Thinking of starting with a condominium

[Cortez Dameron]

I’m thinking of starting with a condo as a buy and hold is there potential of pulling equity out of them in an a couple of years

[Ari Bachrach]

It seems like most people on BP don't like condos. I started with condos and own a few. Here are some good and bad things about this.

In my market real estate is so expensive it's very hard to make things cash flow. Condos haven't appreciated as much, so it was easier to make them cash flow, even with their high HOA fees. Your mileage will obviously vary, just don't forget to count the HOA fees in your calculations. For example the 1% rule becomes to 1+HOA% rule.

Vacancy is a bigger deal because you're paying HOA fees. How long will it take you to get the place ready to rent? If it will take 3 months, it will take 3 months of HOA fees too.

While they cash flowed better on paper, smaller units are the hardest things to rent out. Don't fall for cheap 1 bedroom units like I did. Except near universities no one wants to rent those.

You will have much lower capex - there's no roof, no foundation, no gutters, no hot water heater, etc. I know a lot of working professionals that only do condos for this reason - they just don't have time to deal with the increased aggravation of a house.