Buying a Condo in Tampa? Pros and Cons..

Investor · Tampa, FL · Member since 2016 · 60 posts · 13 votes

Hi Everyone, I wonder what are your thoughts on buying a congo in the Tampa area and renting it out. I am planning to do this but my mortgage lender said that when comes to condos they require a 30% downpayment because of the foreclosures they had in the past. He advised me on NOT go with this plan.

However, I want to hear from you what you think of this? Any landlords that rent out condos can advise on their experience?

Thanks!

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Nick BelskyBusiness Member

Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes

@Krystof Pilisiewicz

Your lender is probably wanting 25-30% down to avoid a full review. If you are looking at a Fannie/Freddie backed loan, the condo will be subject to either a full or limited review. If the condo development is on Fannie's approved list, getting a limited review is much easier. If it is not on the list, or you aren't putting the 25-30% down, then you may have to go through the full review which is quite arduous to say the least.

Private lenders don't require as much down and some don't require any reviews at all. They are treated much like a normal purchase. Expect 80LTV for an investment condo and rates only run a little higher than on a normal purchase. Every lender is a bit different for the condo pricing adjustment.

You may want to speak with a mortgage broker to see what options are available to you as well.

Cheers!

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Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
4y
Your mortgage lender plays the cautious game and rightfully so. Condos are not the best choice when it comes to REI. They can be less desirable from a renters prospective. Obviously the markets are terrible and people will take anything they can find, but I'm just referencing history here. That's just my opinion.

If you're planning to buy run the numbers (correctly) and see if cash-flows! Find a COC level you're happy with and stick to the numbers. At least break even. You'll find a lot of duds in the market right now. Successful investors keep searching and they don't buy poorly performing units unless it has value add or opportunities on the exit side of the equation.
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Krystof Pilisiewicz
OP
Investor · Tampa, FL · Member since 2016 · 60 posts · 13 votes
4y
@Jaron Walling, Thanks for the feedback. Your points are taken!
From what I see, 90% of condos on the market don`t make sense when comes to investment, but there are Condos that make sense and if you run them by the 'Buy and Hold' calculated on the BP site, they show up with 300-400$ cash flow each month.
So I am curious if anyone that owns condos in the Tampa area has an opinion on that.
Cheers!
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Nick BelskyBusiness Member
Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
4y
@Krystof Pilisiewicz
Your lender is probably wanting 25-30% down to avoid a full review. If you are looking at a Fannie/Freddie backed loan, the condo will be subject to either a full or limited review. If the condo development is on Fannie's approved list, getting a limited review is much easier. If it is not on the list, or you aren't putting the 25-30% down, then you may have to go through the full review which is quite arduous to say the least.
Private lenders don't require as much down and some don't require any reviews at all. They are treated much like a normal purchase. Expect 80LTV for an investment condo and rates only run a little higher than on a normal purchase. Every lender is a bit different for the condo pricing adjustment.
You may want to speak with a mortgage broker to see what options are available to you as well.
Cheers!
[email protected]
Belsky Mortgage, LLC527 Reviews
Website View Page
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Kristina Kuba
Tampa, FL · Member since 2021 · 383 posts · 389 votes
4y
@Krystof Pilisiewicz
know that the HOA bylaws in every condo complex/development you're looking at will vary, and that many of them have restrictions, such as a year-long waiting period before renting.
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Randall AlanPro Member
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
4y
20-25% down is the typical standard I have always had to meet in Florida. I agree with the previous response as far as condos not being as good of an investment, for several other reasons:
1. You are at the mercy of the condo complex (HOA / HOA Rules / Etc). Many condos disfavor rentals in general, as they want to control WHO it is that will be living in the unit - and as a rental that can change on a regular basis.
2. HOA Fees usually really 'do a number' on your profitability. Any time you add $200-400(?) to your expense column monthly it isn't going to be as good as if you had a SFH where you didn't have that expense. Yes, you get some services for that fee (grass, common area maintenance, etc), but we choose to avoid it by not investing where there is an HOA - be it condo or otherwise.
3. Assessments. If you owned a house, you could choose when to replace the roof. The condo association will most definitely make that decision for you - and one day you will get a notification that (choose one or more:) the roof, the parking lot, the pool, structural issues (you name it) needs repairs and so we need the owners to pay for it. There will be no choice in the matter - and you can bet if they are coming to you - it is an expensive proposition. They can be $1,000; they can be $10,000, they can be more!
In short - there are A LOT of things you can't control when you are dealing with a condo - not the least of which is how much they interfere with you renting the unit. Many condo's only allow X number of units to be rentals. Then, as the previous post said, they can then start to specify when it can be rented, how frequently the turn-over can be, etc.
There are plenty of condos that are rentals. So it's not like they won't work at all - just know going in that you are usually facing a slew of potential challenges in owning one.
All the best!
Randy
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Krystof Pilisiewicz
OP
Investor · Tampa, FL · Member since 2016 · 60 posts · 13 votes
4y
Thanks, Guys! all great feedback. I hate when someone makes a decision for me on when to fix the roof or anything in this matter so now this got me thinking..Hmm;/ well so far I am hearing overall I would say the majority of the feedback I am getting is not that positive.
I am glad I asked the question:)
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