governs association operations, budgeting, reserves, disclosures, and owner rights. Your decision should reflect the association’s financial health and governance.
- Public lodging rules, Chapter 509. If your unit participates in hotel-style transient rentals, the operation must comply with public lodging requirements.
Local registration and taxes may apply in Destin and Okaloosa County. Short-term rental operators often need local registration or business licensing. Sales and tourist development taxes apply to short-term stays. Confirm who collects and remits taxes in the rental contract and with local authorities.
Coastal building codes and zoning also apply. Projects built to recent coastal standards may include wind mitigation features that can impact insurance and long-term capital needs.
Financing reality in Destin
Many condo-hotels are non-warrantable for conventional agency loans. That can limit your lender choices and affect rates, down payment, and terms. Some buyers use cash or portfolio loans from specialty lenders.
Verify financing early. Ask lenders if the project is eligible, what documentation they require from the association, and how your planned owner use impacts loan options.
Revenue, costs, and returns
Analyze revenue and expenses at the unit level, not just project averages.
Key revenue metrics to review:
- Occupancy rate by month and season
- Average Daily Rate (ADR)
- Revenue per Available Room (RevPAR)
- Gross rental revenue per unit
Translate gross to net. Build a full pro forma that includes:
- HOA assessments, which are often higher due to hotel-level amenities and services
- Management and rental pool fees, plus marketing and reservation charges
- Housekeeping, utilities, supplies, and credit card processing
- Insurance for wind and flood, plus any unit-level policy needs
- Property taxes, reserves for replacement, and possible special assessments
Then evaluate your Net Operating Income (NOI), cap rate, and cash-on-cash return. Use conservative assumptions for occupancy and pricing. Florida has no personal income tax, which affects your after-tax comparison against other states, but federal income tax still applies.
Seasonality and demand in Destin
Destin demand is largely leisure-driven, with a strong summer peak and softer shoulder and winter months. Holidays, festivals, and local events can lift occupancy. Price and occupancy vary week to week, so monthly pacing matters.
Ask for 2 to 3 years of unit-level data with ADR and occupancy by month. Your plan should reflect seasonality, not just peak-season performance.
Risk and insurance on the coast
Coastal properties face hurricane, wind, and flood risk. Flood insurance may be required depending on your flood zone. The NFIP and private markets offer coverage, and premiums can vary with elevation and building features.
Wind-only and hurricane coverage can be a major line item for the association. Review the master policy, recent premium trends, and any gaps. Build in a contingency for rising insurance costs when modeling returns.
Due diligence checklist
Use this checklist to confirm material details before you go under contract or during your inspection period.
Documents and governance
- Condominium declaration, bylaws, rules, and all amendments
- Association financial statements for the last 2 to 3 years, current budget, and reserve study
- Recent meeting minutes and any notices of special assessments or litigation
- The rental program agreement, including revenue splits, fees, owner-use rules, and termination terms
Financial performance
- Unit-level revenue and occupancy history for 2 to 3 years
- Month-by-month ADR and occupancy, plus a gross-to-net reconciliation
- Comparables for similar units in the same project and nearby competitors
Taxes, licensing, and compliance
- Evidence of required registrations for short-term rentals
- Sales tax and tourist development tax remittance history and responsibilities
- Any code violations, fines, or pending compliance items
Insurance and hazards
- Master insurance policies, including wind, flood, and liability
- Flood zone determination and any elevation certificate
- Claims history and recent premium changes
Physical condition
- Building and unit inspection reports
- Deferred maintenance and planned capital projects
- Reserve funding sufficiency for near-term needs like roofs, elevators, and HVAC
Financing and resale
- Project warrantability and lender guidance on financing options
- Recent sales comps for the building and comparable properties
- Any transfer fees or resale restrictions in the governing docs
Third-party reviews
- Local real estate attorney review of association and rental-program documents
- CPA modeling of net returns, depreciation, and tax compliance
- Coastal insurance broker estimates for wind and flood coverage
- Lender pre-approval or written feedback on project eligibility
Step-by-step buying path
Follow a simple path to reduce surprises and protect your return.
- Clarify goals and use. Decide your owner-use windows, target net income, and investment horizon.
- Get lender feedback early. Confirm project eligibility, likely down payment, and rates.
- Request documents. Secure the governing docs, financials, rental agreement, unit-level revenue, and insurance summaries.
- Build your pro forma. Model conservative occupancy and ADR, full expense loads, and a maintenance reserve.
- Inspect and verify. Complete inspections, review reserves, and confirm any upcoming assessments.
- Finalize tax and compliance. Confirm who collects and remits taxes, required registrations, and reporting.
- Close with a plan. Set pricing guidance with the operator, align on housekeeping standards, and schedule owner-use dates.
When a condo-hotel fits your plan
A condo-hotel can fit if you want hotel-level services and centralized marketing with limited day-to-day involvement. It can also make sense if you value personal use and are comfortable with seasonality and higher operating costs.
It may not fit if you want full control over marketing and guest screening, maximum owner-use during peak weeks, or the broadest financing options. In those cases, an independent short-term rental or traditional condo could be a better fit.
Work with a local advisor you trust
The right partner helps you read the fine print, validate numbers, and avoid hidden costs. Our team guides investors through unit-level performance, governing docs, insurance realities, and financing pathways specific to Destin and Okaloosa County.
If you are weighing condo-hotels against other options, we can walk you through the tradeoffs and connect you with vetted lenders, attorneys, CPAs, insurance brokers, and property managers. Ready to run the numbers and see what fits your goals? Schedule Your Concierge Consultation with The Kendall Hood Collection.
FAQs
What is a condo-hotel and how is it different?
- You own a condo unit in a hotel-operated building, can use it personally, and can place it in a rental pool that handles bookings and guest services, unlike a standard condo or owner-run short-term rental.
What Florida rules apply to condo-hotels in Destin?
- Florida Condominium Act Chapter 718 governs associations and owner rights, while Chapter 509 covers public lodging; local registration, zoning, and short-term rental tax rules also apply.
How do financing options differ for condo-hotel units?
- Many projects are non-warrantable, so buyers often use portfolio lenders or cash and should expect higher down payments and potentially higher rates than standard condos.
Who pays and files short-term rental taxes on my unit?
- It varies by project; some hotel operators remit taxes for pooled units while others require owners to collect and remit, so confirm responsibilities in the rental agreement and with local authorities.
What are the biggest risks for Destin condo-hotel investors?
- Hurricanes and flood exposure, rising insurance costs, higher HOA and management fees, strong seasonality, and a narrower resale market compared with traditional condos.
