I was on Money.com today and I read an article about condos selling in Florida for less than $30,000 and condos in Las Vegas selling for about the same price. If you’re looking for a vacation home, or you want to move into a condo, then this might make sense for you.
However, as a real estate investor, condos are a terrible investment. Before you freak out and tell me about all of your friends who made a killing off of condos four years ago, let me quickly remind you of something.
Those people weren’t investors, they were speculators. There’s a big difference. A lot of speculators went bankrupt after the market crashed. True real estate investors make their money going in and never speculate on property. Also, real estate investors stay in business for years and many of us become millionaires and multi-millionaires. On the other hand, I’m willing to bet that 99% of speculators go broke.
So why are condos are such a bad investment?
Well, first and foremost, you have condo dues to pay. Condo dues can run anywhere from $50 a month to hundreds of dollars and even thousands. I once saw a condo in Reston, VA with an $800/month HOA fee. These dues will obviously take a huge bite out of your cash flow.
Another reason not to invest in condos is they’re more volatile than single-family houses. They don’t appreciate as well and when things get bad, they tend to crash a lot further. Also, condos tend to attract single people or just couples, not families. Since I’m a buy and hold investor, I like to get families into my properties that are going to stay there for the next several years. I don’t want some kid in college who’s going to live there a year and then move out.
Let’s not forget about the pain-in-the-butt condo association either. They seem to increase the dues every year and you’re always getting a notice in the mail regarding some violation about your door not being painted the correct shade of red.
How do I know this?
Well, when I first started out in this business and I had absolutely no clue what I was doing, I purchased a condo. I didn’t know any better and I wish I would have never, ever purchased it. I learned my lesson and have never bought another condo, and never will again.
If I were you, I’d stick to single family houses and townhouses. That’s were the money is at and those are the types of properties that attract quality and stable tenants that will stay with you for years.