Would you invest REO or SS condo?

I'm considering to buy& hold on condo(2bed,2bath)FMV@135k for 100k or less with 10% down. If i can find a property at a good rental location and for a good price, i thought it would be a good investment after a long hold for at least 7yrs and sell it for a good profit.
Before making a move i need some opinions to see if investing on a condo a good move. Since i don't have to do anything to the property except little interior works after the lease expires or should i be investing on SFH rather or a duplex apt building at a lower income area with that money?
These are some choices i have in mind but if there's any better suggestions please lay them out. - Thanks in advance! -

Edited: 06/26/2010 at 12:30PM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Apr 17 '10, 02:52 PM

Condos have been discussed quite a bit, so do some searching reading.

HOA fees can be a killer on condos. HOAs themselves can be a pain. You'll always have the risk of a large charge if the HOA decides to do something major.

Unlikely you'll get investor financing with 10% down. At least 20-25%.

Read about the "50% rule" in the Rental Property forum. You're likely to not even do that well with HOA charges.

Edited: 06/26/2010 at 12:30PM

Jon Holdman, Flying Phoenix LLC

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Apr 17 '10, 03:01 PM

Ditto on Jons' post. I'd add that it is not just the monthly HOA, but all the SPECIAL assessments that occur; exterior paint, pool repairs, fencing, asphalt parking and roof replacement for just a few. I hate condos because you NEVER will own a free and clear property due to the fees. Rich.

Edited: 06/26/2010 at 12:30PM

Peter Giardini

Real Estate Investor · Baltimore, Maryland

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Apr 17 '10, 03:06 PM

Also, because of the numerous FHA financing rules related to condos/HOAs many HOA boards are looking very closely at the number of rentals. Too many rentals and current owners can't sell to those who would use FHA financing.

Best of luck!

Edited: 06/26/2010 at 12:30PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Apr 17 '10, 07:09 PM

Peter- it is 8 a.m. here in Egypt. What is your excuse for being on BP? Where are you?? Rich

Dory Peters

Real Estate Investor · dc, Washington D.C.

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Apr 17 '10, 09:32 PM

Besides monitoring the owner/rental ratio, some HOAs have bylaws that disallows an owner from renting one's unit.

BTW, just to build on Rich's point, a friend received a special assessment for an extra $15+K (with the other owners in his subdivision who were current on their dues) a few months ago to cover the back dues from several of the other underwater owners.

Edited: 06/26/2010 at 12:30PM

Jason Kim

Real Estate Investor · Chicago, Illinois

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Apr 18 '10, 05:02 AM

looks like condo is not a good option at this point by hearing from the gurus, so what can i buy or should i invest with about 15k that i want to put in? i am learning about wholesaling from one of local investor and from BP but not good enough to go out and do it on my own. will i need this money to do the deals in future?

Edited: 06/26/2010 at 12:31PM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Apr 18 '10, 06:46 AM

With only $15K and a straight purchase, find a $50K SFR that will bring in at least about $800 a month in rent. Buy it with 20% down plus closing costs. Keep the remaining $2000-3000 in you bank account to handle the inevitable bumps.

Edited: 06/26/2010 at 12:31PM

Jon Holdman, Flying Phoenix LLC

Jason Kim

Real Estate Investor · Chicago, Illinois

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Apr 18 '10, 09:03 AM

Jason Kim

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Apr 18 '10, 09:03 AM

Jason Kim

Real Estate Investor · Chicago, Illinois

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Apr 18 '10, 09:04 AM

Alex Cortez

Residential Real Estate Agent · Maui, Hawaii

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Apr 19 '10, 06:47 PM

Jon hit in the head. HOA fees will be a killer and even the 50% rule would be ineffective. His last post for the SFR would be the most feasible scenario for you.

Edited: 06/26/2010 at 12:32PM