Does anyone believe the condo market is worth the investment?

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Does anyone believe the condo market is worth the investment?

Antony S.
Retired · Las Vegas/Henderson, NV · Member since 2010 · 21 posts · 3 votes

I know of some condo high rise properties, that  are transitioning from leasing to selling.  I also have notice that price per square foot for low rise condo communities are considerably lower than SFRs, though that might be common.  Certainly there are requirement variables different in condo financing than in SFRs(owner occupant requirement ratios, current on payment ratios, and so on.), but does anyone believe that now would be a good entry point?   Thanks

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Teresa F.
Residential Real Estate Broker · Clinton, MD · Member since 2008 · 297 posts · 178 votes
10y

Hi Antony,  Lots of great info here already.  I have a few condos and I love them.  Cash flow great, bought two for 28k each, my rehab was cleaning, rented for 1100 each.  The condo association is 244 per month, ins 256 per year and taxes 900 per year.  I purchased in an area that is gradually improving although if I had to sell now I could move to another investor and still sell at a profit, maybe offer financing.  For me the key is that my tenants know that this is NOT an apartment so the owners around them have expectations of friendly, quiet, clean neighbors and my tenants should have the same expectation.  I also attend and vote at meeting so I am known as an active and informed member of the community albeit investor.   Good luck, Teresa

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    I don't like condos and avoid them. I believe too much risk. Too much is out of my control. 

    Whether it is a good time to get in depends on your particular market and the particular deal. A fantastic deal on a condo is better than a lousy deal on a SFH.

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  • Jacqueline Carrington
    Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
    10y

    How is the Las Vegas market now? I lived there from 2005-2009 for college, UNLV (Go Rebs)! My mom bought a condo there that I lived in and has rented since I graduated. I know values have gone up recently but not to where they were. 

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  • Charlie Fitzgerald
    Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    10y

    Vegas market will always be good for rentals. ..condos or otherwise.

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  • Joe Abughazaleh
    Investor · Las Vegas, NV · Member since 2013 · 131 posts · 63 votes
    10y

    Entry point was 4-5years ago. Condo prices have gone up. In my opinion prices are to high for them to be a good cash flow investments. HOA's are high, rents are typically lower in general. If your looking for buy and hold then it maybe good. Just like in any market you could still find some decent deals if you search hard enough.

    Think one of the BP members from Vegas has a condo listing that's coming up. 

    Hope that helps.

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  • Account Closed
    Investor / Real Estate Agent · Miami, FL · Member since 2015 · 81 posts · 55 votes
    10y

    It all depends on how you buy. I have 4 condo rentals and they cash flow very nicely. I was lucky to accumulate between 2010-2013. Wish I bought more, but im sure everyone feels that way  

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  • Jim C.
    Investor · IN · Member since 2012 · 263 posts · 168 votes
    10y

    I bought a 2 BR condo January of this year from a distressed seller for 20k (He had an appraisal done and it came in at $60k). I currently have it rented for $800 per month, but the HOA fees are $125 per month. Taxes are $1000 per year. The reason I bought it so cheap was that the owner couldn't sell it because most standard banks wouldn't lend on it due to the high number of rentals in the building compared to owner occupied (He had spent $25k rehabbing with all new flooring, paint, fixtures, etc). So he couldn't get a OO (Owner Occupied) to buy it. So, if you buy, you may want to verify the OO / rental ratios for your complex, or plan on holding for a very long time, or wholesale as an exit strategy when you want to sell.

    I also had some issues with the HOA. They can be a big PITA. My first tenants only lasted about 2 months due to the 'noise' issues with my tenants. This building has older owners (also on the HOA board) who hate tenants with a passion because they think with all the 'transients' it's going down hill in terms of quality.

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  • Antony S.
    OP
    Retired · Las Vegas/Henderson, NV · Member since 2010 · 21 posts · 3 votes
    10y

    Thanks for all the imput,  greatly appreciated!  Good information to consider.  New to the aspects of condo investing, but I see some potential.  

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    My condos are my favorite investments. However I have a pretty good idea which condo projects are good and which ones are bad ones to buy into.  There are certainly particular risks that come with investing in condos, limited appreciation...possibly not even keeping pace with inflation unless it is in a downtown of a major city, special assessments, hoa rule changes, increasing condo fees, to just name a few.  

    For me personally though the ease of management outweighs the risks along with my own due diligence.

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  • Michael Lee
    Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
    10y

    Yes condos can be a good investment as long as the HOA does not surprise you. I am 59 years old and I found BP about 3 months ago and I am still learning. I graduated from college and I got a broker license in 1980. I have been in the construction business since I was 17. If you think I can be any help to you please do not hesitate to contact me. I was born and raised in Dallas Texas. I still live in Dallas County. Good luck!

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  • Alberto Camacho
    Investor · Flower Mound, TX · Member since 2015 · 179 posts · 48 votes
    10y

    Condos usually are the last to appreciate and the first to lose value. While a well run association is a tremendous asset the inverse can be financially devastating to owners. You also have to deal with tenant issues that you cant really control. When unit 1A rents to insert problem here..well you get the idea. There is money to be made in that market just it carries more risk than SFR. If you can buy to compensate for the added risk and tiime it can be profitable.

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  • Rob Gribben
    Bel Air, MD · Member since 2014 · 119 posts · 36 votes
    10y

    I avoid condos, HOAs and special assessments typically kill cash flow, and they also don't typically appreciate as well as SFHs.  Not to mention the fact that much of the maintenance is out of your control.  

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  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    10y

    The tough part with condos are the association fees. They can creep up on you as the years progress. I know an investor who went this route but eventually got out of the condo market due to the excessive association fees. Best of luck! 

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    I was shopping in Nashville and was shown some condos - - ran away as fast as I could.

    Whole building was individually owned condos in various conditions (hint: no curb appeal). Insides were no better.  

    Additionally, many HOAs will refuse rentals, rooming and subletting, so even if the above does not apply in your case, get the hoa terms & conditions (aka codicil ) and in your offer include a contingency of approval thereof

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  • Teresa F.
    Residential Real Estate Broker · Clinton, MD · Member since 2008 · 297 posts · 178 votes
    10y

    Hi Antony,  Lots of great info here already.  I have a few condos and I love them.  Cash flow great, bought two for 28k each, my rehab was cleaning, rented for 1100 each.  The condo association is 244 per month, ins 256 per year and taxes 900 per year.  I purchased in an area that is gradually improving although if I had to sell now I could move to another investor and still sell at a profit, maybe offer financing.  For me the key is that my tenants know that this is NOT an apartment so the owners around them have expectations of friendly, quiet, clean neighbors and my tenants should have the same expectation.  I also attend and vote at meeting so I am known as an active and informed member of the community albeit investor.   Good luck, Teresa

    1Reply
  • Robert AdamsBusiness Member
    Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
    10y

    I believe you are referring to high rise luxury condo towers? Those units in Vegas are good for long term appreciation but not cash flow. The HOA fees are typically very high which kills your cash flow. If you are referring to apartment style condos you can still get some great CAP rates on those. Do you have a particular deal you are trying to analyze?

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