how about this condo deal?

Question

condo
120k
Expenses: 841 = HOA+mortgage+taxes+insurance
Rent: 1100
Good location and good schools
I don't have to do day-to-day maintenance as HOA takes care of it.

Its only 250$/per month profit/cash-flow. But, I'm betting on appreciation in 2/3 years. So, looking at selling it at around 150k profit in 2/4 years time.

Bill W. · Answer

Chandra,

I would suggest you read up a bit on determining cash flow on a rental.  Your analysis is off as it doesn't account for many expenses.  You can search for "calculate cash flow" or "50% rule" here on biggerpockets.

You have left out quite a few expenses and disregarded repairs completely.  Just because some of your HOA fees are theoretically going to building repairs doesn't mean you won't have repair expenses.  You have not accounted for vacancies or property management.

Eric Thomson · Answer

Also, $250/month is best case scenario. That is not calculating vacancies, repairs, etc.

Eric Thomson · Answer

Chandra, I have invested in a couple of town-homes, which are condos without the maintenance fees, and have made some decent money both in rent and in return when I sold them. The answer I would predict you will get most unanimously on here would be that the high maintenance/hoa fees and the slow appreciation of condos make investing in them a bad (or at least risky) idea. I think it can be done if you buy far enough below market value, but with so many carbon copies of your condo in the complex they just don't appreciate as quickly as detached single family homes.