Pros to Owning a Condo?

Question

I have been approached with buying a condo in an up and coming area close to Dallas, TX. I think it's located in a great spot and would easily be rented. However, I've never owned one and curious if they are a good asset to hold onto. Seems like they don't have great appreciation, HOA's eat into it, and hard to resell. I'm just curious what other's who own a condo think about them and if you think it's a good investment.

Sunil Kurian · Answer

@Jacob Maes I know that some investors cash flow fine with condos in certain areas but it isn't something I'd be comfortable with because of all of the external factors that could be at play. In between the potential for special assessments, restrictive deeds, nosey HOA boards, and more complicated insurance scenarios...I'd prefer to pay more for a free standing property where none of those things are an issue. (The only thing about HOAs that are "fixed" are the monthly dues and even those may be subject to revision annually.)

Again, there is definitely money to be made on condos if you find the right area/deal...but I'd just rather look elsewhere.

Frank Chin · Answer

@Jacob Maes

Agree with @Joe Splitrock above. I experienced all of the above since I bought condos to live in and rent out. Also there are prior discussions, see: Condo investment

As I also handled my mother in laws Coop in an estate, these entities are subject to the governance of HOA's and Coop boards. In the case of the condos I bought, the CC&R's spells out how many of the units can be rentals, 21 out of 104 at one. I seen buyers on this board unaware of this when they bought the condo and and find out afterwards it can't be rented it out. They are not tenant friendly and after problem with condo units renting to rowdy tenants, said they must give approvals on tenancies. Keep in mind the board only meets once a month for such matters, and if your tenant is turned down, you might have to wait another month. Also, I've been blindsided by special assessments, $10,000 at one time for a roof replacement.

Scott M. · Answer

The biggest pro in my opinion is you are responsible for the walls in and the HOA is responsible for the walls out. Cuts your potential maintenance and cap ex expense exposure.  As you and others will not this comes with trade off's and only you can decide if that is right for your model.

John Underwood · Answer

I would absolutely try and buy a house over a condo for reasons you already outlined.

Joe Splitrock · Answer

It sounds like you understand the risks of a condo. In a market down turn, condos are the first to lose value and the last to regain value in an upswing. A bad HOA can cost you lots of money or even restrict your use as a rental. It is not just the HOA fee, but the potential for special assessments. That is when standard fees don't cover major expenses. They you are stuck with a bill for $20,000 or whatever as a lump payment. Too much risk for me, but condos can be fine in some markets that have crazy appreciation. I am not sure Dallas is that type of market.

Bruce Lynn · Answer

What's an up and coming area close to Dallas?   Seems like most condos are in Dallas or Fort Worth and just a scattering around other cities.

Lots of issues with condos as rentals....lots of rules and regs your tenants may not follow....trash out on the wrong day.  Items on balcony, noise, pet issues, noise, covering windows, parking in the wrong spots, and on and on.  HOA dues kill the returns in most places other than about 5 developments I know about in DFW area.  I think you end up subsidizing the amenities for your tenants...pools, guards, gates, fitness center, etc.

Way too many places I see around DFW have a ton of deferred maintenance....so make sure to check that out.....you know who gets to pay for that at some point....YOU.

Rents are probably coming up....so you could get lucky.  With the run-up in SGF prices, you could get lucky when many buyers are left with less expensive condos as the only way to start their ownership journey.

Plenty are probably great places to live in for yourself, but often haven't made great rentals.

Bud Gaffney · Answer

@Jacob Maes none. I own a condo and would never buy another 1. HOA fees stink, and the “assessments” are brutal. Stay away

Pros to Owning a Condo?

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