Investing in Condo in Arizona

12 Replies

@Dareen Allie I think it highly depends on the HOA that governs the property and what their CC&Rs are as it relates to renting. I just sold a condo property that I owned for 5 years and it was a very good investment for me with little to no HOA related issues. The HOA was well managed which is a big factor. If you are doing STRs then I would definitely vet that HOA guidelines. As for rentals, my specific building didn't restrict rentals or STRs for that matter. Typically if you have a real estate agent you're working with, then they can find out pretty easily from the listing agent whether or not there are HOA restrictions (if it isn't already disclosed in the MLS listing).

@Dareen Allie Condos can be a bit tighter on investors, some/many have put a stop on Short Term Rentals and a few try and restrict long-term rentals. In general, most are going to be fine with long-term rentals (30 days or more). 

We have helped investors purchase condos in Mesa, Phoenix, Gilbert, and Tempe, Arizona that are working out well for them. Condos can come with a few restrictions but also many offer amenities such as community pools that can be attractive to tenants.

Financing condos are more restrictive than single-family. Many are not FHA approved, which as an investor is likely not an issue. Also, the percentage of ownership rules come into play on condos, which is simply if too many in the complex are owned by investors it's capped and won't finance. Of course, if you are cash much of this matters less.

One other item to watch is the percentage of ownership by any one individual or entity. If one owner gets to a significant percentage that can force the minority percentage of owners to sell units back to them. It's an odd, often overlooked area of Arizona law.

With all of that said, we have a number of investors that are very happy with their condo investments! Don't let all of my topics scare you away, it's more of informing you on potential issues.

Happy to answer further questions! We need rentals, more applicants than units!

@Doug McVinua thanks for all that great information. some of the different restrictions do scare me a lot but they’re what i know i can invest in just starting out because of their cheaper pricing. i think i heard about that law on the local news not too long ago. i think home owners were mad they had to sell to investors or something like that. is there a way i can know percentages an investor holds in the association?

@Dareen Allie Yes, we can obtain the information as the process moves forward. It's all attainable, some easier than others of course.

I was fairly hard on condos but I could do some of the same for single-family. Single-family has fewer restrictions but some of it is just knowing what one's goals are and how do we achieve that!

Arizona investment real estate can offer great rewards in many different forms. Very, very few start off owning an apartment complex, most buy one simple property or convert an occupied property to a rental as your needs change in life. It's about starting, learning, and as time moves on adding more to your portfolio.

From my perspective, the number one mistake made in Real Estate investing is not buying the first property. Some over analyze, some never have the down payment, some never get their credit in order, some just let fear drive them, and many just don't take the steps!

It's work and takes some time but if you want it, get your butt out of the chair and do the legwork to be an investor. Many paths to success, which one is right for you?

We have owners receiving over $10,000 per month on properties that are paid off, be like them!!!!!

@Doug McVinua i completely agree. that’s why i so determined to just hop in and learn the ropes… in a safe and calculated way of course. i’m ready to get over this “beginner’s learning phase” in my investing career! are you a real estate agent?

@Dareen Allie I started investing earlier this year and have purchased two townhomes in Phoenix. I checked the CC&Rs before purchasing and ensure that they allowed for LTR. I try to attend the virtual board meetings for the one I have held a little longer so I can meet the resident run board and make everyone comfortable that I am a responsible landlord. I offered to share my leases with the HOA as the CC&R requires and neither HOA felt it was needed and did not seem phased at all that I was leasing. Both units are rented and have appreciated quite nicely in the short time that I have had them.

@Dareen Allie I started investing earlier this year and have purchased two townhomes in Phoenix. I checked the CC&Rs before purchasing and ensure that they allowed for LTR. I try to attend the virtual board meetings for the one I have held a little longer so I can meet the resident run board and make everyone comfortable that I am a responsible landlord. I offered to share my leases with the HOA as the CC&R requires and neither HOA felt it was needed and did not seem phased at all that I was leasing. Both units are rented and have appreciated quite nicely in the short time that I have had them.

@Dareen Allie you should ask your agent to pull the CC&R during your inspection persons to assure yourself that rentals are not restricted if you aren't able to confirm it prior to submitting an offer. There are HOA's that restrict the percentage of units within a complex that can be used as rentals so be careful! Feel free to reach out if you want to chat about it.

Originally posted by Dareen Allie:

@Whit B. thanks the info Whit!

As mentioned before, it really depends on CC&Rs, rules and regs, and how well the HOA is run. If there is a high rental to owner ratio, then lenders will stop lending and some HOAs will put restrictions on any new units being able to rent to keep below their specific ratio.

That said, it's a great way to start. My first purchase and live in flip was a HUD condo and it worked out very well.

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