Condominium Investing? Good Or Bad Idea?
Hello All, I just have a few general ?'s regarding investing in Condo's.
1. Is this a wise decision?
2. What would you look for in order to make a return or to flip it?
3. What steps would you take in qualifying it?
4. Is the transaction treated the same as a residential sfh purchase?
5. Is condo investing better or about the same in profit generating?
6. Is there a market for these type of properties?
I am interested in these type of properties and would like any input from any of you that have any.
I am located in Dallas, TX.
Thank you in advance.
Ms. Ann 
Hi,
I, too am interested in seeing if condos are a good investment. I am looking in repressed areas to rent out, hold a couple years, fix up and resell when they appreciate
Thanks
While there are difference between condos and SFH's I think this is simply a numbers game. If a deal is good it doesn't matter if it's a condo or a a SFH. The numbers have to justify the deal. This could be dependent on your market as well. If you live in a big city it may be very difficult to come across SFH's so naturally you'd be looking at 2 flats, 3 flats, condo's, townhomes, etc.
Ryan J. Schnabel
I am torn on this issue, but let me speak from experience as i hope it may help others. My first purchase was a condo. I purchased for 82k with a fmv of 100k. Trying to skimp on renovations, I painted, but did not carpet. It needed nothing else as teh association takes care of everything. It sat vacant with me carrying my loan for 9 months. Luckily i got a good tenant in there for the next year at 825 per mo. Covering my mortgage at 8% hoa dues, and P&I When all is said and done, i broke even cash wise, but got some tax advantages. The next year i carpeted it and put in a heat pump, got a new loan, and raised my price by 50 a month. I got a 2 year lease on teh first showing and it is throwing off cash pretty well now. I guess teh moral is that a well located property in a good condition can make cash, weather it is a condo or sfr.
Just my .02
Thanks for the testimonials. I really needed to hear that a person could actually do okay with the condos. I have heard some horror stories...
Ms. Ann
I think there's no problem investing in condos. The problem you could encounter (as I have numerous times) is that the "condo commandos" i.e the association is made up of grouchy old or young folks whose only aim in life is to make yours miserable. That made me resolve to always look at a condo deal 3 times b4 buying - once bitten twice shy I guess.
But let not the nay sayers hinder you. Any investment is a good investment if the numbers bring you positive at the end of the day. Good luck.
I agree that the HOA can sometimes be a pain. The most negative thing that I've found in owning condos is that rehabbing can sometimes be a little hard on tements living next door. Espesically if there is extensive rehabbing necessary.
My 2 cents.
Shikey is correct regarding the association. They can be a big pain. Look at it several times before buying and have a critical eye. Get it in great condition and good luck.
I am really interested in developing my niche in these type of properties as well as multiunits.
Anyone else have experiene in dealing with these?
I find the condo fees to be a real deal killer.
Here in Boston, typical condo fees range from 250-300 per month, which can destroy your profits.
The other major downside is the condo board. If they vote to reface the buidling, and there's not enough cash from fees, you have to pony up the cash. You have no control over those situations.
For me, being at the mercy of the condo association was the reason I abandoned condo investing entirely.
I want absolute control of my investments.
[addsig]
Monkfish has a good point. Here in NC, my fees are only 120 per month which i consider reasonable for the amount of work they do. Where i bought is well maintained and there are no assessments pending and none in the forseeable future. The fees can sometimes be a killer though.
Monkfish,
when considering the purchase of a condo as an investment, how does one conduct a due diligence? In other words, how do I find out about the rules for the association if the current seller does not have a copy. Or are you completely reliant on the seller to providie you with this information?
Has the HOA been mentioned....
Couple of other things to consider. In a Condo you can't control neighbors. If the 2 nice old ladies move out that live on either side, and two families with 12 kids each move in instead you've got a totally different place.
holding times are traditionally longer also.
Comps don't tend to be as reliable for a condo as a SFR.
I just read an article that talked about how although condo's had been the "black sheep" type of property in RE for some time, the demand for them has recently increased substancially as more and more people find this a good way to become homeowners at a lower cost and without the extra time that a SFR requires. Is it a fad or a change in the way Americans live??? Only time will tell.
Condos = Home owners associations = sometimes stiff rules with regards to renting so beware! Also holds true for Townhouses which are governed by a Home owners association. One of our properties is going through the association's desire to discontinue allowing investors to rent units. This is a pain in the bottom! A stand alone single family home does not have this home owners association problem.
Eric & Rosa
[addsig]
i've had success with my condo. however i boughtin the same community where i had been living for 2 years so i knew a lot about the area, the rents, the availabliity and the HOA. i rented it out immediately (within 10 days of closing) at break even and in the past 7 months its appreciated $50K. not bad for a $5K investment!!!
If only we could all do so well
How about a condo with cc&taxes =1200 45% deductible at a price of 300k in an area where rents are 2100 which would not cover expenses. However there is a pretty good chance that the condo values would go up in the future do to new constructions which will bring in new businesses. Would you put more than 20% down to bring this investment to cash flow?
Is:
There a strong association manager in place?
The association in a strong financial position?
The condo complex well located with good rental demand?
The resale price for similar units showing constant appreciation?
The market rent high enough to give you a positive cash flow?
If the answer to all the above is YES, then I would say the condo you are looking at would be a reasonably good investment.
A few years ago (August 2001 to be exact) I bought my fourth condo in the same complex for my rental portfolio. I paid $49K. Today, units similar to mine are on the market for $92.5K to $100K and staying on the market for less than 45 days.
Wouldn't you agree that a condo, in the right market, is a good investment?
I am loving all this phenomenal feedback!... Please keep it up!
Ms. Ann
This board can be a great place for feedback and advise from others. If there is a message that I would like to convey to other newbies, it is that you don't make any money by sitting around reading boards. You must take a risk (Calculated) and jump in in order to be successful and really learn. I have taken many lumps along the way, but i am confident in what i am doing now and now make good decisions.