Why Investing in Condos as a Beginner Could be a Great Idea
Condos have a negative connotation and justifiably so. Buying the wrong condo, in the wrong location with a poor managed Condo association could be an investor's nightmare, but here are some ways you can avoid that & some of the pros of getting into a Condo!
- More affordable! Condos tend to be way less expensive than Single Family and Small Multi-Family. Your mortgage payment being low is a huge factor in Real Estate investing.
- Market rents are typically pretty high for low priced 1 bd 1 ba Condos. This makes it very easy to acquire a Condo that generates some cash flow! The price to rent ratios can often times beat those of a Single Family home!
- Less work! When you buy a Condo you are essentially just responsible for the interior part of your apartment. The outside is considered Common space which is covered by all of the owner's HOA fees. There is no fixing gutters, roofs, structural damage, plumbing and etc.
-Buying a Condo in the right Location where there is a high demand and a lack of inventory can mean that your Condo can appreciate an immense amount. Single Family homes often times beat Condos when it comes to appreciating, but the right Condo in the right area can outpace many single family homes because of its location!
-(Risk Factor) You're going to make mistakes and often times come at a loss when starting as a Real Estate investor. This could be a great way to mitigate those risks and then progress to a Single Family, then small multi-family & then commercial.
Ultimately, starting out with a condo as an investment can be a great way to start your journey as a Real Estate investor. There will not be many unforeseen surprises as long as you buy a Condo in the right location and that has a well managed Association with a significant amount in reserves. Buying a Condo could be the inception of your Real Estate Portfolio!
I'll admit I'm in the anti-condo investing school. Rarely have I seen fellow investors make it out big or even break even on condos. I wouldn't argue there aren't any okay condos that can return a profit but I've yet to find an option that works in my market. And appreciation is nice but isn't liquid enough for new investors strapped for cash.
When I talk to new investors I always recommend the house hack to begin REI. For one, you become a homeowner and develop an intimate relationship with the interworkings of a house. And you are close to monitor problems with tenants and other issues.