Full time Middle School Principal & Part Time Aspiring Real Estate Investor
Hello everyone! This is my first time posting, so please excuse my lack of knowledge. I recently discovered BiggerPockets and I am learning quite a bit from the podcast. My husband and I are in our mid 40s and looking to get into real estate investing. We live in Brevard County, Florida. Last year we sold our large home in Merritt Island, and purchased a condo for our daughters near USF in Tampa (no more paying for dorms) and a townhome for ourselves. We paid cash for both properties, we then took out a mortgage on our townhome to purchase a rental property (another townhome). Although two of the properties are technically paid off, all three of them have HOAs and only one of them is bringing in rental income. The rental income does cover the mortgage and the HOA for the rental, but it does not cover any taxes or insurance. Not sure if we should have gone about things differently, but there isn't much we can do about that now. We would like to try house hacking as our next move, but unfortunately there isn't a large inventory of multi-family homes in Brevard County, FL. We are currently looking at a rare Duplex that is listed for $420,000. We could move into it and rent the other side, but the rent definitely wouldn't cover the mortgage. It's also not in the best area. It has good bones, but would need some upgrades (flooring, appliances, cabinets, bathrooms, etc.). I'm just not sure what to do moving forward. I feel like we may have made a mistake getting three properties with HOAs, although we do save on insurance since the HOAs cover the roof and outside structure. Any guidance for a newbie just getting started???
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I personally own about 20 condos/townhomes that have low HOAs and like them as a means to getting started. They have their pros and cons. We sold our last one that was a similar situation as yours, 15 year loan that basically broke even. I didn't like that it was a small community, so that makes dues more expensive and also reduces the number of qualified and willing HOA board members. It had appreciated a lot and we wanted to cash out of it. In my opinion, townhomes are a really good buy for investments if they have a well managed HOA with low dues. Sometimes it's better when you own your own roof, because it dramatically reduces the HOA cost, however it increases your insurance cost. The pro on this situation is that you don't have the community making decisions on prematurely replacing roofs, but the con is that a bunch of roofs end up looking different which takes away from the aesthetics of the community. The main reason why I like townhomes though is that they finance like a single family home. They do not fall under the same restrictions and financing hurdles as condos, because you actually own the land. This makes selling them in the future easier, however just note that they won't appreciate as much as a house will. We all have to get started somewhere and under a tight budget, and it's really hard to beat the cash flow of an affordable townhome, especially those that are 3 bedrooms and have a garage because they rent for nearly as much as a single family house but at a fraction of the price.