What the heck am I doing?

Question

This is not a deal I made, but my cousin's deal, which I followed very close and made me think: What the heck am I doing?

- Nov/2013 Tairy (Cousin) decides to buy her first place, she got  pre-approved for $150.000 FHA Loan.

- By Feb/2014 after seeing a lot of ugly houses and apartments we found a 2/2 apartment, in a good area (very close to Miami Lakes in Miami NW), recently rehab, in a condo that had 2 similar units for sale for $130.000 this was nicer, cleaner, and $90.000

- The deal was conventional only, so we found our way to get the down payment money (thank you family) and she closed in Mar/2014, $20.000 down, $8.000 closing fees and $70.000 mortgage.

- She end up paying $570 a month plus $300 Association, water include.

- The rent of one unit like hers at that moment was between $1.200-$1.400.

What the heck am I doing? I have to do this, I though. At the end of the day she was saving some cash, has her own place, and she was putting money in her pocket with every mortgage payment.

So it looks like a pretty good deal to me, even though, I knew it was a very superficial analysis.

What do you Think?

Jerry W. · Answer

It is worth looking into.  Be careful of HOA rules they may prohibit renting or may put limits on how many units can be rented.  You might also consider looking at a duplex instead.  Good luck

Alexander Felice · Answer

I have a condo and while it's been an ok investment, I can tell the day is coming that it will not be. The HOA just kills most profitability. Between their rules, and the fee, I don't recommend them (I don't recommend them as a general rules, specific examples can always be found that negate this).

That said, for living, they are great. Low maintenance, (Hopefully) well kept, you get some amenities built in, market value protection, etc.

My plan was to own my condo, and buy houses for investments. It was going well until I met some stupid girl and got married to her and decided to move into a house. Now I'm happily engaged, but a worse investor.

Joel Rodriguez · Answer

Yes @Alexander Felice The HOA can be a real pain. Sometimes it feels like you don't even own the place! A friend has a condo unit rented to some guy, this guy got a girlfriend and tried to move her in, so with the owner consent they apply to the HOA and she was rejected, so the gay brought her in anyways without the owner awareness. Right now The  HOA  is trying to take the property from the owner due to the violation, a real nightmare!

Joel Rodriguez · Answer

@Doug McLeod the deal work out very well for her, she wants it for living, now she is thinking in start looking her second property, but,  @Jerry W. is right, there is a HOA limitation, the unit can not be rented during the first 2 years, by mar/2014 she will be good to go!

Doug McLeod · Answer

If it is a place where you want to live and it is more affordable than other options, go for it.  Condos can be hard to sell, but you may be able to rent it if you move out someday.  If you were just looking for an investment, I'd say stay away from condos generally, but if you need a place to live, can't afford a house in the area you want, and can live in the condo and build a little equity vs. renting an apartment, that works.  Or at least it sounds good, but I've never owned a condo.

Would be interested to hear from condo owners who later kept as rental or tried to sell.

What the heck am I doing?

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