Hey BP! Need help making a decision:
Bought a condo across the street from a university in Tennessee mainly for my daughter to live in and "house hack" in the fall semester.
We listed it for Summer Lease Only and have gotten about 10 inquiries, all but 1 wanting a years lease and every single person that we have had contact with asked if we would let them know if we have anything else open up there (I guess they are assuming we are a big company).
In the mean time an identical condo has come up for sale in the same building. Which would require minor "make ready" repairs and could be ready by May 1 for rent.
Won't bore you will ALL the numbers, but the first condo was a cash purchase. Cash flow = $550/mo after HOA, Tax, Ins, CapEx, repairs, and PM (we are self-managing, but want to include this for later). Did not figure vacancy...I know...I know...but two other owners (from the HOA board) said they both have waiting lists for their condos.
To buy the 2nd condo, we would take out a small mortgage on both, ending up with approx. $200 cashflow from each. To cope with some initial vacancy during the "make ready" we are able to pay PITI and expenses from our day jobs without killing ourselves if needed for a time.
Seems pretty good, BUT my reservations are:
-- We would be making less cashflow with the two, have twice the potential headaches and have to worry about getting two sets of tennants.
-- We would own two condos in the same building. IF a special assessment came, we would be on the hook for twice the assessment.
Would appreciate any advice!
I just cant see a reason to spend more money for less cash flow. Maybe if the unit is a real bargain and there is potential for appreciation/instant equity but if there is that much demand its likely priced accordingly. Stick with the first one.
Welcome to owning multi property landlording!! Face it- you will have double the risk/reward/head aches when you get another of anything.
Having two in the same building eliminates a lot of headaches than having two in different areas.Control is easier. If there is such a demand- fix up the unit a little nicer the the comp and get more rent. maybe gross 250/mo is still a nice return
Also join the HOA. But BUY IT. Good Luck
I still own the house we bought when Daughter went to college. Rehabbing it again now. She hacked it with roommates when she was in school. All she had to pay was her share of utility's. It worked , cash flowed, an still does. With that said.
I don't buy anything that has HOA fees. I can't plan for assessment's. I yr leases only If it sits empty during the summer break. you will be paying for vacancy's also. Even inurance will make you pay for a vacancy permit extra If empty over 30 days.
Wife bought a Condo Last year. Math didn't work for me. but she just had to have one. (bought what she wanted to live in someday). So Far She has made payments. collected rent and deposits from someone who never moved in. Empty again. repaired heat unit. paying utility's And fielding calls from people who cant afford the rent. there are more dated units. in the complex drawing less rent. and that's not helping either. I'm just setting back and waiting on the assessment's to come in.
More headache for less returns doesn't compute for me. Never fall in love with a unit.
I would look for a house in the area. no assessment's or fees. Just like a dorm' roommates help with bills.
That's just my opinion. each case is Different.
Thanks guys-- will take all under advisement in making our decision! Appreciate your responses!
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