Slow and Steady - 1 bed/1bath Condos in Hot Spot Cities
New to Real Estate · Lockdown Capital of the World Melbourne, Australia · Member since 2021 · 60 posts · 26 votes
I haven't bought a property yet (very nervous, but it will pass after getting more educated). I rented a 1 bed/1 bath in Las Vegas. It was a small space, but in a great spot. Since duplexes aren't easy to find, I was thinking about buying a 1b/1b in a popular city, Nashville, TN specifically. I'm overseas, but just hopping around on Redfin. (Not going to buy until I get back to the States). Slow and steady is how I'd like to go.
There are a few inexpensive 1b/1b in nice neighborhoods that are old, but turn key. Several were $85k-$100k. They actually looked nice. Surely, I can fix up and rent out to someone who will likely rent out b/c Nash is such a hot spot much like Austin (Texas property taxes are high though). Even if it weren't TN, wouldn't this be a "safer" way to go to slowly build cash? Find the highly sought after cities? Even 2 beds 1 bath (or 2).
(I would go through a property manager in an HOA by the way. I like safety nets when starting out. I would also consider 2-3 bed house but don't want to deal with having to fill rooms. Also - want something less expensive to start.
@Stephanie Ro I think you're on the right track. Many investors start their portfolio with turn key properties for the simplicity and overall ease of the first deal. It's also a plus that you have identified your target market, Nashville, property type, SFH 1-2 bed/1-2 bath, and budeget, 85-100k. I would take action and start developing your core four (agent, lender, pm, contractor). Continue to network here on BP to assemble your team and other investors will proivide more insight on the market, and what's working for them. Last thing to note, be careful with HOA communities, many have rental restirctions that could therefore limit your investment strategy. Hope this helps.
@Stephanie Ro I think you're on the right track. Many investors start their portfolio with turn key properties for the simplicity and overall ease of the first deal. It's also a plus that you have identified your target market, Nashville, property type, SFH 1-2 bed/1-2 bath, and budeget, 85-100k. I would take action and start developing your core four (agent, lender, pm, contractor). Continue to network here on BP to assemble your team and other investors will proivide more insight on the market, and what's working for them. Last thing to note, be careful with HOA communities, many have rental restirctions that could therefore limit your investment strategy. Hope this helps.
@Stephanie Ro I think you're on the right track. Many investors start their portfolio with turn key properties for the simplicity and overall ease of the first deal. It's also a plus that you have identified your target market, Nashville, property type, SFH 1-2 bed/1-2 bath, and budeget, 85-100k. I would take action and start developing your core four (agent, lender, pm, contractor). Continue to network here on BP to assemble your team and other investors will proivide more insight on the market, and what's working for them. Last thing to note, be careful with HOA communities, many have rental restirctions that could therefore limit your investment strategy. Hope this helps.
@Stephanie Ro I actually went for a condo because of the best money for the bed/bath combo that is the largest factor in price renting to students, and also exterior maintenance and landscaping and being able to offer a pool/volley ball court/basketball court that checks the boxes for the kids. :)
@Stephanie Ro I think you're on the right track. Many investors start their portfolio with turn key properties for the simplicity and overall ease of the first deal. It's also a plus that you have identified your target market, Nashville, property type, SFH 1-2 bed/1-2 bath, and budeget, 85-100k. I would take action and start developing your core four (agent, lender, pm, contractor). Continue to network here on BP to assemble your team and other investors will proivide more insight on the market, and what's working for them. Last thing to note, be careful with HOA communities, many have rental restirctions that could therefore limit your investment strategy. Hope this helps.
@Genny Li Thanks for the encouragement! I am going to research, research everything until I am comfortable. I'll have to look up HOA laws more. Is your property in an HOA?
@Stephanie Ro I think you're on the right track. Many investors start their portfolio with turn key properties for the simplicity and overall ease of the first deal. It's also a plus that you have identified your target market, Nashville, property type, SFH 1-2 bed/1-2 bath, and budeget, 85-100k. I would take action and start developing your core four (agent, lender, pm, contractor). Continue to network here on BP to assemble your team and other investors will proivide more insight on the market, and what's working for them. Last thing to note, be careful with HOA communities, many have rental restirctions that could therefore limit your investment strategy. Hope this helps.
Thank you. This helps tremendously and I feel encouraged by your reply. The reason I was going for an HOA is because they take care of the roof when it falls in and the water heater when it gives way. Do you have an example of an HOA ruining an investment strategy?
Also, I see you're in GA. I wrote a list of suburbs down and started to research places, but found a thread on here from 4 years ago and several mentioned the boom is gone or tapered off. I picked GA BC of lower property tax and it's a landlord friendly state. Thanks for your help. I'll continue to network on here. I'm still exploring the website! 🤗
1 bedroom condos can be a decent place to start. The rehab cost will be less to make it nice. Make sure you read all of the HOA rules, because many have rental restrictions.
1 bedroom condos can be a decent place to start. The rehab cost will be less to make it nice. Make sure you read all of the HOA rules, because many have rental restrictions.
Hello Phillip! Before leaving for Australia, I last lived in Las Vegas! Specifically, Silverado Ranch. I LOVED that area. I should consider Nevada again, but didn't think Nevada was landlord friendly. One of the benefits though is that I know the area very well. I lived in Las Vegas for over 10 years. I don't want the risk of a tenant squatting and it being difficult to evict! YES! I researched HOA rules last night and am blown away at what changed they can make where I'd be in a difficult position.
I think slow and steady is a great way to start, @Stephanie Ro, as you will learn a lot without the risk of a mortgage/rehab project that you can't afford. I think one thing you can consider is financing a property as a primary residence and living in it while you fix it up, then later turning it into an investment. You get the benefit of putting less money down than by financing as an investment, and your interest rate will be lower. This is a good way to maximize cash flow for someone starting out.
I think slow and steady is a great way to start, @Stephanie Ro, as you will learn a lot without the risk of a mortgage/rehab project that you can't afford. I think one thing you can consider is financing a property as a primary residence and living in it while you fix it up, then later turning it into an investment. You get the benefit of putting less money down than by financing as an investment, and your interest rate will be lower. This is a good way to maximize cash flow for someone starting out.
I appreciate this and am most certain that a duplex is more what I desire if I am going to get the tax benefits in financing a primary residence. Nashville has very few and I will look at other states.
Hey Stephanie! Nashville is certainly a hot spot now - tourism has drastically changed in a relatively short amount of time. I flipped a condo in Nashville with an HOA, and found out they didn't allow airBNB / short-term leases but did allow 1 yr leases, so just be sure to double-check the HOA rules depending on your goals. Also many parts of Nashville are limit the amount of airBNB permits, so may want to check that as well. If you need help, I'm a Realtor here! :) https://www.nashville.gov/depa...
Hey Stephanie! Nashville is certainly a hot spot now - tourism has drastically changed in a relatively short amount of time. I flipped a condo in Nashville with an HOA, and found out they didn't allow airBNB / short-term leases but did allow 1 yr leases, so just be sure to double-check the HOA rules depending on your goals. Also many parts of Nashville are limit the amount of airBNB permits, so may want to check that as well. If you need help, I'm a Realtor here! :) https://www.nashville.gov/depa...
@Stephanie Ro
I had a condo in Bend, OR for a year and hated it. Vetting an HOA's financials is about as complicated as vetting a multifamily syndication, but riskier in my opinion. I never felt like I "owned" the condo. It felt more like I was doing STR arbitrage. I'll likely never own another condo, and I'd recommend either SFR or syndication instead.
@Stephanie Ro
I had a condo in Bend, OR for a year and hated it. Vetting an HOA's financials is about as complicated as vetting a multifamily syndication, but riskier in my opinion. I never felt like I "owned" the condo. It felt more like I was doing STR arbitrage. I'll likely never own another condo, and I'd recommend either SFR or syndication instead.
Hello Nate. I really appreciate this perspective. I am so happy that my -this is what I want to do- mindset has been changed by simply getting educated, been-there-done-that recommendations. Now, I have changed my mind regarding HOAs. The thing is, I am a really easy tenant and lived in Las Vegas before going abroad. It was a 1b/1b in a condo and was part of an HOA. I thought - wow - how simple? I should buy low and rent out. However, this was from MY perspective as a tenant not a landlord! Silly me. Now, I know that HOA's can simply say "no more renting" at any time or make me pay for a massive paint job! Thank you for this. I don't quite know what syndication entails, but won't be going commercial for a bit. SFR or duplex/triplex is looking good to me! (without HOA) :)
@Stephanie Ro
Of all investments, this would be my least favourite. Smaller renter pool. Condo corps are generally ridiculously poorly managed. Someone else having a say in my investment isnt ideal. Higher turnover (1/1 is always a stepping stone). You dont own land, you own a structure with a finite lifespan). Depreciating asset vs something with land (no finite lifespan) which appreciates.
Just non stop reasons to buy a different asset class.
@Stephanie Ro
Of all investments, this would be my least favourite. Smaller renter pool. Condo corps are generally ridiculously poorly managed. Someone else having a say in my investment isnt ideal. Higher turnover (1/1 is always a stepping stone). You dont own land, you own a structure with a finite lifespan). Depreciating asset vs something with land (no finite lifespan) which appreciates.
Just non stop reasons to buy a different asset class.
@Stephanie Ro I'm in a similar position as you, just getting started. My plan right now is actually looking at condos in the Las Vegas area that can be used as an Air BnB. Everything written here matches what I've read elsewhere, there is some risk because you're also dealing with a HOA. Need to make sure they allow STR but also are well run themselves. If they are poorly managed things can go bad quick. Another thing to always remember is to factor in the monthly HOA fee when analyzing a place. Seems obvious but something easy to overlook.
Good luck, let us know what you end up doing. Personally I'm always looking to learn from others working on the same type of goal.
@Stephanie Ro I'm in a similar position as you, just getting started. My plan right now is actually looking at condos in the Las Vegas area that can be used as an Air BnB. Everything written here matches what I've read elsewhere, there is some risk because you're also dealing with a HOA. Need to make sure they allow STR but also are well run themselves. If they are poorly managed things can go bad quick. Another thing to always remember is to factor in the monthly HOA fee when analyzing a place. Seems obvious but something easy to overlook.
Good luck, let us know what you end up doing. Personally I'm always looking to learn from others working on the same type of goal.
Hello Brian. Thank you for your input! I WISH that when I lived in Las Vegas, I had a 1 or 2 bed condo or townhouse and rented it out through AirBNB or the like. I worked in the hotel industry for years and when it was fight night or electric daisy carnival, or some major event, the city sold out. An AirBNB would have been sweet. I thought NV laws weren't very landlord friendly, but never looked into it. I was such a perfect tenant in the condo I was renting, this is why I thought it would be simple, but I failed to see everything from the landlord's perspective - until now!
@Genny Li Thanks for the encouragement! I am going to research, research everything until I am comfortable. I'll have to look up HOA laws more. Is your property in an HOA?
Yes, all condos are HOAs (or corporations of other sorts) because you need an entity to fix the roof, take care of landscaping, etc! :) There seem to be 2 ways of running big capex expenses for an HOA, the oooogly way and the smart way. The oooogly way is to spend every cent of HOA fees each month and have nothing for capex, and then suddenly demand a crazy one-time sum down from all the owners when capex pops up. Now, that may be cheaper in the long run because you're not paying interest on stuff like roofing, BUT it's incredibly hard to know exactly what one-time fees are going to pop up and when. This seems to be how Florida condos are run, with one-time assessments sometimes running in the high five figures for properties worth only in the mid six figures! This also encourages people to delay, delay, delay maintenance until they sell their own condo, and so condos under this system usually go downhill.
The other way is for the HOA fees to be high enough so that stuff like new roof, new parking paving, new siding, etc, can be financed and then is paid out of the normal fees. That's how mine is structured. Under this system, everyone wants the improvements and repairs made ASAP so that they can get the highest amount out of their own condo because you can advertise it as having a new roof, etc.
Also, it's better to have a condo with a property management company, even though in theory this might be more expensive, because being willing to run for the condo board does not equal being a competent property manager. Our PM does all the stuff for the condo that it does for apartment complexes, like porter services for bulky trash, lightbulb replacements outdoor, picking up litter, paying landscapers, sending in a plumber when some plumbing breaks outside, maintaining the pool, maintaining the sports courts, etc.
So, why did *I* choose a condo? The condo complex I chose is all owned by investors. Every bit of it. The condos are 4 bed/4 ba in just 1250 sqft built to be student condos on a university bus stop. Bus stop ain't moving because there are probably a thousand student units right around it. Students are horrible at lawn care and don't want to do it--no lawns with a condo! The price was awesome for the cash flow because there's no competition from anyone wanting to actually live there themselves. The PM company is the biggest in the county and takes care of tons of apartment complexes and townhome communities. I don't have to worry about roofing and I can offer the sports areas and pool that some kids want. For student rentals, it was easily the best deal on the market.
Worse, in other areas, there are restrictions that can be imposed down to a sub-neighborhood level on the percentage of renters allowed and the number of unrelated adults in a unit. Some places have it locked down to 10 percent rentals by *street* and 2 unrelated adults. My parents' neighborhood did this after they got a fraternity in it! They got the frat in trouble for alcohol violations and got it shut down, eventually, and then threw the rules on so people would stop renting out 4-bdrm SFHs to kids who would kill all the landscaping and make the houses look abandoned. You really, really have to know these college towns well!
I only buy condos and have had great cash flow and appreciation. I only buy 2bd 2ba units as they tend to attract more long term tenants. I buy in Riverside, Ca.
@genny li Thank you for the explanation. WOW. You really did your research and were very specific. I was thinking about student rentals, but only in a town where I know the area. It's going to be tricky, but I know I can make it happen. So many people on this thread are saying to stay away from condos and HOAs altogether! So much to think about. I appreciate the depth of your reply.
Hi Stephanie, I agree with @natebell.
Just read some articles on the Surfside Condo Collapse. That's a worst case scenario, but basically the condo board was trying to levy hundreds of thousands of dollars PER resident to fix the structural damage prior to the collapse. There is a BP podcast about an investor whose strategy was to buy condos and become the head of the association to make sure their financials were in order. That's the only way I'd operate.
New investors get burned one way or another. Pick a specific house type (sfr, duplex) and try to do a few deals with that type. If doing out of state, try the same area so that you can build trust with agents, contractors, etc.
@Stephanie Ro you said you're overseas, but can you move back to the US and house hack a duplex? That's a lot "safer" than buying a random condo in a random city. You'll get owner occupant financing and also (potentially) have stronger rights as a landlord.
@daniel Mears This was just a thought. Ideally, when I move back to the states, I'd like to get a duplex/triplex and take advantage of an FHA loan at 3.5%. There are lots to think about! Just starting out and joining the forums.
@Stephanie Ro you said you're overseas, but can you move back to the US and house hack a duplex? That's a lot "safer" than buying a random condo in a random city. You'll get owner occupant financing and also (potentially) have stronger rights as a landlord.
I wrote everything out and it all disappeared. Here we go again. I said that I just posted to another reply that duplexes/triplexes are what I want now after hearing everyone's input. I lived in Las Vegas before I left and I don't want to live there again. Before that was Colorado and so much has changed and homes are so expensive. I was thinking a college town where I went for 1 year would be cool. I want to take advantage of the FHA loan at 3.5% and go from there.
I was considering Nashville but heard about the crime. I'd also consider Indianapolis or Cincinnati/KY boarder. I need to build a strong foundation first and read the books. It's overwhelming and exciting to think about the possibilities. So many people have opinions on the market. I only have myself and don't want to make thousands of dollars in mistakes. 😔