I'm looking for input on a deal I have found recently. What are some of the pitfalls people have experienced investing in condo units? This would be my first investment property so I'm looking to start small and work my way up. When taking into account the 50% rule I would be right around break even in terms of positive cashflow. I think the property would be paid off within 5 years by taking the surplus and applying it to the principal. I have always invested in stocks and am new to REI. If anyone has any experience with condo rentals I would appreciate any insight!

Property details:

List price: $40,000
2 Bd 1 Ba 733 sq Ft in move in condition
Taxes are $995/yr
Association fees are $175 a month
The same units in the area rent for $805/month

Total costs @ 20% down 30yr fixed

$440/month including P&I, taxes, home ins, and association fees.

$365 monthly cashflow (not taking into account the 50% rule) 

@Joe Fornasiero - The reason I would never "invest" in a condo is because of the HOA. In my area many of the HOA bylaws limit or forbid the rental of condo units. Some only allow a certain percent to be rented, some make you wait a certain time, and some don't allow it. When the crash happened, instead of having foreclosures they lifted these rules so the condo owner did not lose their house. Problem is that the restrictions are in the bylaws, and now many HOA's are going back to them and the original restriction on rentals and guess what is happening to these investors? They are SOL and are forced to sell or sit on a vacant unit.

Also read this thread

http://www.biggerpockets.com/forums/311/topics/164...