Good morning Houston,
I'm a newbie investor with a single family home rented it the Westbury area of Southwest Houston. I have a potential deal on a condo in a great neighborhood near the medical center, but have no experience with condos at all. I'm wondering if anyone BRRRRs condos, and if so, are there any pitfalls to consider compared to BRRRRing SFH or multi family properties.
2/2 1100 sqft condo
$15K down (25%)
I've never refi'd a condo before and am curious how it compares with refinancing SFHs. Do lenders look at them any differently? How much should I expect back for my next deal based on the numbers above? I was estimating 75% of the forced equity ($50K) which is around $37K.
Thanks for your time.
@Lyric Todkill The major challenge with Condo is the HOA regulations and restrictions.
Is this for a Long-Term Buy & Hold or For AirBnB? - Understand their Condo Regulations first before anything else.
Also, you did not mention the purchase price so I can not completely answer your questions but most lenders will only refinance you at 70% of ARV (Hence the 70% rule).
Apply the 70%-80% rule then if it there is still some meat on the bone then go for it. 80% is still a good deal for neighborhood like Westbury Area of Southwest Houston.
Thanks for the reply. Purchase price is $60k and I am planning on a long-term rental. I appreciate the feedback.
Hey @Lyric Todkill , I second @Wale Lawal 's caution about Covenants and HOA's. It's very likely that they'll have restrictions on subleasing, or possibly outright ban it. So that would be the first thing I'd check. Since it's a condo finding the deeds or HOA documents online shouldn't be too difficult, or you can just give the management company a ring. Subleasing is probably something they get asked about so they should have an answer for ya. 👍🏻