Investing in Condos for rental and cash flow

[Martin Guerrero]

I am looking into buying my first investment property.  I have analyzed the property and the numbers seem like the investment will be a good opportunity for a first time investment.  I can

 my analysis.  Any advice or recommendations for a first time buyer of a condo used for rentals to obtain cash flow? 

[Greg Scott]

How comfortable are you that the HOA fees will remain $150/ mo? Have they had any special assessments in the past 5 years? Your returns can be easily destroyed by HOA fees and you have little to no control over them.

Does the condo association have any restrictions on rental units?  This is CRITICAL to understand.

Frankly, I think you'd be better off buying a single family property.  You can find plenty in Milwaukee in that price range.

[Martin Guerrero]

Thank you @Greg Scott for your time and your advice regarding the Condo in question.   I will be sure to do my due diligence regarding the items you mentioned.  Are you familiar with the Milwaukee area and do you recommend any particular areas of interest in the Milwaukee Area? Thank you again for your time! 

Martin

[Greg Scott]

I've never been to Milwaukee but I know how to search for rent properties.

Consider these likely candidates:  https://www.realtor.com/reales...

[Theresa Harris]

With condos, you need to make sure they have a healthy reserve fund and are well managed.  You also need to ensure that they allow rentals.  I have some condos, but prefer single family.  Last year when I was looking to buy (newer higher end condo vs 15 year old single family home), I went with the single family.  The difference in purchase price was about $25K (mid to high $200k), but cash flow was a bit higher with the single family.  We ended up renting it for more than expected, so cash flow was even higher. The difference for me was I either pay monthly management fees  (in this case $225) or that money goes to my mortgage.  

[Cayden Standlee]

@Martin Guerrero Condos can be a double edged sword. As many see, they are easy to maintain with little maintenance and are normally cheaper than a SFH. But there are things that you need to look out for. One is the Condo Docs as that can give you answers to many of your worries. This includes the things mentioned like dues and whether or not rentals are allowed in the first place.

I hope this helps

[Martin Guerrero]

@Theresa Harris thank you for your time and input.  The condos that you do have what would you say is the biggest challenge that you prefer Single family homes over them.  Thank you 

[Martin Guerrero]

@Cayden Standlee Thank you for your response and your advise, I will be sure to double check the condo documents.  Anything in particular that you have seen in your career to particularly look out for.  Thank you

[Cayden Standlee]

Quote from @Martin Guerrero:

@Cayden Standlee Thank you for your response and your advise, I will be sure to double check the condo documents.  Anything in particular that you have seen in your career to particularly look out for.  Thank you

 You will want to take a look and see what the fees all include so that you get a true understanding of your costs. Also make sure that they allow rentals. Next look at the building and member setup, in the past I have joined a condo board so that I was able to keep a nice cash flowing rental.

[Theresa Harris]

Quote from @Martin Guerrero:

@Theresa Harris thank you for your time and input.  The condos that you do have what would you say is the biggest challenge that you prefer Single family homes over them.  Thank you 

 Over the years, I've had three. The first the condo board was poorly managed and kept increasing condo fees and having special assessments.  The two more recent ones (last 10 years), one is more of a townhouse style and because of the condo fees (combined with caps on rent increases) is harder for it to cash flow.  The other I have a PM and has higher turnover and every turnover there seems to be a number of issues combined with the 1 month vacancy (again it is the type of unit and a small part the PM).  There they do a good job managing the complex, but condo fees are higher as it includes all utilities-great for the tenants, but they don't seem to factor that in when they see the price of rent.

[Marcus Auerbach]

@Martin Guerrero Condo's don't make for great investments. If you are currently still renting, you first move should be house hacking. We are lucky to have more duplxes in Milwaukee than any other city in the US. You can also look on YouTube (house hacking Milwaukee). the money you can save on a house hack will exceed what you could make on a condo, you can get a very favorable owner occupied loan with low money down and after a year you can move out and then rent both sides if you like (and buy another duplex).

[Allan C.]

@Martin Guerrero condos are a bad investment. There are no barriers to entry (same reason why it appears enticing to you) and there are many negative factors that others mentioned. I owned several condos in the past, and while they were profitable, I would not purchase for rental purposes in hindsight.

[Eliott Elias]

I prefer single family, it appreciates better and no HOA fees

[Rebecca Knox]

If the condo complex is managed by Camco, RUN!!!!!!!!!!!!!!!

[Martin Guerrero]

Thank you everyone for the great advice.