Buying family condo as first rental - need structuring advice
Madelyn G.Pro Member
Member since 2025 · 2 posts · 1 voteBuying family condo as first rental - need structuring advice
Most Popular Reply
Jeff CopelandBusiness Member
Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votesCondos can be very tricky as investment properties for a few reasons:
1. COA/HOA Fees: How much are the monthly condo owners association / homeowners association fees? For many condos, these are several hundred dollars per month, which can eat into your cash flow to the point the unit simply does not work as a rental. So it's crucial to know this number going in (as well as understanding the HOA's financial position and reserves, because if they are strapped for cash, they can raise the montly fees at the next HOA meeting).
2. The COA/HOA Rules & Leasing Restrictions: Do they even allow rentals? You'd be surprised how many do not. And those that do often have rules such as "You have to own the unit for a year before you can rent it out" or "The HOA must have at least 30 days to perform a background check and review/approve your tenant, and we charge $250 for this privilege" (in addition to your month of lost rent, or longer for all the prospective tenants you lose because they couldn't wait that long to get approved). It's also common for HOA's rules to include things like "one year leases only", which precludes you from doing MTR or offering a great tenant a 6 month lease extension when you otherwise want/need to. And, yet again, these rules can all change at the next HOA meeting.
3. HOA/COA's in general: HOA's/COA's tend to attract and breed nosy neighbors who are members of the HOA/COA (we call them Condo Commandos here in Florida!) who enjoy enforcing the rules. And the rules often include things like what color paint you are allowed to use on your front door, and what you are allowed to store on your balcony. I've had an HOA tell my tenant they could not park on site because her car was too ugly. They literally made her park outside the gate and walk a quarter mile to her front door. To be fair, her car was ugly. But it ran and it was licensed and insured and legal, so where do you draw the line on "ugly" cars, and who makes that call?
4. Financing options can be very limited: Financing options for condos are much more limited that single family homes or even townhomes. This makes many of them "cash only" assets. This can work fine if you have the cash and the rental cash flow is positive. But it can make them much harder to buy and sell. On that note, seller financing could be a good way to structure this deal with your family if everything else checks out.
Copeland Morgan LLC4.770 Reviews
7 Replies
- 11moJeff CopelandBusiness MemberReal Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
Condos can be very tricky as investment properties for a few reasons:
1. COA/HOA Fees: How much are the monthly condo owners association / homeowners association fees? For many condos, these are several hundred dollars per month, which can eat into your cash flow to the point the unit simply does not work as a rental. So it's crucial to know this number going in (as well as understanding the HOA's financial position and reserves, because if they are strapped for cash, they can raise the montly fees at the next HOA meeting).
2. The COA/HOA Rules & Leasing Restrictions: Do they even allow rentals? You'd be surprised how many do not. And those that do often have rules such as "You have to own the unit for a year before you can rent it out" or "The HOA must have at least 30 days to perform a background check and review/approve your tenant, and we charge $250 for this privilege" (in addition to your month of lost rent, or longer for all the prospective tenants you lose because they couldn't wait that long to get approved). It's also common for HOA's rules to include things like "one year leases only", which precludes you from doing MTR or offering a great tenant a 6 month lease extension when you otherwise want/need to. And, yet again, these rules can all change at the next HOA meeting.
3. HOA/COA's in general: HOA's/COA's tend to attract and breed nosy neighbors who are members of the HOA/COA (we call them Condo Commandos here in Florida!) who enjoy enforcing the rules. And the rules often include things like what color paint you are allowed to use on your front door, and what you are allowed to store on your balcony. I've had an HOA tell my tenant they could not park on site because her car was too ugly. They literally made her park outside the gate and walk a quarter mile to her front door. To be fair, her car was ugly. But it ran and it was licensed and insured and legal, so where do you draw the line on "ugly" cars, and who makes that call?
4. Financing options can be very limited: Financing options for condos are much more limited that single family homes or even townhomes. This makes many of them "cash only" assets. This can work fine if you have the cash and the rental cash flow is positive. But it can make them much harder to buy and sell. On that note, seller financing could be a good way to structure this deal with your family if everything else checks out.
Copeland Morgan LLC4.770 Reviews - 11moSean SmithBusiness MemberReal Estate Agent · Seattle, WA · Member since 2020 · 162 posts · 105 votes
Hi @Madelyn G. sounds like an interesting opportunity! There are many ways to structure this:
1. Traditional loan with 20% down or more (ideal for seller, less ideal for you)
2. Seller finance the entirety of the loan to you minus whatever you're willing/able to put down (ideal for you, less ideal for seller)
3. Traditional loan + seller finance some/all of the downpayment (likely the ideal balance)
Of course, there's so many other ways to accomplish this but these might be the most straightforward.
Fellow Real Estate Services537 Reviews - Member since 2025 · 2 posts · 1 vote11mo
@Jeff Copeland Thanks for the reply - lots of good info here.
For this property, there is no HOA… Our family has always called it his "condo" but it's probably better described as a townhouse. Two residences in one building with a shared wall. Two stories. Each townhouse has a garage and individual back yards/side yards.
Looking forward to your advice based on this info.
- 11moJeff CopelandBusiness MemberReal Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
Quote from @Madelyn G.:
@Jeff Copeland Thanks for the reply - lots of good info here.
For this property, there is no HOA… Our family has always called it his "condo" but it's probably better described as a townhouse. Two residences in one building with a shared wall. Two stories. Each townhouse has a garage and individual back yards/side yards.
Looking forward to your advice based on this info.
I suggest checking the legal description of the property (and confirming with your lender). Townhomes are treated much more like single family homes from a financing perspective.
But some of the other concerns (HOA fees, etc) can still apply.
Note that you may also have to share some responsibility (and give up some control) for shared amenities such as the roof, pest control, landscaping, parking, etc with the onwer of the other side.
Copeland Morgan LLC4.770 Reviews
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11moYou probably want creative financing like this
Quote from @Madelyn G.:
New to real estate and investing — looking for advice on my first potential deal.
A family member is moving into private care and wants to cash out on their fully paid 2/1.5 condo (~900 sq ft) in Kent. As-is value is around $250K, but ARV is ~$310K (estimating 20-30k in renovations). The fam is considering under-market cash offers just to close quickly.
I want to buy it as a rental, live out of state, and give them a fair payout. I have great credit, some savings, and a solid W2, but I’d like to avoid putting down the typical 20% required for an investment property.
How would you structure this to maximize their payout, minimize my upfront cash, and stay lender-compliant? Any pitfalls for a first-time, out-of-state investor? TYIA
https://www.biggerpockets.com/forums/311/topics/1265821-usin... - Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes11moWhen I was buying and selling in King Co, there was a 2% cost of sales to the state (an excise tax) which would be about $10,000 on a $500,000 sale, so don't forget to take that into account. Your "cost" basis will depend on what you buy the property for and will be taxed at later for capital gains.
Quote from @Madelyn G.:
New to real estate and investing — looking for advice on my first potential deal.
A family member is moving into private care and wants to cash out on their fully paid 2/1.5 condo (~900 sq ft) in Kent. As-is value is around $250K, but ARV is ~$310K (estimating 20-30k in renovations). The fam is considering under-market cash offers just to close quickly.
I want to buy it as a rental, live out of state, and give them a fair payout. I have great credit, some savings, and a solid W2, but I’d like to avoid putting down the typical 20% required for an investment property.
How would you structure this to maximize their payout, minimize my upfront cash, and stay lender-compliant? Any pitfalls for a first-time, out-of-state investor? TYIA
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