Orlando, FL - First Condo Purchase

8 Replies

Hi I am looking at buying my first condo in Orlando, FL and the analysis I have done so far gives me a 17% Cash on Cash ROI. I am curious about insurance, does a condo HOA cover roof and outer walls? I called to get an insurance quote and they gave me one for interior and one for exterior. The difference for the yearly premium is significant and would definitely change the ROI. Any education you could pass along would be greatly appreciated.

John Bastidas

    John,
    It all depends on the community. Typically if it is a condominium, the Association takes care of the outside. You would insure walls in.
    Take for instance, I have a townhome in Windermere that I own. They pay for the exterior paint, but I take care of the roof.
    Just call the HOA or COA before purchasing. I usually find that condos don’t cash flow well because of the ridiculous monthly dues and possible special assessments. Speaking of assessments; make sure that the condo or HOA are well funded and they have proper reserves for roofs, parking lots, painting etc...
    In addition, make sure that there are not a lot of foreclosures still on the books

    Kim Meredith Hampton, Real Estate Agent in FL (#BK0601196)

    Kim thank you for the feedback. I called today and they said they usually do the roofs and outer walls every few years, but thank you for the other recommendations. 

    John Bastidas

      Hi @John Bastidas ,

      I own 2 investment condos, and I love them. The HOA does hurt your return, but if you know what to look for in the beginning you can take care a lot of those capital expenditures. I'm responsible for the appliances, water heater, and AC. I don't cut the grass, save for the roof or exterior paint. I get to offer amenities, like pools, gyms, security gates/guards to my marketing.

      Condominium is not a style of property, but rather a definition of ownership. You own a box in a building, therefore you are responsible from the drywall in. 99% of the condos will cover all exterior. 

      Your offer plus the condo rider, check the box for requesting condo docs. The AS IS contract will outline what those condo docs are. You want to add that you wish to see the last 12 months of board minutes. If they're going to increase, decrease, start an assessment, they're certainly going to be talking about it when they meet. 

      A condo policy is called an HO3 policy. That should be roughly $500/year, unless the condo is old, super large, or on the ground floor.

      Good luck!

      Tom Parris

        @Kim Meredith Hampton and @Tom Parris do you think a condo would be a good first investment. I am looking at a $43,900 asking price with current tenant that pays $830 in rent, HOA Fees are 218 a month, and taxes are $283. Quoted insurance premium is at 408 yearly (covers interior). I have run the numbers and it shows a 17% cash on cash ROI, but like i said i am a newbie..lol

        John Bastidas

          Originally posted by @John Bastidas :

          @Kim Meredith Hampton and @Tom Parris do you think a condo would be a good first investment. I am looking at a $43,900 asking price with current tenant that pays $830 in rent, HOA Fees are 218 a month, and taxes are $283. Quoted insurance premium is at 408 yearly (covers interior). I have run the numbers and it shows a 17% cash on cash ROI, but like i said i am a newbie..lol

           I would relook at the taxes on this property, I doubt they are only $283. Look on the Orange County property appraisers site, pull up that property address, and you should see s small Box near the top that says tax estimates. Put in there the price you are paying, non homestead and this will give you the real tax amount

          I would also factor in vacancy and capx. There are some great financial analysis tools on BP

          Kim Meredith Hampton, Real Estate Agent in FL (#BK0601196)

          Not super versed in property taxes for condos but ran into this with my personal SFR in Orlando. Bought house before being educated. Did not realize Save Our Homes Act exemption would fall off after I purchased Home. In addition, purchase money transaction / warranty deed signaled to county property appraiser it was time to reappraise tax assessed value. Added 75k in tax value to Home + loss of save our homes = property tax doubled. Glad this is my personal residence/house hack and not a pure rental or my cash flow would have REALLY been blown up. I would recommend making sure your condo won’t get smoked with this or it could really hurt your cash flow.

          Hey @John Bastidas ,

          We see new properties show up every week for the Orlando area. Properties are listed weekly with miss listed multi family, turn key investment, and and even 20% under value homes. From the data I have seen, Orlando seems to have a good mix of properties for all types of investors and income types. Condos appear to have good value and and rental potential. If HOA fits your profit goals it takes a good portion of maintenance costs and capital savings off your plate.

          Happy Hunting !

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