Single Family Vs Condo

[Karan Nanda]

Just starting out and am looking at my first Investment property.

I am confused between single family homes vs a condo.

What is a better bet for a buy and hold investment and I want to rent it out. 

I want to take it as a learning experience so I was looking at low cost investments. I saw a 3 bedroom condo with 1.5 bath built in 1971 for $18k. The price seems comfortable to me. Wanted to understand more about condo buying before i spend any more focus on these kind of properties. It has a condo fee of $210 and mortgage will be less than $100, is this normal. Is the condo fee going to cover for property management and maintenance/repairs? What is this fee for.

On the other hand, could not find any SFH for this price range apart from tax foreclosures and all which I don't know if they will be a condition to rent or need a lot of work.

Any suggestions?

[Pete Krentz]

Hi Karan,

My personal advice is to shoot for a SFH. Condo's, although they have some perks, just don't appreciate in value as similar SFH would. Also the association fees have a tendency to seriously eat into your profits.

Though I don't know anything specific for your area the price for that condo seems a bit low to me. Granted having no experience there it could be right on par.   Either way it makes me wonder a bit.

As for the association fee they cover the amenities the facility has to offer. Unless expressed differently in the Association rules (Which you should check on) they cover only the exterior and grounds maintenance like roof, lawn, pool and some other things like a bellhop/doorman, etc.  They will NOT cover any maintenance inside the unit. When you buy a condo you purchase the unit itself and you own a share of the outside facilities.

That all being said buying a rental is all about cashflow, if you can make the numbers work for you with a good enough cushion by all means move forward. If you aren't sure on it, I'd say ease off and ask a local professional for some help if you can. Hope this helps!