Are Condos a Good Investment Option?
Chances are if you asked ten investors if investing in condos was a good idea, at least 5 would say “absolutely not” and the other half would say “yes.” It’s just how this business works. What works for some will not work for all. This is good for you to remember when trying to decide if condos are the best option for you. Here are a few tips to help you get started
Save Money and Time
For the most part condos and townhomes are less expensive than most single-family properties. Therefore, this will give you the option of investing in a market that’s normally out of your price range. Also, unlike with three or four family properties, condos offer the same low down payment financing as a single-family property, which will help you stretch your money a bit farther.
An added bonus that can also be appealing is that since many investors don’t like to deal with condos they tend to stay away from them, creating a lower demand. This means that you’ll be able to pick and choose the best options available. You’ll be far more likely to land the right property at the price you want.
Keep an Eye on Comparable Sales
Remember that the resale value has the potential to be lower down the line. Keep an eye on the comparable sales in the area to get an estimate of your property value. The downside to this is that for the most part the comparable properties will be within the same complex. Meaning that if a condo around the corner is going for say $250,000 it would be hard to justify trying to sell yours for $300,000 without major changes. But, even with the biggest of improvements a 10-20 percent increase is hard for most buyers, leaving you at the mercy of the complex to slowly appreciate.
How do HOA’s Factor In?
A condo that is part of a homeowner’s association can be a great investment for the first time and older buyer. With an HOA the traditional everyday hassles of home ownership will be taken care of thanks to the fees you pay each month. This means that grass cutting, snow removal, and general grounds maintenance are taken care of. You will also get the added bonus of using the pool, tennis courts, clubhouses and parking.
On the other hand an HOA comes with fees and restrictions that you will have to deal with. For example they can restrict what color you paint the building, what your deck will look like, if you can fly a flag and whether you can rent out your space. Keep this in mind before you get involved in this business and remember that before you do anything to your investment you’ll have to sit down with the HOA head to go over the bylaws.
While hearing the opinions and advice of other investors can be helpful and certainly interesting, you shouldn’t base your decisions about condos solely on them. The decision is yours to make, so you should do as much research as possible and build a team that will help guide you through the entire process. With these tips you’ll soon be on your way to making successful investment decisions.