How to analyze a condo deal

[Uwais Zaid]

If one is looking at a condo deal, ie 4 separate units that are condos, how does one evaluate this deal. Ie how to factor cap ex if HOA does this. Also do you still use cap rate and noi to calculate value?

Lastly, I've heard of issues with HOAs . Do many people shy away from condos for investments? 

Thanks!

[Brian Ploszay]

You have to be careful when buying condos. First, is the HOA healthy? Second, are there special assessments that can be levied on the property?

You can use a cap rate, but deduct the HOA fees from your net operating income. If the fees are high, most of these condo deals are low cap rates.

Also, check to see if there are recent sales in the condo complex to regular buyers.  This is a plus.   And check to see if there are any rental restrictions on the unit.