1st investment, condo or multi?

Question

The wife and I have decided real estate is where we want our money to go so we can not only have a little extra but also so we have something to leave our little one.

We're in the Portland Or market and looking around here but I've been looking mainly at duplexes and shes been looking at condos. My questions are, how is appreciation on condos in your experiences vs duplexes and would anyone recommend it for a first investment property?

Alina Trigub · Answer

@Lance Thomson

I think @Jonathan Greene stated it really well: it all depends on how safe/risky you want your first investment to be. Btw, you haven't mentioned SFH. Consider all three options, evaluate supply versus demand, and take action!

Here're additional guiding posts for you and food for thought:

https://www.biggerpockets.com/member-blogs/10850/87253-should-i-scale-my-investment-from-single-family-homes-to-multifamily

https://www.biggerpockets.com/member-blogs/10850/86621-six-steps-approach-to-getting-started-in-real-estate

https://www.biggerpockets.com/member-blogs/10850/85836-should-i-buy-a-turn-key-property-or-invest-in-a-syndication

Jonathan Greene · Answer

You want to buy low on condos because they are always being replicated. Condos can serve as a safe first investment, much safer than a MF, because much of the maintenance you pay for. But from a profit and cash flow POV, much of the maintenance you pay for. If you have no landlord experience, a MF investment-only can be a lot to take on and understand on the fly and the biggest mistake is usually either bad choice of tenants or lack of reserves. In Portland I think you could hold steady on a condo, but not expect a ton of appreciation unless the location is currently undervalued, which is probably not an option there. A MF will provide you much more upside, but much more risk in some ways as first time investor.

Mathew Wray · Answer

@Lance ThomsonMorning Lance!

We generally heavily advise against condos as investment properties with a few exceptions...

If you already own it then it can potentially make sense to hang onto it as a rental. The only common scenario where we’d recommend buying a condo as an investment is if it’s going to improve your life in some way (you plan on retiring there in the future, a kid will be moving in the area in a few years for school, etc.).

While there are some big positives (low maintenance), I don’t think they’re generally outweighed by the negatives of increasing HOA payments, reduced appreciation, and my biggest concern-changing HOA rules on rentals (what happens if the board changes the rental cap or eliminates rentals all together?).

I’d definitely take another look at multifamily or even single family (at least you’ll get the benefit of higher appreciation over time).

Best of luck,

Mathew

Lance Thomson · Answer

@Jonathan Greene love it thanks for the input

Thomas Cummings · Answer

SFR

1st investment, condo or multi?

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