First Condo/ HOA property

5 Replies

i am looking at a condo on Friday in Columbia, SC. While I have rental property, this is the first condo I have considered purchasing. In addition, this is the first property I have considered with an HOA fee. I am looking at buying the condo for $20k with a rental history of $675 a month, but it has a $180 HOA. The cash flow works for me though. Does anyone have any HOA thoughts or horror stories I should consider? Also are there any differences between SFH rentals vs condos that I should consider?

This is a pretty thin margin for a Condo but it is also very cheap so it wont have much financing costs (if you are financing it.) I often just take out the HOA of my rent amount and think to myself if i could make this property rented out at $495/month ($675-$180) rent.

You also need a bigger margin than normal because HOA's can often go up without your control and they also can do special (or year end) assessments and tack on more charges you are unprepared for. These can heavily effect your return when you are dealing with such small numbers.

We have a similar property we bought for $23,000, rent for $750 and pay $187/month HOA. Its been working for us so far, but its a pretty small margin.

Medium apartment logoPhillip Syrios, Stewardship Investments | http://youtube.com/c/phillipsyrios | Podcast Guest on Show #121

In my opinion there are positives and negatives with condos/HOA. The positive is that the HOA may take care of alot of the external maintenance issues for you with the HOA fees and I feel that condos are easier to self manage with tenants cause not as many moving parts. But the downside is that condos sometimes try to regulate the owner/renter ratios. Supposedly banks won't loan to condos/co-ops if there are too many renters living there and not enough owners so I have heard of condo's having waiting list for people wanting to rent out their apartments when there were too many investors in the building. So I would definitely ask about that. Also with HOAs and co-op boards, I've met some of the dumbest people on the face of the planet trying to get on and run things....unless you happen to get really lucky and get a good group. And unfortunately if the HOA decided they want to do certain "improvements" they have the power to assess everyone or increase your HOA fee. I think you can definitely make money on condos and alot of people do but the first question I would ask is how many people own verses rent that live there and how are the people on the HOA...do they like to make rules...do they hate investors....are they good with managing money, what's their track record with assessments and HOA increases, etc.

Thanks phillip and Laura.  There maybe potential money to be made, but I agree it's no cash cow.  I plan to buy on an existing credit line which is another appealing feature- not having to go looking for financing.  I will add the applicable questions you suggested, Laura.  Thanks.

Thanks phillip and Laura.  There maybe potential money to be made, but I agree it's no cash cow.  I plan to buy on an existing credit line which is another appealing feature- not having to go looking for financing.  I will add the applicable questions you suggested, Laura.  Thanks.

Do you have a copy of the latest financial statement from the HOA? See if you can find out who the president is and see if you can have a conversation with them. The thing that bugs me with HOAs is not the monthly fee but the potential for 'special assessments' for things they didn't reserve for like redoing the parking lot or drainage issues.