Should I buy this condo all-cash (numbers in thread)?

General Real Estate Investing
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Should I buy this condo all-cash (numbers in thread)?

Alex Silang
Real Estate Professional · Las Vegas, NV · Member since 2013 · 225 posts · 74 votes

So what triggered this thought in me is that I really think the stock market is overvalued
* Cyclically adjusted PE ratio (valuations) are 2nd highest historically, #1 was the dot com bust. It took ten years for stock market to recover from that crash.

* Lots of people now are calling out the AI bubble, including Larry Ellison (founder of Oracle) and Bill Gates. I personally think its a bubble. Just a few days ago JPMorgan came out with a report pointing out that the billions in new profit that needs to be generated from the fortune being invested in new AI.

My thoughts is to take some off the top, transfer money out of the stock market and buy a condo all cash.

$150k studio, needs approx $10k rehabbing. $1500 rent, $460 HOA fee, $1300 annual taxes. Apartment manager says theres a waiting list for people looking to rent.

So let's say $750 monthly rental profit. That's 5.6% yield. Also got depreciation tax benefits. 2% appreciation and we're already close to stock market returns.

With retirement planning, it's generally held that a 4% safe withdrawal rate from stock market holding.

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So basically for a $160k all cash investment in a condo, I can get $750 month. If that's in the stock market, financial experts say that to be $500/mo.

Stock market of course is liquid but I'll keep multiple six figs liquid just for safety.

In a recession I'd sleep much better at night collecting monthly rent rather than have terrors about the stock market.

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Adam BartomeoBusiness Member
Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
10mo

I would advise staying away from condos unless they are in some magical place. they are normally terrible investments.

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  • William KwongPro Member
    Real Estate Agent · Jersey City, NJ · Member since 2015 · 110 posts · 53 votes
    10mo
    Quote from @Alex Silang:

    So what triggered this thought in me is that I really think the stock market is overvalued
    * Cyclically adjusted PE ratio (valuations) are 2nd highest historically, #1 was the dot com bust. It took ten years for stock market to recover from that crash.

    * Lots of people now are calling out the AI bubble, including Larry Ellison (founder of Oracle) and Bill Gates. I personally think its a bubble. Just a few days ago JPMorgan came out with a report pointing out that the billions in new profit that needs to be generated from the fortune being invested in new AI.

    My thoughts is to take some off the top, transfer money out of the stock market and buy a condo all cash.

    $150k studio, needs approx $10k rehabbing. $1500 rent, $460 HOA fee, $1300 annual taxes. Apartment manager says theres a waiting list for people looking to rent.

    So let's say $750 monthly rental profit. That's 5.6% yield. Also got depreciation tax benefits. 2% appreciation and we're already close to stock market returns.

    With retirement planning, it's generally held that a 4% safe withdrawal rate from stock market holding.

    ---

    So basically for a $160k all cash investment in a condo, I can get $750 month. If that's in the stock market, financial experts say that to be $500/mo.

    Stock market of course is liquid but I'll keep multiple six figs liquid just for safety.

    In a recession I'd sleep much better at night collecting monthly rent rather than have terrors about the stock market.

    Hey, I’m not big on investing in condos due to the HOA. It’s an easier start to the investing side with real estate but to spend 160K to get 750 monthly I think you can do better with a duplex, triplex or quadruplex. Leverage the banks , rehab, rent them and m refi to recoup a portion of what you spent if the ARV makes sense.  The returns should be a lot better. 

    I like where your heads at though with the real estate returns over stock market to diversify your investments. 
    1Reply
    • Rob HowardPro Member
      Knoxville TN, USA · Member since 2023 · 61 posts · 42 votes
      10mo

      @William Kwong Agreed! Deals are everywhere - but many are better than others. With time, anything bought correctly will likely prove out - but HOAs and metropolitan entities have a way of making intvestments less and less sexy. In Knoxville you have to live in a house in order to even do an ADU. It's one of myriad reasons the city is less prosperous than the surrounding county with a libertarian mayor (Glenn Jacobs - Kane of WWE fame) who is much more laissez faire with housing regulations than the increasingly protectionist city government - but on the other hand there aren't many hotels and speakeasy bars outside of downtown!

      0Reply
  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 974 posts · 641 votes
    10mo

    I agree the stock market feels stretched right now, and if you’ve already got liquidity covered, shifting some capital into a tangible, cash-flowing asset can be a smart move. Even if appreciation is modest, consistent rent plus tax benefits can outpace what a volatile market offers, especially if you value peace of mind in a downturn. At the same time, keeping a mix of different asset types is key; real diversification is the best hedge against whatever the economy throws at us. That's why I do what I do.

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  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    10mo

    I have thought the stock market has been overvalued since the pandemic but thankful I didn’t attempt to market time or it would have cost me a lot of money. What does your financial plan say? If this is in keeping with your asset allocation structure and you are heavier in the market than your plan outlines I think RE can be an excellent bond type fund component. Like you noted consider that it’s not liquid, requires babysitting and also that vacancies eat into your anticipated cash flow quickly. Despite owning a condo they are not what I generally recommend due to fees and likely abundant supply when it comes to resale and renting. 

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    10mo

    Regardless of the stock market, this is a simple math problem.

    $160k in cash is your cost, around $11k CF/year means it will take you almost 15 years, not counting added cash costs along the way, before you recover your $160k cost.  That's terrible.

    1Reply
    • Rob HowardPro Member
      Knoxville TN, USA · Member since 2023 · 61 posts · 42 votes
      10mo

      @Joe Villeneuve except that he can sell it at any time probably for a profit in addition to the cash flow. 

      0Reply
    • Joe VilleneuvePro Member
      Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
      10mo
      Quote from @Rob Howard:

      @Joe Villeneuve except that he can sell it at any time probably for a profit in addition to the cash flow. 

      Not really.  The downpayment is buying equity that you should recover from the sale price, but that's not profit.  The extra DP could be better served split at the start into more deals.
      If the condo was worth the cash purchase price at the start, the value doesn't go up just because you made repairs, and if it does, it may not go up the full repair cost.  That means it's worth only $160k,...yes JUST $160k.  That means you paid $160k for a property worth $160k.  Yes that's obvious, but extremely important.
      Here's why.  If you used that cash as 20% DP funds, that same cash (and same equity) would be worth $800k in PV...not JUST $160k.  So, if the properties in question appreciated as little as 5%/yr, the $160k property would increase in PV/new equity to $168k.  The $800k deal would have a new equity/PV increase to $840k.  That's a difference of $32k more in PV/equity...and that number will exponentially increase in future years because of the higher base.
      Now before you mention the decrease in cash flow, let's say your CF was cut down to 1/3 of the $11k/year.  That's a loss in CF of only $8k/yr.  You're still ahead going the 20% down route by at least $24k/year...still with exponential growth.

      So no, he still can't "sell it anytime and make a profit".  That profit would be based on the spread between starting cost/PV and selling price, which is still the difference between $160k and whatever the sale price is, which is the same numbers either way.

      1Reply
    • Rob HowardPro Member
      Knoxville TN, USA · Member since 2023 · 61 posts · 42 votes
      10mo

      @Joe Villeneuve good points. I was writing from a Knoxville point of view. We're not looking at anything stagnant or losing equity without an insurable event. Sorry - not everywhere is like here - $160k doesn't get anything. 

      1Reply
    • Joe VilleneuvePro Member
      Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
      10mo
      Quote from @Rob Howard:

      @Joe Villeneuve good points. I was writing from a Knoxville point of view. We're not looking at anything stagnant or losing equity without an insurable event. Sorry - not everywhere is like here - $160k doesn't get anything. 

      That doesn't change my answer.  The numbers also dictate whether or not you should buy a property in the first place.  Rationalizing buying a bad property just because a particular market that doesn't give you good numbers is local, isn't a good idea anyway.  That's a bad market.  Just change markets.  

      I have found over the years (many) that you can always find a good market close to you, even though it may not seem so on the surface.  Market analysis done the correct way, will always find a good market, not rationalization.  However, all markets that eventually work, must be accompanied with the proper strategy.  It's the correct strategy that makes any and all markets work.
      1Reply
    • Rob HowardPro Member
      Knoxville TN, USA · Member since 2023 · 61 posts · 42 votes
      10mo

      @Joe Villeneuve I agree. Well thought and well said. 

      0Reply
  • Elealeh Fulmaran
    Specialist · Member since 2025 · 483 posts · 270 votes
    10mo

    Your logic is solid to prefer sleep-at-night cash flow, but tighten the underwriting before you move: verify true market rent, vacancy, PM fee, insurance, utilities, and HOA reserves; HOAs can spike assessments and cap rentals, so read minutes and rules. Compare that condo's net to a similar-priced SF home or small duplex with no HOA to see which yields better and is easier to finance later. If you do buy all cash, keep rehab light, build a CapEx reserve, and have a clear exit or refi plan; if the deal only pencils with perfect rent and zero surprises, keep shopping.

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  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    10mo

    I would advise staying away from condos unless they are in some magical place. they are normally terrible investments.

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  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    10mo

    For a condo still need run capex numbers maybe $60 to $80 a month. Also specials maybe $50 to $100 a year on averaged out unless its a building with really high reserves, they all get specials at some point. 

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    10mo

    @Alex Silang,

    You’re on the right track considering real estate as an alternative to stocks, especially given current market valuations. From a tax perspective, the depreciation on the condo will be a big win for you, it reduces your taxable income and offsets the rental income. Plus, the rental income is generally taxed at a lower rate than ordinary income.

    Also, if the condo appreciates, that's an added bonus. Just be mindful of the property taxes, HOA fees (as mentioned above), and repair costs, as these will reduce your taxable rental income, but they're deductible against the rent you collect. Many investors are also shifting toward multifamily because it's often easier to manage than scattered single units. While it's always smart to diversify, real estate has historically been a strong wealth builder, especially if it's something you're genuinely interested in. And as you mentioned, it's less volatile than stocks, especially during uncertain times. If you do decide to jump in, just know these tax benefits are only the tip of the iceberg; you can build a full, strategic plan around this depending on your overall financial picture and other income sources.

    Good luck, and happy to connect!

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