Private Money Hawaii

Condotel Loans in Hawai‘i: Fast Funding When Banks Say No

Condotels are some of the most incredible investment opportunities in Hawai‘i. They offer daily rentals, consistent tourism demand, strong Airbnb income potential, and often outperform long-term rentals.

But here’s the challenge:

Most banks refuse to lend on condotels.
Not because they’re bad investments — but because they fall outside conventional lending rules.

As a local Hawaii hard money lender, I help investors finance condotels in Waikiki, Kihei, Lahaina, Kona, and Princeville every week. Hard money provides fast, flexible financing that banks simply cannot match.

Below is the full breakdown of how condotel loans work, why banks decline them, and why hard money is often the best solution.

What Is a Condotel in Hawai‘i?

A condotel (“condo hotel”) is a condo that operates similarly to a hotel. These units typically offer:

• Daily or short-term rentals
• Hotel-style amenities
• Front-desk check-in
• On-site management options
• Strong Airbnb or VRBO demand

Common Hawaii condotel buildings include:

• Waikiki Banyan
• Aqua Palms Waikiki
• Kuhio Village
• Island Colony
• Maui Kai
• Royal Kuhio
• Lahaina Shores

These units are perfect for investors — but often impossible to finance conventionally.

Why Banks Decline Condotel Loans in Hawai‘i

If you’ve tried financing a condotel through a bank, you’ve probably heard responses like:

• “This building is non-warrantable.”
• “Short-term rentals are not permitted under our guidelines.”
• “Hotel operations conflict with residential lending rules.”
• “Too many investor-owned units.”
• “HOA reserves do not meet Fannie Mae requirements.”
• “Litigation is present within the building.”

Banks consider condotels high-risk because they fall outside traditional residential lending criteria.
But in Hawai‘i, condotels are normal, not risky — and extremely profitable.

In Hawai‘i, the challenges are amplified by:

Hotel-like operations

Daily rentals and front-desk operations cause banks to classify them as commercial.

High investor ownership

Some buildings are 70–90% investor-owned.

Short-term rental zoning

Airbnb-friendly buildings automatically trigger lending restrictions.

Litigation and HOA reserve issues

Many older Waikiki and Maui buildings face ongoing repairs or lawsuits.

Non-warrantable condo status

Most Hawaii condotels do not qualify for Fannie/Freddie financing.

This is why hard money lenders play a critical role in condotel financing.

Why Hard Money Is the Best Option for Hawaii Condotel Loans

Hard money lenders evaluate condotels using common-sense underwriting, not rigid national guidelines.

Here’s why they approve when banks decline:

No restrictions on daily rentals

Airbnb and VRBO units are fully acceptable.

No Fannie Mae “warrantability” rules

The building does not have to be warrantable.

Fast closing

Most condotel deals close in **5–10 days**.

Flexible property condition requirements

Units needing renovation are acceptable.

Local knowledge of Hawaii buildings

Local lenders understand which buildings perform well.

Comfort with HOA litigation and repairs

If the deal makes sense, hard money lenders still approve it.

Hard money lets you compete with cash buyers — without needing all cash.