Buying Condos as rentals?

Question

I currently own 3 condos, that provide around $100 net each month in passive income. condo fees seem to be eating away at any positive cash flows. My question is should I sell my condo with the most equity in order to buy a larger, or more positive cash flow property? or continue to let my tenants pay down the principal I owe?

Thomas S. · Answer

Sell now before the markets drop, HOA fees go up or you are hit with a 10K special assessment. Condos are a poor/risky investment.

Pat L. · Answer

My family still owns properties in Burlington & Dundas that we bought in 1987 :)

Hai Loc · Answer

The price of condos in Burlington increased by at least 50% between 2015-2018.. If you can cash flow $100 a month in the Toronto area that is considered good. In an appreciating market any positive cash flow is solid.

Chibuzor Nnaji · Answer

@Marco Acampora I think you should sell them and place your money elsewhere for sure. There are a lot of different options you can explore with the proceeds from your sale whether it be flipping, SFRs that don't have HOA fees and other miscellaneous expenses, and etc. I hope this helps.

Pat L. · Answer

Yep I was told I was crazy buying all the homes I rehabbed & rented out as financing was @ 18-19%. My first buy was $48k & I had every room rented. I sold off many over the years & moved on to many others elsewhere but we still hold some. I bought one of the Lakewinds condo's (Burlington) for $80k before they broke ground & we eventually sold it for >$300k. When we visited my home town (Adelaide SA) in 2012 I visited the first home I bought for $2400, rehabbed & sold for $4800 (while still in University). It sold in 2011 for $975k. The home we lived in as kids was torn down & 5 townhomes were built on the lot with each selling for $300k.

Ya never know !!!!

Hai Loc · Answer

Wow I was just a little guy back then but I know there was a recession in 1990 and the interest rates were 18% I think..

Still about 6-700% increase since then..

Leroy Smith · Answer

I have 9 condo's and average $646.55 NOI per door. I live in South Florida were the rents keep going up and up. I try to buy condos that have low HOA dues. I have been a real estate investor for over 22 years. I'm in the process of closing on 2 more on Jan 3rd. I bought them below market in an exclusive area in Broward county (Lighthouse Point) near the beach for $65k (1/1)and $71K (1/1). I am on the board and all the owners that have owned for years know that when they are ready to sell I will do a cash offer. They rent for $1000 a month no problem. So I love condos.

Ryan Hoover · Answer

@Marco Acampora

I have owned and currently owned condos with some decent cash flow.  The benefit is point of entry costs are typically lower but HOA fees can eat up a lot of profits.  My current condos are vacation rentals, which do really well.  Those are even more vulnerable to HOA rule changes and even regulations.  Also as outlined, they tend to appreciate at a slower level.

I think they make a good point of entry for new investors if you can find a value add.  Once you have some equity built up, I would recommend rolling that profit into single family or small multi family.  I am preparing to sell my last condos this spring and don’t plan on going back to the well with these type of properties.

Pat L. · Answer

Did one once for an aging relative in Burlington ON. Hated the idea & we were advised not to do it by the agent. But they loved the place as it was walking distance to the Mandarin Chinese Buffet with senior rates & had a bus stop out front. We more than doubled our investment over the years & the aging parent paid all the expenses including the financing we had on it. However, all the profits were eventually invested in the $12k/month retirement home until she passed away.

Buying Condos as rentals?

Most Popular Reply