Real Estate Agent · West Hartford, CT · Member since 2016 · 449 posts · 476 votes
I know there has been a lot discussed on here about whether or no condos are a good investment however, after reading countless articles and listening to the podcasts I am still torn- which is why I would like to get input on this specific deal:
Off market deal 2br 2b updated unit. The woman is willing to sell at a discount to avoid realtor fees.
Purchase price 90k
Market Value or ARV based on comparable comps are 105-110k
Income: $1250 (conservative)
Taxes: $1800 per year
HOA: $235 per month
Total Operating expenses: $542
P&I: $532
Purchase Cap Rate 9.43%
Cash on Cash ROI: 10.24%
Monthly Cash Flow$174
----I included 5% for vacancy, repairs and cap ex however the cash flow should be higher than $174 because everything is new in the unit.
The numbers work however, it is not a cash cow. It is only attractive because it's something that I could own that should be maintenance free (for the most part) and have a majority of the equity paid down. However, even though it's off market, it still isn't a great deal. I appreciate all thoughts and comments!
The numbers work, it's not a huge cash flowing asset but still works!
I think you have to look at what your goals are and does it help you get there? Also, do you see continued appreciation in there area? I'm not usually one to buy just for appreciation but if you're cash flowing $175 a month and have a chance for appreciation down the road I think it's a good deal.
The big issue with condos are the risk that HOA dues go up, potential very large one time special assessments, or bylaws currently prohibiting rentals/ the chance that they forbid them in the future.
I don't know that this is a homerun. It does sound like it would cash flow and give you instant equity depending on whether or not it needs any work.
If you have a better deal go for that, if not this doesn't sound too bad.