condo investing!! Good or bad?

Question

is it wise to invest in condos? Only thing that shys me away are the fees. But I've found a few with very low monthly fees. What are everyone's thoughts ?

Linda Weygant · Answer

I happen to love condos.  My partner and I own 6 condos and 4 townhouses.  Here's why I love them:

1.  Price point was easy to get into at first.

2.  No exterior maintenance

There are some things to consider.

You do still have to buy at the right price and research your rental income.  The HOA fee is an expense you factor in like property taxes and insurance.  If it cash flows and meets your criteria, it's fine.

Lots of people tell me I'm crazy for this investment model.  What if there's a special assessment, they ask...  What if the fees go way up?

Yep, that's a possibility, but not for me.  Either I or my partners sit on the boards of all the complexes we invest in.  Yes, it's a pain in the ass, but we have quite a bit of control over what goes on.

I'm actually an advocate for raising dues a little every year as it allows the HOA to maintain the property in an attractive manner to bring in excellent tenants.  Other landlords fight me tooth and nail on those 2% increases.  I plan for those increases in my business model and plan rent increases to go along with them.  If the market turns to the point where I can only increase every other or every third year, then I need to understand those profit hits and plan for them with extra reserves or whatever.

Condos have one or two extra moving parts but it's not an insurmountable problem.

Derrick Dill · Answer

I prefer SFR cause HOA fees can hurt returns. HOA fees can also go up depending on the association.

Steve Racicot · Answer

It depends on the Association, Cash Flow you are generating as with any other investment.   Run the numbers and add about 5% for contingencys..

Steve

Kristopher Hanks · Answer

@Jonathan Ruiz Bad!

condo investing!! Good or bad?

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