Condo deal, yes or no?!

[Robert Davis]

Currently own a condo in a 3 story building. The one directly below from me is listed for a fair price. The building is very new, being built in 2004. Here are the numbers: $1092/mo: includes mortgage, tax, ins, HOA, interest Can be rented easily for $1400/mo, will be Able to get $1500 next summer. Do these numbers make enough sense? The maintenance would be extremely minimal with HOA fees covering exterior. Plan to keep it for buy and hold and pay down quick. Value will definitely appreciate over the years Please give advice!

[Don Konipol]

you are betting "on the come", in other words on price appreciation and rental rate increase.  you did not include in your expenses

1- vacancy expense

2- leasing fees (to broker)

3- property management

4- repairs

5- bookkeeping, accounting, tax prep

6- depreciation reserve (limited since the HOA should have its own reserve)

Big issue is financial condition of the HOA. If their reserves are insufficient a major cost item can trigger either a special assessment or a large increase in monthly HOA fees. And new construction is not immune from major cost items. If their was improper construction or a failure on materials, the HOA may not be able to collect from the builder.