Hi investors! Would you in invest in a single condominimum in high-rise with high assessment? What are the pros and cons?
Here is a little more information about the deal: good area in Chicago, close to the lake. After all expenses, net rental income will be maybe $300.00, but property might appreciate. The average 2b/2b in the same building are ranging from $260,000 and up to $400.000. Since it's REO I can get it for $225,000 (will need some work inside), taxes about $2700, assessment $600, rent varies from $2200-$2500. I am not sure it is a good investment, and honestly, I'm scared due to a high assessments. Any thoughts / expirience with rental properties in high-rises? Thank you, Julia
I don't think condo would be a very good first time investment.
Yes it's nice to have the outside stuff taken care of. However it's those HOA fees that will either make or break that cash flow. They can and will increase those HOA fees over time just like they do with taxes. I would also make sure it can be a rental. In my area almost half a condo building is in foreclosure and none can be rented as that's the association restriction.
Are you also factoring in:
If you aren't sure of the costs then 10% is a good number to use for pm, vacancy, Maintenance.
Plug all those numbers in again and see how it looks.
Also you might consider going a little further out for a SFH or multifamily.
I always tell people to run, run, run from condos. In my opinion they are not good investments as rental properties.
Between the PITI, HOA fees, and any assessments, you will be lucky to break even on your investment. If you're hoping for future appreciation, you're not investing; you're speculating.
Having said that, if you have the resources to pay cash for a condo, then it may be a decent investment as a rental property because you won't have the monthly mortgage payment to worry about. But the monthly HOA fees and any assessments will always be a drag on your ROI as long as you own it.
Hello, Every post I read is absolutely right about investing in condos. They seem like a good investment until a special assessment comes along, and tries to charge you 10,000 to fix the foundation of the building. I would start with a cheaper condo, one that you would mind if you took a hit.
Thank you so much for your insight! Looks like I might have to kill the deal.
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