Buying Property And Renting It Out...
Hi,
I'm thinking about buying a condominum that is nice but its not what I want for myself. Therefore, I was wondering if it would be a good idea to buy it, live in it until I find what I really want and then rent it out? Also, could someone tell me if there is a certain amount of time that I need to reside in this home before I decide to rent it out? 
Thanks!
Check with the Condo association. They may have a rental restriction. These restrictions are specific to each condo association.
Thank you for your response. But if the Condo Association says that rental is okay, then do you think I would be making a smart move to rent my place out once I find what I really want? That's what I really would like to know?
Thanks again...
Sure, Why not? If the condo cash flows, and you can afford the second place without selling the condo, you will now own two properties. I can't really find too much wrong with that. Better than money in the Bank. Just make sure you check out the Condo association.. Things to consider are Do they have adequate reserves? Does the building need any major repairs or renovations? Ask if there are any pending additiional assessements coming up, etc... Investors are a little weary of condo's becasue one assessment that you were not prepared for can wipe out your cash flow and potentially give you a negative cash flow. To me a condo is just like every other property. You have to buy it right. Do your research, and if the deal makes sense, GO FOR IT!!!!
Good Luck!!!!
Thank you, Mgraval ... That's the response that I was looking for!
Your comments and advice are highly appreciated and well considered.
Take care....
The only things I would check out would be the following...
Do I plan to sell it soon? if so, does the resale and rent give me a good ROI?
If the condo's layout have good market value. Is it a 3 bedroom or 2 bedroom? Whatever it is, does that configuration rent out well?
My 2 cents worth...
Dale
[addsig]
Ddemott,
Thanks for your '2 cents' as well...lol. I will say this. It's a 2bdrm condo with new appliances (fridge, stove/micro and dishwasher) and the amount its going for is $65,000 with the association dues being $200. For this area that it's in, that's cheap! I've already looked at it with my real estate agent and its in good condition. The only thing is - it is small. But hey I would be there temporarily. So, I was thinking that once I decide to move, I would rent the place out for about $300-400 more than what my mortgage / dues is...
How does that sound?
<IMG SRC="images/forum/smilies/icon_smile.gif"> [ Edited by csoul78 on Date 01/07/2004 ]
You need to do the math. What are rents in the area? What are your taxes? Are you homesteaded? If not, plan on the taxes doubling after the first year, so you need to figure that in. Are you going to make $100-200 a month clear? <IMG SRC="images/forum/smilies/icon_rolleyes.gif"> Good luck[ Edited by demolady on Date 01/07/2004 ]
Anything is possible. I would think about having a plan as opposed to just winging it. What if, what if, what if. Fail to plan, plan to fail.
I am new here, but when I was attempting to purchase a condo I had a tough time finding lenders who would give me the cash becasue most lenders I spoke to said that if the property was not at least 50% owner occupied they would not lend the money. Here in houston its tough to find a situation where 50% of the units are owner occupied.
Anr remember the monthly maintenance fees some associations are crazy when it comes to this especially if there is a pool on the property.
[ Edited by michaelgregg on Date 01/08/2004 ][ Edited by michaelgregg on Date 01/08/2004 ]
LOCATION, LOCATION, LOCATION!
If the property is well managed and the loan amount & association fees can be covered by the tenants rent, why not add to your porfolio?
Being a landlord is not a casual occupation. Are you going to hire a property managmenet company? If you do hire one make sure you know what they charge so that you can add it to you cost analysis. If you do not hire one are you prepared to get educated on landlord/tenant laws, leases, how to screen tenants, etc.
By my rough estimates with 5% down and not a property manager, you will have to collect $718 each month to break even. You should factor in about 20% for vacancies and repair so you really need to collect $861 to break even.
Also by my rough estimates: if you buy it at 65k you will have to sell it for appr 73k to break even. 2.5% closing cost to buy, 2.5% closing cost to sell, 6% realtor commission.
Brenda