I am looking at a Homepath condo in Fl that is listed at 87K w prob value of 100K( needs 3K for appliances otherwise very clean w granite top etc. Built in 06. I am debating on a 79K offer w 2% concession to cover closing ( $2400) so roughly 77K offer on a 2/2 1100sqft that rents for 950-1000K. The catch that seems to kill it is the HOA is $350/mth. If I put 5% down as Homepath allows my mortgage would end up around 495/mth. If you add in HOA that is 845. Doesn't even include taxes or repairs. I think Im going to bail on it. Wouldnt barely cash flow. I wouldn't expect much for repairs as you would for SFH. The damn thing sold in 06 for 220K so it caught my eye. I was thinking about a buy and hold for a few years and it would prob barely cash flow but I just not sure what expect in terms of repairs for condo. Im looking for something that can maintain itself w out me having to maintain it like the typical sfh.
Ok if you want to live there, but it probably isn't a great investment.
That's what I keep thinking.
The condo fee, special assessments and restriction on rentals are usually the 3 factors that kill it (a condo) as a practical positive cashflow investment.
And I always say if it don't cashflow, its a no go.
I have to agree with the others that I don't see these numbers work as a rental. It's the same conclusion I come to every time I evaluate a condo or an HOA associated townhome (or even many times with HOA associated SFRs). It really kills the cash flow - in addition to having to deal with sometimes whacky rules and regulations.
I know some people right here on this board are successful with condos, but I just cannot figure out how that works. For condos HOA fees tend to be VERY stiff (yes, much fewer repairs, but still...).
I'm a condo investor here. Agree that the deal looks thin and condo fees can go up over time further eroding cashflow or creating a loss.
As for people's sentiments on condo investing, I think successful condo investors only really stand a chance in metro areas as typical higher rent becomes high enough to support HOA fees, mortgage, and leave enough cashflow to be worthwhile to hold as a rental. If rent is under 1000, it appears to be much harder for a condo to cashflow accounting for the condo fee.
As you are finding out, condo investing is almost
as much about the prospective " Community " as
the individual unit. The right mix of Association
stability, tenant class, and Desirable features for
"rentability" has to "gel " to make Condo investments
work! " Bricks and Mortar" values considered alone
is a recipe for disaster. The fragile nature of some condo
associations command a good looking over of the recent
issues and near term projections on what is likely for the
Condo Community you are looking at ,and attention to
the impact these will have on your costs.
In the present deal I didn't,see insurance mentioned, or
Management expense. Built in '06 -just about time for a
plumbing refresh, and defective workmanship to emerge as
problematic . You are smart to think this one over , but
this should help you to revise your " criteria" to include
community " fundamentals" as well as unit characteristics!
Best for Success! As the Kid's say:" It's in the Mix"
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing