Condos as long term rentals
Hello All,
My name is Phil, a real estate investor in the Chicago/Central Illinois area. I am relatively new to BP but have already learned a ton from the forums and podcasts. I am considering purchasing a condo in central Illinois to use for long term rental income. Are there any disadvantages to purchasing a condo instead of a house aside from the HOA dues (FYI HOA dues in this case only cover snow and lawn maintenance)? Additionally are there any benefits?
Any advice is much appreciated.
Thanks!
Hey @Philip Adeleye
First off, welcome to BP
Second, what market central Illinois market are you considering for you condo investment? Just curious because I'm in Decatur.
As far as HOAs and condos go, the first thing you should check is to see if the there are any rental use restrictions at the complex you are considering, if you haven't already.
The other big thing that comes to mind is still regarding the HOA. Just be prepared for assessments for improvements/maintenance to the building exterior or the complex in general as these would be lump sum amounts due on top of your monthly HOA fee.
@Philip Adeleye Welcome to BP.
Personally I tend to avoid HOA's when ever possible. They then to be more trouble than benefit. It seems the more you have to pay them, the more rules you have and the more you have someone else minding your business for you.
The condo association may have either a suggested "soft" cap on the number of rentals they allow, or hard cap in the POA/HOA by-laws. I have run into a few that also put a cap on the rent's you could charge.
Another down side to Condo HOA's is that they seem not to be run the most effective way possible. If they need new siding, they hit you with a special assessment, if the building needs to be re-roofed, they hit you with a special assessment. Even though, they are supposed to plan for & budget these items in on a monthly basis, they rarely seem to.
Like I said, just my opinion, but I avoid HOA's.
Good Luck.
JW
Originally posted by @Jesse Waters:
@Philip Adeleye Welcome to BP.
Personally I tend to avoid HOA's when ever possible. They then to be more trouble than benefit. It seems the more you have to pay them, the more rules you have and the more you have someone else minding your business for you.
The condo association may have either a suggested "soft" cap on the number of rentals they allow, or hard cap in the POA/HOA by-laws. I have run into a few that also put a cap on the rent's you could charge.
Another down side to Condo HOA's is that they seem not to be run the most effective way possible. If they need new siding, they hit you with a special assessment, if the building needs to be re-roofed, they hit you with a special assessment. Even though, they are supposed to plan for & budget these items in on a monthly basis, they rarely seem to.
Like I said, just my opinion, but I avoid HOA's.
Good Luck.
JW
Thanks for the response. Ok, makes sense, I will dig a little deeper into the HOA before considering making an offer.
Originally posted by @Jeremy Zindel:
Hey @Philip Adeleye
First off, welcome to BP
Second, what market central Illinois market are you considering for you condo investment? Just curious because I'm in Decatur.
As far as HOAs and condos go, the first thing you should check is to see if the there are any rental use restrictions at the complex you are considering, if you haven't already.
The other big thing that comes to mind is still regarding the HOA. Just be prepared for assessments for improvements/maintenance to the building exterior or the complex in general as these would be lump sum amounts due on top of your monthly HOA fee.
Thanks for the response. I am looking in the Bloomington/Normal market, preferably closer to the universities. It does not appear that there are rental restrictions as the unit I am looking at is currently rented. Okay, I will do some more research on the HOA before I consider making an offer.
@Philip Adeleye the HOA fees may also cover insurance on the structure and you will only need insurance for your contents inside the unit such as appliances. Also in order to determine any issues with making your unit a rental you may want to consider getting a copy of the HOA regs and read those over prior to purchase.
Originally posted by @Philip Adeleye:
Thanks for the response. I am looking in the Bloomington/Normal market, preferably closer to the universities. It does not appear that there are rental restrictions as the unit I am looking at is currently rented. Okay, I will do some more research on the HOA before I consider making an offer.
Bloomington/Normal is a good market. I've been studying it a lot in the last 6 months or so and I'd really like my next investment to be a 3 or 4 unit property there.