Real Estate Investor · Member since 2010 · 5 posts · 1 vote
I'm new to real estate investing. I've been reading books and have been interested for the past 6 years and now I'm ready. I know I have to put 20% down to get approved for financing on an investment property. Would it be a good idea to start out with condos and move on to single family homes once I get good cash flow. I just need advice. Is it a good idea to start out with condos and then go on to single family homes? I also plan on buying in Las Vegas. Thank you for the advice.
Real Estate Investor · Phoenix, AZ · Member since 2009 · 62 posts · 32 votes
16y
In today's financing market I would say NO. Condos are very cheap now for a good reason. You and later your buyer will have trouble getting financing. Talk to a mortgage broker very familiar with loans for investors on condos. The percent of owner occupants in the complex is key.
Additionally, despite the low price your cash flow may be far worse due to high HOA fees. When fees were 10% of your mortgage payments that was fine ... now they may be 80%. HOA's lose those fees when there are foreclosures so they spread the losses among the remaining owners.
Step 1 - check on ability to get a loan on that condo ... if you can buy through the TACT Program then you're OK. If in AZ we can help.
Step 2 - Do your calculations on low priced homes vs condos.
Good luck ... if this were easy, everyone would be doing it, and the successful few would not be as wealthy as we are.
Real Estate Investor · Phoenix, AZ · Member since 2009 · 62 posts · 32 votes
16y
In today's financing market I would say NO. Condos are very cheap now for a good reason. You and later your buyer will have trouble getting financing. Talk to a mortgage broker very familiar with loans for investors on condos. The percent of owner occupants in the complex is key.
Additionally, despite the low price your cash flow may be far worse due to high HOA fees. When fees were 10% of your mortgage payments that was fine ... now they may be 80%. HOA's lose those fees when there are foreclosures so they spread the losses among the remaining owners.
Step 1 - check on ability to get a loan on that condo ... if you can buy through the TACT Program then you're OK. If in AZ we can help.
Step 2 - Do your calculations on low priced homes vs condos.
Good luck ... if this were easy, everyone would be doing it, and the successful few would not be as wealthy as we are.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Avoid any investment where you have a silent, uninvested partner - an HOA. As Ron says, many HOA's are struggling, and their struggles are made worse by foreclosures. HOAs can be OK, but they can also place rules on you that make it difficult to make money or impossible to rent.
Real Estate Investor · Saratoga, CA · Member since 2010 · 100 posts · 14 votes
15y
Cherryl, have you considered multi-units? like a triplex or fourplex...I would go for those rather than SFH.Your risk would be spread if you have a vacant unit, and yet be able to break even potentially....but if the SFH is vacant, you are on the hook for 100% of the expenses, including mortgage.