Investing in Condos

[Sastry Konduri]

Hi Gurus,

Is investing in condos a good idea? This will be my first investment property and in my area, investing in SFHs and MFs is out of my current reach. I am looking specifically at Folsom CA area. Some insights on that area will also be super helpful.

Thanks in advance,

Sas3.

[Matt Vogt]

Condos can be a good investment, but it depends on what you're trying to do. Appreciation is typically less than a SFR, and your cost structure is different. You're going to have lower CAPEX due to the HOA covering exterior features. You'll want to have extra insurance to protect against special assessments, and you'll want to verify that the HOA is in a good financial position and relatively well managed. HOA's typically charge quite a bit relative to a SFR, however they make some aspects of management easier for you.

For a buy-hold type deal, a condo could be a great investment, just factor in HOA costs and annual increases (inflation give or take) into your model.