Thoughts on Investing in Condos?

Question

I was wondering if anyone had any experience investing in condos. I've heard a lot of people say that they wouldn't get involved in them, but some of the deals I've been looking at make sense. Am I missing any unknown fees normally associated with owning a condo? Are there any things I'd have to look out for if I was interested in investing in them? Any information would be great!

Bjorn Ahlblad · Answer

HOA's can completely screw up rentals. The boards are corrupt, they can disallow rentals and alter existing regulations at a board meeting. I don't want anything between me and my tenant.

Edward Liu · Answer

HOA cost and what it covers is the key.  Some people don't like it because even if vacant, you are still on the hook for HOA.  In many places, SFH also has HOA, so P&L is really the determining factor.

If you only buy 1 condo/townhouse, make sure the HOA association is NOT controlled by 1 owner (1 owner owns more than 50% of the units).  I have heard bad stories of such arrangement for other owners.

John LaBanca · Answer

My first property was a condo/townhouse. It's fine as long as the numbers work. You pay a monthly HOA, but you save on maintenance costs. If the association is well run and negotiates good deals, you could potentially pay less in maintenance overall because they're painting and replacing roofs with a bulk discount that you don't get with a SFH.

The two things to watch out for are high HOA fees where the numbers don't make sense, and rental restrictions.  Many condo communities are limiting the number of units that can be rented or impose additional fees or restrictions on them.

Thoughts on Investing in Condos?

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