Condos vs sfm in the short term rental market

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Condos vs sfm in the short term rental market

Lane C.
Rental Property Investor · San Jose, CA · Member since 2020 · 47 posts · 4 votes

What are your thoughts on investing in a condo as a str vs a sfm. The big benefit of str in my opinion is chase flow and obviously since you’re typically buying in a desirable area you can offer get really good appreciation as well. I’ve noticed In the markets I’ve looked at condos seems to sit on the market much longer and from some research I’ve done they don’t appreciate as well as sfh. I know some markets seem like they only allow condos as str. What are your opinions is it better to find a market that allows sfh str or go with condos that seem to sell worse and depreciate slower.

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
4y

HOA's add costs and risks of rule changes. There are tons of Condos available to buy and rent. This causes the rental rates to be pretty cheap due to the competition.

I personally always stay at a beach front house. I like being able to walk out the back door and be on the beach. I like sitting on back deck and looking out over the ocean. Great place to be when a storm rolls in. 

A house will make more money than a condo. Set your self apart and you can be a top performer with a STR.

Also families and friends can and do vacation together and can rent a house together. This is a memory maker and keeps people coming back.

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  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    4y

    Market is the key word. In some markets like PCB condos can rock. Also greatly depends on the building itself. Some buildings can be great for short term and some can stink, even in the same market. 

    Some folks don’t realize you can’t get a conventional mortgage on a condo and when they figure that out they think condos stink. 

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Lane C.:

    What are your thoughts on investing in a condo as a str vs a sfm. The big benefit of str in my opinion is chase flow and obviously since you’re typically buying in a desirable area you can offer get really good appreciation as well. I’ve noticed In the markets I’ve looked at condos seems to sit on the market much longer and from some research I’ve done they don’t appreciate as well as sfh. I know some markets seem like they only allow condos as str. What are your opinions is it better to find a market that allows sfh str or go with condos that seem to sell worse and depreciate slower.


    Condos are easier to get into, but they rarely perform as well as a single-family home. Anything within an HOA is riskier because the value of the property can be tied directly to how well the HOA runs. You also have to remember HOA fees always go up, never down. And if you get on the bad side of that little old lady down the street that likes to file HOA complaints daily...good luck!

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    HOA's add costs and risks of rule changes. There are tons of Condos available to buy and rent. This causes the rental rates to be pretty cheap due to the competition.

    I personally always stay at a beach front house. I like being able to walk out the back door and be on the beach. I like sitting on back deck and looking out over the ocean. Great place to be when a storm rolls in. 

    A house will make more money than a condo. Set your self apart and you can be a top performer with a STR.

    Also families and friends can and do vacation together and can rent a house together. This is a memory maker and keeps people coming back.

    3Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    4y
    Quote from @Lane C.:

    What are your thoughts on investing in a condo as a str vs a sfm. The big benefit of str in my opinion is chase flow and obviously since you’re typically buying in a desirable area you can offer get really good appreciation as well. I’ve noticed In the markets I’ve looked at condos seems to sit on the market much longer and from some research I’ve done they don’t appreciate as well as sfh. I know some markets seem like they only allow condos as str. What are your opinions is it better to find a market that allows sfh str or go with condos that seem to sell worse and depreciate slower.

    In 2011-2012 I purchased 5 high end (3 high rise, 1 mid rise, 1 townhouse) condos in and around the Phoenix area.  Each condo association had a restriction eliminating StR.  Two condos had minimum lease time running 12 months, two had 6 months minimum, and one 90 days.  Further, two of the condos required information on renters; and one had a restricted percentage of units that could be in the rental pool.  The reasoning for this in condos in which people live full time , as opposed to where everyone is using their unit as a vacation place, is (1) quality of life for the permanent residents, (2) limiting the rental units” below the percentage where conventional financing is no longer available (3) avoiding a hotel like or timeshare like atmosphere, (4) safety issues and (5) resale issues.

    There are condos, particularly in vacation areas, that either by design or be default are short term rental “friendly”.  The general rule of thumb is that you’ll give up some profit for a somewhat easier management task vs SFR short term rental. I believe that some of the larger, more experienced STR investors on this forum would argue that with the technology available today managing a SFR short term rental is very similar to managing a condo STR.  
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