Thinking about a condo-hotel on Jekyll Island but unsure how it really works? You are not alone. The island’s leasehold system, hotel-style operations and rental rules can be confusing at first glance. In a few minutes, you will understand the pros and cons, how the Jekyll Island lease affects ownership, what to model for income and expenses, and the exit paths to keep in your back pocket. Let’s dive in.
What you are buying on Jekyll Island
Jekyll Island property is not fee simple land. The State of Georgia and the Jekyll Island Authority (JIA) own the land, and you buy improvements with a long-term ground lease. JIA materials show residential leases with expiration dates that vary by property, often decades out. Review the exact lease term, assignment rules and what happens to improvements at lease end in the official JIA guidance on property ownership and rentals.
JIA charges annual lease rent that is based on a formula tied to land value, and owners also pay property taxes and HOA fees. If you rent overnight, you must obtain a JIA rental license and remit a posted percentage rent on gross rental revenue, shown as 3 percent in JIA materials. You must also collect and remit lodging taxes, and Glynn County has announced its hotel-motel tax will be 7 percent effective July 1, 2025, so confirm the rate that applies to your booking dates.
- Learn more about Jekyll Island leasehold ownership and rental licensing in the JIA resource center: JIA property ownership and rental
- See the county’s tax update here: Glynn County hotel-motel tax increase
What is a condo-hotel
A condo-hotel is a condominium that operates like a hotel. You own your unit, and the building provides hotel services like front desk, reservations and housekeeping. Many owners place their units in an on-site rental program and receive income after fees. For definitions and background, see this overview of condo-hotel structure and history.
You usually have three management choices. You can enroll in the hotel’s rental program, hire an outside manager, or self-manage if the documents allow it. Full-service programs can be convenient, but they often take significant commissions that may range from about 20 to 50 percent of gross bookings, per industry guidance from Condohotel Center.
Pros of buying a condotel on Jekyll Island
- Turnkey management and strong marketing. An on-site program can handle bookings, housekeeping and guest services. That reduces day-to-day work and can improve occupancy if the brand draws demand.
- Visitor demand drivers. The Golden Isles host millions of visitors annually, which supports short-term rental demand in peak season. For context, regional reporting cites roughly 3.5 to 3.6 million visitors a year. See tourism insights from Georgia Trend.
- Potential income with clear caveats. When occupancy and average daily rates are healthy, condotels can generate meaningful gross revenue. Net income depends on HOA dues, management fees, insurance, taxes and the JIA’s percentage rent, so model conservatively using verified statements from the rental manager and the JIA rental rules.
- Possible tax benefits. Rental real estate often allows depreciation and expense deductions. The IRS explains when to report on Schedule E versus Schedule C depending on services. Review IRS Publication 527 with your CPA.
Key risks and what to watch
Lease term and reversion risk
Your value is tied to the remaining years on the ground lease. JIA materials note that improvements on the land may vest with the Authority at lease expiration according to the lease. Shorter remaining terms can reduce buyer demand and lender options. Always confirm the exact expiration and any renewal language with JIA documents.
Public fees and taxes that trim income
JIA’s percentage rent on gross rentals and local lodging taxes come off the top. The county’s hotel-motel tax increase to 7 percent effective July 1, 2025 will affect pricing and net revenue. Verify all taxes and fees for your pro forma and who is responsible for collection and remittance.
Financing hurdles
Many condo-hotels are considered non-warrantable, which means conventional agency loans can be difficult. Expect larger down payments and higher rates with portfolio or condotel-specific loans. Review this primer on how condo financing can differ and why some projects are non-warrantable from Guild Mortgage.
Tax treatment of services
If the activity looks like a hotel business with substantial services, you might report on Schedule C and could owe self-employment tax. If services are limited, you may report on Schedule E. The line can be nuanced, so use IRS Publication 527 and your CPA to determine the correct approach.
Liquidity and resale pricing
The buyer pool for condotels is smaller and financing can be tighter, which may lead to longer time on market. Some condo-hotel projects in other markets have had volatile resale performance. Build an exit plan early and underwrite conservatively.
HOA and rental program rules
Condo-hotel documents can limit personal use, set minimum stays, or require participation in a rental program. Program agreements may control rates and charge marketing and housekeeping fees. Study the HOA budget, reserve study and rental program agreement closely. Industry guidance on typical terms and fees is summarized by Condohotel Center.
Insurance and operating costs
Coastal buildings face wind, flood and insurance pressures. HOA master policy costs, unit policy premiums and assessments can rise. Get current quotes for HO-6, flood and liability coverage before you make an offer.
How to plan your exit from day one
- Traditional resale. List on the open market and price for remaining lease years, rental performance and HOA health. Buyers will ask for verified income statements and clarity on JIA obligations. Start assembling documents early using JIA ownership and rental resources.
- Assign the lease with required approvals. JIA leases and enabling statutes allow assignments subject to terms and Authority procedures. Review assignment clauses and Authority discretion in the Jekyll Island Authority Acts.
- Sell with rental history in place. Units marketed with clean revenue statements, occupancy and ADR history are more attractive to investor buyers. Program agreements should explain fees and owner payouts. See common practices in Condohotel Center’s guide.
- Change use strategy. You can shift between short-term rental, longer-term rental or personal use if documents allow, though income and tax treatment will change. Confirm with JIA whether licensing or reporting rules differ for longer stays.
- Consider a 1031 exchange. If your unit is held for investment, you may be able to defer capital gains by exchanging into other investment property under strict IRS timelines. Review basics with a qualified intermediary, such as this overview of 1031 exchanges.
A simple modeling framework
Use a conservative, base and upside set of numbers so you are never surprised.
Gather documents. Request the last 2 to 3 years of owner statements showing gross bookings, occupancy, ADR, program fees, housekeeping, card fees and payouts. Ask for the HOA budget, reserves and any special assessment history.
Build gross revenue. Start with occupancy and ADR from verified statements. Apply realistic seasonality for Jekyll Island and check that peak and shoulder periods align with your target use.
Subtract direct costs. Deduct the rental program share, housekeeping, platform fees and credit card fees. Then subtract the JIA percentage rent, local lodging taxes, and the state hotel fee where applicable.
Add fixed expenses. Include HOA dues, utilities not covered by HOA, insurance, property tax and lease rent. Include a repair and replacement reserve for furniture and systems.
Stress test. Reduce occupancy by 10 to 20 percent and raise expenses by 10 percent to see if you are still comfortable. If the deal only works in the best case, keep looking.
Due diligence checklist
Use this list before you write an offer and again before closing.
- JIA lease packet. Full land lease, expiration date, rent formula, use restrictions, assignment process and any transfer fees. Confirm what happens to improvements at lease end in the JIA ownership and rental guide.
- Rental licensing and reporting. Is there an active JIA rental license for the unit and a record of percentage rent filings? Verify forms and rules with JIA.
- HOA health. Declaration, bylaws, current budget, latest financials and reserve study, minutes for the last 12 to 24 months, and any pending litigation or special assessments.
- Rental program agreement. Fee schedule, rate control, booking allocation, owner payout timing, termination rights and any mandatory participation.
- Revenue proof. Last 2 to 3 years of occupancy, ADR, gross bookings and owner net, with backup from the manager’s trust accounting or statements.
- Taxes and public fees. Confirm Glynn County lodging tax, state hotel fee and JIA percentage rent. Model the county’s posted 7 percent rate effective July 1, 2025 using the county announcement.
- Financing. Ask lenders whether the project is warrantable and request terms for portfolio or condotel loans. See an overview of non-warrantable issues at Guild Mortgage.
- Insurance. HO-6, liability umbrella and flood quotes, plus the HOA master policy’s coverage and deductibles.
- Professional advice. A real estate attorney familiar with JIA leases and a CPA who understands IRS Publication 527 can help you avoid costly mistakes.
Ready to run the numbers on a specific building, or talk through management and exit planning? Reach out to Linda Williams for local guidance and hands-on support from acquisition to 24/7 property management.
FAQs
What is different about owning a condotel on Jekyll Island
- You buy improvements with a long-term ground lease from the Jekyll Island Authority, not fee simple land, and overnight rentals require a JIA license and percentage rent.
How do condo-hotel rental programs typically pay owners
- Owners usually receive net income after the program deducts commissions, housekeeping and other fees, which can be substantial according to industry guidance.
Will financing a Jekyll Island condotel be harder than a regular condo
- Often yes. Many condo-hotels are non-warrantable, so buyers use portfolio or condotel loans with higher down payments and rates compared with standard agency loans.
How will local taxes affect my rental income
- You must factor in the JIA percentage rent and lodging taxes. Glynn County’s hotel-motel tax is scheduled to be 7 percent starting July 1, 2025, which affects guest pricing and your net.
What happens when the ground lease expires
- Lease terms control, but JIA materials note improvements on the land may vest with the Authority at expiration. A shorter remaining term can reduce resale value and financing options.
