Does the 1% rule apply for condos?

Question

There are a lot of posts about different rental markets, turnkey providers, rent to value, BRRRR, and etc...

What about remote investing in a condo?  It's fairly easy to get 1% rent to value in a condo, you have to deal with condo fees, but you would have lower Cap Ex expenses and usually cheaper insurance.

Does anyone here invest in condos? What is your opinion on condo vs turnkey, pros and cons.

What are the key differences when creating a single family proforma vs a condo proforma ?

Tyler Gibson · Answer

@Carlos H DeOliveira I would love to get some more information about your experience with the condo.

Anthony O. Porter · Answer

@Carlos H DeOliveira - Even though I have a condo that I am renting, for a buy and hold investor the only drawback is that most condos have a cap on the amount of units that can be rented at any one time.

Anthony O. Porter · Answer

https://www.biggerpockets.com/co/porters-property-llc

Joseph Firmin · Answer

If the numbers work then yes. Condos can be great if you are accounting for potential assessments, maintenance, HOA fees, etc. I think some people are turned off by condos because they are not in control of the amounts or timing of the assessments that must be paid. If you run your numbers, you should be good.

Johnny Wolff · Answer

@Carlos H DeOliveira - to @Joseph Firmin's point literally anything can work if you run the numbers and its sound.

Personally love that SFRs can attract tenants that will stay for half a decade fairly often.  Condos or multi-families are more work on the churn/occupancy side - at least from what I've seen

Carlos H DeOliveira · Answer

@Johnny Wolff - I totally agree, I'm wondering if we have some members that focus on Condos. I have a condo in Orlando where its tough to get a turnkey rental due the way the market has been performing, but my condo currently rents at 1% rent to value.

Condo fees are $345/month, but when you factor cheaper insurance and lower cap ex, it's still a sound investment with less to worry about when investing remotely.

Johnny Wolff · Answer

Think this is why the 1% rule (and nearly all "rules") generally falls short.

What is the rent to value ration after subtracting the Condo HOA fees?  Is it still 1%?  The detailed proforma analysis is very important in all types of RE.  Condos are fine, but cashflow is typically very difficult to find in such properties all things considered.

Does the 1% rule apply for condos?

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