Thoughts on Condos as Rentals

[Jaime Brame]

Hello, everyone! I wanted to get your thoughts on buying condo(s) as rentals. I know there are various HOAs that go along with the package, but that's just about all I know. Any thoughts or information/experience would be great!

[Mitch Messer]

Hi @Jaime Brame. I'm not a big fan of condos as rentals. Here are a few reasons why:

1. Too many rules that can impact my profit - Many condo associations in my market (Atlanta) restrict rental of units. Those that allow it often limit the total number of units that can be rented at any time. Some charge a random "rental registration fee." But, the real deal-breaker for me is that any association can change their rules arbitrarily at any time often with just a majority vote of members. I don't want to play that game.
2. Limited back-end options - If the association is not FHA-approved, buyers will be cut off from one of the most popular loan programs in the nation. An alarming number of associations are not. That means the only buyers of those condos will be other investors, who will often expect (and get) a steep discount. Bad news for condo sellers.
3. Condo boards are often dysfunctional - The condo board ultimately decides what repairs get made, what dues are charged, and what rules are imposed/enforced. That's an awful lot of power with hardly any real oversight. Everything might be fine, or it could be a total disaster. It's a roll of the dice, and I don't want to gamble when it comes to my investment or my cashflow.