I know a lot of you guys are against buying anything with an HOA due to it interfering with cash flow howeverâ¦In Myrtle Beach SC you can get a nice Condo/Apartment for about 35-50kâ¦My question is, if you pay cash for one and only have to pay the HOA fees and it stays rented all the time wouldn't this be a good investment?
I am thinking if I can get rid of the mortgage by paying cash and only have an HOA every month, keep it rented I would be good. If you have a mortgage and HOA fees then I can see the problem.
Hey @Chance Cooper
I would say do the numbers and let the numbers lead the way. Plug in the projected rents minus all the expenses (including HOA) into your own spreadsheet or the BP Rental Property Calculator and if the return is what you are shooting for I would say go for it. I know in my area the HOA usually eats into a good portion of the cashflow and although there might be a few expenses (roof, exterior, landscaping) which are taken care of by the HOA it does not offset the monthly expense.
Outside the simple numbers try to get your hands on a copy of the bylaws for the HOA prior to signing any deal. This is the other main objection most people have which is the loss of control over your asset. In some cases the HOA can put restrictions on your ability to use the condo as a rental. Also if you could get a 10 year history on the HOA fees you will see if they have held flat or increased over the past decade. Pushing even further if you are serious about the condo try to get the financials for the HOA. How much do they have in reserves, what have the expenses been, does the Condo community have deferred maintenance that could result in a HOA hike in the coming years.
In any case do the homework and you will increase your likelihood of success in this and future investments.
Best of Luck
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