Condo to build Equity

7 Replies

Hey all, so I just moved to Phoenix two weeks ago. Im currently living rent free with a buddy of mine for about 2-3 months before I have to get a place of my own. I really believe in the podcasts ethos of, "Just get your first deal", so that is what I'm trying to do. I have some money saved up for a 3.5%-5% down payment on a small condo in the 75k-85k range. There are plenty of people who swear by not investing in condos but it just seems like they're just more risky with HOA fee hikes, potential litigations, etc. Point is, what do you guys think of a condo as a first investment if proper due diligence is performed? Thanks!

I think if you do your due diligence and the numbers are there for the long term investment plan you have then it’s a good way to go. It’s a nice way to get started in the Phoenix area where a sfr is not available for under 100k. It can be tougher in some areas to see as much appreciation in condos compared to sfr, but that doesn’t mean it’s a bad plan. 

@Joe Vertuccio welcome to Phoenix!

I'm definitely an advocate for getting in the game and buying some real estate while interest rates are still low. Using a low down payment option for your primary residence purchase is the cheapest and easiest money you'll ever get (compared to an investment properly loan). 

Due to current demand and price increases, there aren't a ton of condos in the price range you listed. My best advice is to live rent free while saving like crazy. You'll find a big difference in condos priced just a little higher around $150k. 

Due diligence is key when looking into condos. You must make sure that the HOA allows for the unit to be used as rental before you buy it or you can be stuck in a less-than-desirable situation.

Getting your feet wet and getting started with a condo can be a great idea if properly vetted, but as @Ryan Swan stated, you're probably looking at a much better condo if you can get the budge to 150k due to the low inventory we currently have in the area pushing prices up.

Originally posted by @Kellen King :

I think if you do your due diligence and the numbers are there for the long term investment plan you have then it’s a good way to go. It’s a nice way to get started in the Phoenix area where a sfr is not available for under 100k. It can be tougher in some areas to see as much appreciation in condos compared to sfr, but that doesn’t mean it’s a bad plan. 

 Hey Kellen, thanks for the feedback. Yeah this definitely isnt easy but I have reached out to a broker and lender recently and we're trying to form a game plan. I think the whole process of reaching out to players in real estate, experiencing the process, and getting the first piece of property will make it so much easier going further. 

Originally posted by @Ryan Swan :

@Joe Vertuccio welcome to Phoenix!

I'm definitely an advocate for getting in the game and buying some real estate while interest rates are still low. Using a low down payment option for your primary residence purchase is the cheapest and easiest money you'll ever get (compared to an investment properly loan). 

Due to current demand and price increases, there aren't a ton of condos in the price range you listed. My best advice is to live rent free while saving like crazy. You'll find a big difference in condos priced just a little higher around $150k. 

 Yeah I'm starting to realize that now but still holding out hope for getting a place under that. Worst case scenario I have to rent for a year but that's life!

Originally posted by @Bob Okenwa :

Due diligence is key when looking into condos. You must make sure that the HOA allows for the unit to be used as rental before you buy it or you can be stuck in a less-than-desirable situation.

Getting your feet wet and getting started with a condo can be a great idea if properly vetted, but as @Ryan Swan stated, you're probably looking at a much better condo if you can get the budge to 150k due to the low inventory we currently have in the area pushing prices up.

Bob, the HOA factor is mentioned time and time again with condo investing and I completely agree with you. I just contacted a broker who specializes in condos who I'll use in addition to my own research on HOA conditions. My buddy currently lives in a condo and is actually the Treasurer for his association and the insight I've received from him is mind boggling. Have a properly funded condo group is so important and will really put my mind at ease.

Just an update, I ended up not going ahead with the condo purchase. Going over the numbers and looking at it bigger picture I decided to just pay down my debt(my student loans) in the mean time. Thanks to all of you who’ve responded!