What makes condos such an appealing choice? As with all investment properties, buying a condo to use as a rental has both benefits and drawbacks. On the positive side, there are a couple of things that make condos an attractive option:
- Lower Cost: In several real estate markets, condos cost less than comparable single-family homes. If you are a new investor or if the expense is a top concern, this makes buying a condo one way to overcome the cost barrier to entry.
- Desirable Locations: Condos are always situated in the urban centers and vacation destinations, making them suitable for renters who want to be close these areas. In areas where single-family houses are limited supply, purchasing a condo will help you gain new and different markets.
- Less Maintenance: If you purchase a condo, some maintenance tasks are already done for you. Condos often have little or no yards and common areas usually maintained by a building manager or condo association. That may mean lower maintenance costs compared to a standard single-family house.
- Amenities: Together with maintenance, individual condo buildings will give a selection of added amenities. Depending on the condo and management, provided services could range from cable and internet, garbage and sewer costs, pest control, and more.
Indeed, getting a condo has a lot of potential drawbacks. These negative aspects may also overcome all of the benefits listed above. These drawbacks may include:
- Condo Association Fees: Almost all condos are part of a homeowner’s association, that charge a monthly fee. At times, and depending on how many services rendered, these fees can be surprisingly high. If such fees cover a lot of attractive amenities and services, they can be reasonable to pay. But you have to add all associated condo fees, including any potential special assessment fees, into your calculations. If you don’t, you could wind up making a costly investment mistake.
- Financing Options: It may be more challenging to secure financing for a condo than a single-family property because conventional lenders often have strict rules for such loans. Some lenders would like assurances like proof that the condo building is at least 50% owner-occupied or that there are no ongoing lawsuits from the condo association.
- Renting Restrictions: Many condo associations restrict when and to whom you can rent your condo. Some will even require you to live in or own the condo for a full year before allowing you to rent it out.
- Lower Appreciation: Condos usually gain in value at a different pace than single-family properties. If your investment goals do not focus on retaining a property for a few years, buying a condo that won’t appreciate very quickly isn’t a good idea.
Finally, buying a condo as an investment property only makes sense if the numbers make sense. By learning everything about the true costs of buying and owning a condo, you can decide what best suits your investing goals. If you’ve found the right condo, don’t forget to message Real Property Management Charlotte Metro to help you with your investing goals. Contact us at 704-919-1344 or contact us online right away!