Rental Property Investor · Redmond, WA · Member since 2018 · 44 posts · 4 votes
Hi,
I found a good condo & I know the area of it very well. Condo is in an excellent condition, located at a golf course. When I did my math, I found that the condo is going to barely break even (target Rent vs mortgage + management fees). Would you pass on this case? Or would you take it? What else you should consider for investment condo or SFR?
Thanks
Investor · Stratford, CT · Member since 2015 · 258 posts · 230 votes
7y
Hi, Ihave several condos that cash flow well. My decisions are primarily based on cash flow expectations to generate urgent income. I see nothing appealing in purchasing a break even asset at today’s high market prices, especially in an asset class (condos) that is more price volatile in down market periods. To me this is not investing but rather speculating, and speculating in an asset that is going to take time and attention. How would such an investment get you closer to your goals?
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
7y
In this market I am uncomfortable buying any investment property that does not perform extra well. Prices will likely stay the same or decrease before they start appreciating. So to invest in this market either there is an opportunity to force appreciation or strong return as it is. The same applies to condos particularly due to HOA fees and the boards which favor the board members and not LL's unless that LL is one of them.
Total rookie here, but condos are big in my area, and I have one that is great. I think one thing often overlooked is, how many total homes are included in the HOA. For me, I think associations of 100+ homes are safer b/c they are more likely to have enough revenue from monthly fees to cover both the day-to-day property management/maintenance (which is getting more and more expensive) AND still have enough to put away to reserves. The smaller associations I've seen typically have more deferred maintenance and way less reserves b/c they simply don't have the revenue. So if those back steps covered by the HOA are broken, you might end up on a pretty long backlog for repair. A great deal is a great deal, but if you're looking at condos in a hot market with tight margins, the quality of the HOA can be a big deal.
Coppell, TX · Member since 2015 · 485 posts · 310 votes
7y
pass. it should cash flow well on day 1. remember taxes and HOA fees can and will go up. unless you get it for a steal, there are better uses of your money.
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
Assuming complex has 100 units. 20 units are non-owner occupied and 80 are owner occupied. That is healthy.
A high tenant qty occupied often means if you buy or sell no lender will provide mortgage. Also the place will look dumpy as tenants do not take care of even trash. Transients often means safety, and crimes .
Rental Property Investor · Cape Coral, FL · Member since 2015 · 206 posts · 83 votes
7y
If I'm investing in condos & townhouses I'm looking for more cash flow than SFR (less appreciation with condos and townhouses). Although I'd never invest for appreciation, you are less likely to get it with a condo- risk vs reward.
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
7y
It depends on where you are. In Chicago, if you want to live in the city, it will almost always be a condo, so the investment for rental purposes would be good. HOWEVER, many condo board have limitations on the number of rental units, and in this market, if they don't currently, they soon will, as neighborhoods gentrify and people want to live in the city, but can't afford a home at $500K-$1M, for an average home!! They are moving to areas that are/were dominated by rentals, but are now being converted for ownership.