What makes condos such a winning choice? Just like all investment properties, buying a condo to use as a rental has both benefits and drawbacks. On the positive side, there are a few things that make condos an appealing alternative:
- Lower Cost: In several real estate markets, condos are less expensive than comparable single-family houses. In case you are a new investor or if the cost is a major apprehension, this makes buying a condo one way to get over the cost barrier to entry.
- Desirable Locations: Condos are often located close to urban centers and vacation destinations, making them enticing to renters looking to be close to such areas. In places where single-family houses are in short supply, buying a condo can help you gain access to new and different markets.
- Less Maintenance: When you buy a condo, most maintenance tasks are regularly done for you. Condos often have small or no yards, and common areas are usually maintained by a building manager or condo association. This may mean lower maintenance costs than a typical single-family house.
- Amenities: Along with maintenance, some condo buildings will provide a selection of added amenities. Depending on the condo and management, included services could range from cable and internet, garbage and sewer costs, pest control, and more.
Nevertheless, buying a condo has several potential drawbacks. These negative aspects may even outweigh all of the benefits listed above. These drawbacks may include:
- Condo Association Fees: Most condos are a member of a homeowner’s association that enforces a monthly fee. At times, and contingent on how many services are given, these fees can be surprisingly high. If such fees cover a lot of attractive amenities and services, they may be worth paying. But you need to factor all related condo fees, plus any potential special assessment fees, into your calculations. If you don’t, you could wind up making a costly investment mistake.
- Financing Options: It can be more difficult to secure financing for a condo than for a single-family property because conventional lenders often have strict rules for such loans. Some lenders may want assurances like proof that the condo building is at least 50% owner-occupied or that there are no current lawsuits against the condo association.
- Renting Restrictions: Some condo associations limit when and to whom you can rent your condo. Some may even require you to live in or own the condo for a full year before allowing you to rent it out.
- Lower Appreciation: Condos typically gain in value at a different pace than single-family properties. If your investment goals do not rely on holding a property for many years, buying a condo that won’t appreciate very quickly is not a good option.
Lastly, buying a condo as an investment property only makes sense if the numbers make sense. By knowing as much as you can about the true costs of buying and owning a condo, you can make the verdict that best fits your investing goals. Once you find the right condo, make sure to contact Real Property Management Lakeview to help you with your investing goals. Give us a call at 940-323-0505 or contact us online today!