Condos- Equity, HOA, and cash flow, are they worth it?

Question

Does anyone have experience investing in condos? What is your general experience? Do they build enough equity to be a worthwhile investment? I'm looking at one that is small- 900 square feet, but it is in a great location and the HOA seems reasonable. It seems good in the short term, but I'm wondering if the equity will pay off in the long term.

Rodney Sums · Answer

@Kaitlyn Pratt

When you say the HOA seems reasonable, what have you observed that gives you that impression?

As a condo owner I'll tell you some things to be very well aware of.

As @Russell Brazilmentioned do your due diligence on the HOA...big time.

How well are they maintainig the property? Any special assessments being considered/coming up? How strict are they? (read thier CC&R's and ask neighbors). What are they responsible for? I know someone who owns a condo in a community were the HOA does NOT cover the roof. They also made individual owners responsible for upgrading the stucco within the boundaries of their unit rather than making a special assessment to do the whole building. How many of the units are occupied by owners vs renters? Is there one owner of many units? That's a big one to know because there can be financing challenges if a certain percentage of units is owned by one owner. This would make your property value decrease and be less marketable. How many units are past due on HOA dues? This could interfere with your ability to buy or sell when financing is involved. What are the rents of a condo in your community vs comparable apartments in the area? How do the amenities compare? Be very familiar with their CC&R's there's lots more to consider that I didn't mention in this novel.

Russell Brazil · Answer

I own 3 condos, and Ive owned 2 other ones in the past. Condos are more volatile than other asset classes. Easy to manage, less maintenance. You just have to do your due diligence on the association.

Condos- Equity, HOA, and cash flow, are they worth it?

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