I'm looking at a condo @140k to purchase and rent. I realize that if I put this on a 15yr note my return will be mostly principle down payment but still a 20% return on investment. Although I can purchase a 4 unit for nearly the same price I believe the tenant will be less likely to tear up the place and pay rent. Does anyone have opinion/advice on their experience in owning a condo versus a multi-unit building?
The big down side to condo's are condo fee's and special assessments. Generally, you don't own the outside of the building, parking lot, roof etc. So, when repairs are needed, or the building needs to be re-sided or re-roofed they will hit you with a special assessment. My business partner lives in a condo in Virginia Beach and he has recently been hit with two special assessments for a total of about $9500. To make matters worse, the assessment was so high because the condo association president was inept and allowed the contractor to do the design work for the repairs and didn't get any other bids. Assessments can quickly wipe out years of positive cash flow, which, is the name of the game.
I tend to avoid them because I don't want someone who doesn't own my property telling me that I have to pay money for, what ever, fill in the blank. If a condo association is well run and they have been saving up for anticipated expenses and you don't have to shell out for a special assessment, I would give it a look. Remember to factor in condo fee's and then some to cover. After that, see how your cash flow looks before deciding which way to go. Some condo associations also have limitations on rentals.
I also have Quads and they are generally easy to manager, although some of the tenants that move out with out notice can trash the place. I had one move out with out giving notice, when we went in the power had been off for about 4 days, the mess in the fridge was enough to turn even the toughest stomach.
For what it's worth, that's my point of view. Best of luck.
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