What makes condos such an appealing option? Like other investment properties, buying a condo to use as a rental has both benefits and drawbacks. On the bright side, many things make condos an attractive option:
- Lower Cost: In a few real estate markets, condos charge less than comparable single-family houses. Whether you are a new investor or if the cost is the top priority, purchasing a condo is one way to overcome the cost barrier to entry.
- Desirable Locations: Condos are always in the vicinity of urban centers and vacation destinations, making them capture the interest of renters who are eager to be close to these locations. In places where single-family houses are short supply, buying a condo can help you gain entry into new and different markets.
- Less Maintenance: When you buy a condo, specific maintenance tasks often completed for you. Condos mostly have small, or no yards, and common places usually maintained by a building manager or condo association. It may result to lower maintenance charges than an average single-family house.
- Amenities: In addition to maintenance, other condo buildings will offer a selection of added amenities. Depending on the condo and management, provided services could range from cable and internet, garbage and sewer costs, pest control, and more.
Having a condo has a few potential drawbacks. These negative factors may even dominate all of the benefits listed above. These drawbacks may include:
- Condo Association Fees: Many condos are a member of a homeowner’s association that demands a monthly fee. Sometimes, and depending on how many services included, these fees can be surprisingly high. If such fees cover a lot of attractive amenities and services, they may be worthwhile to pay. However, you have to add all relevant condo fees, and any potential special assessment fees, into your calculations. If you don’t, you could wind up making a costly investment mistake.
- Financing Options: It can be difficult to secure financing for a condo than for a single-family property because conventional lenders often have strict rules for such loans. Some lenders want assurances like proof that the condo building is at least 50% owner-occupied or that there are no ongoing lawsuits against the condo association.
- Renting Restrictions: Many condo associations restrict when and by whom you can lease your condo. Others may even require you to live in or own the condo for a full year before you can rent it out.
- Lower Appreciation: Condos generally gain in value at a different pace than single-family properties. If your investment goals do not depend on holding a property for several years, buying a condo that won’t appreciate very quickly is not the right choice.
Finally, buying a condo as an investment property only succeeds if the numbers make sense. By learning more about the true costs of buying and owning a condo, you can make the best decision for your investing goals. After choosing the right condo, make sure to contact Real Property Management Connection to help you with your investing goals. Give us a call at 352-428-2316 or contact us online today!