Wholesaling and flipping condos.

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I'm a newbie. I've never done any deals but have recently come across a 1 bedroom condo. The area is nice and the property needs a bit of work (not a complete disaster but more than just paint). Is it possible to wholesale condos or to BRRRR them? I think it has BRRRR potential but again, I'm a newbie. I'm figuring that the ARV on the property is about $37,000 and may need about $8,000-$10,000 worth of repairs.

Hi @John Hilliard and welcome to BiggerPockets!

I get it: The appeal of condos is that they are cheap. At least they appear to be. Heck, my first two deals were condos!

But, condos are generally not ideal for BRRRR and here are three reasons why:

  1. You have ZERO control of your destiny - In condo-land, the association board is king. They have the power to raise your monthly dues by, say, $100 (thereby killing your cash flow). They can also, for example, levy a $3,000 special assessment against every condo member to repave the parking lot (thereby depleting your reserves). And worse, they can decide one day that members can no longer rent their units freely (thereby putting you out of business.)
  2. Condos are hard to (re-)finance - A key part of the BRRRR strategy is the refinance. Problem is, very few lenders are interested in underwriting properties under $100K, and those that do often charge a premium. Also, FHA has minimum standards that a condo association must meet, and many do not. So, if yours doesn't make the cut, then that particular funding avenue would be completely closed to you, and to any buyer you might seek down the road when you are ready to get this turkey property off your hands!
  3. Most buyers don't want condos - Unless you live in a resort hotspot like Miami, the demand for condos is far less than that for single-family homes. For example, people come to Atlanta from places like New York and Chicago specifically because they don't want neighbors above or below or on either side of them. They want space! They might tolerate a condo until they can afford better, but as soon as they can they will trade up, leaving you with an ugly vacancy. I'm inclined to believe the same is true in big ole Houston, Texas! And don't even get me started on 1-bedroom rentals: You might as well put a revolving door out front!

I do hope this helps! I strongly encourage you to learn from my many mistakes and reconsider your condo cravings!