Real estate investors have their own pick of the lot. From gas stations to medical/dental and office buildings to apartments…the list seems endless. Seasoned investors ultimately find their own niche and specialize in a particular investment typinvesting in condominiums and condotelse, say turning large single family homes into separate rentals or 2-4 unit properties near campus.

Once an investment turns out well, it’s easier to duplicate that success rather than find a new way to invest in real estate. But there’s one type of investment that is considered residential but a bit out of the box, especially in the eyes of a bank: the condo-tel.

“Condo-tel” is the moniker assigned to a property that is primarily a condominium project but many of the units are designed for short stays rather than long term rentals. Technically, a condominium is a form of home ownership where the property owner buys and takes possession of the living space from the interior walls in of the unit. Exterior features, common areas and amenities are all equally owned by the individual property owners.

An owner of a condo-tel unit may rent out the property for a very short term from an overnight stay to a few weeks. The property itself doesn’t appear any different on the outside than any other apartment building or condominium project but it does look different once someone enters the building; it looks like a hotel lobby replete with a registration desk, perhaps a concierge and wait staff.

A condo-tel can be compared to any other hotel except each room is owned individually and the rental income is forwarded to the owner after a management fee is deducted. Some condo-tels have all their rooms available for short term rentals while others delegate only a few, say 10 percent of the units.

However, if you’re a real estate investor and are considering a condo-tel as an investment, be prepared to pay cash as few banks make conventional loans on condo-tels. There are loan programs available, but require a greater down payment and slightly higher interest rates compared to traditional mortgage product.