For the first time home buyer or real estate investor, a condominium seems like a great investment, but will it provide for you in the long run? In this article, we share how condos differ from single-family homes and which type of property best fits your investment needs.
Condo vs. Single Family
A condo is an attractive housing complex for most new buyers. With each unit owned by an individual with privileges to use common areas within the building, it provides a next step to turn renters to buyers. However, condo owners are responsible for maintenance and repairs within their own unit. Owners are also required to pay regular fees to a condo association that provide maintenance of the shared common areas, building amenities and the exterior of the building.
There are a few perks to investing in a condominium. Compared to a single-family home, condos are attractive because they are typically less expensive. Condos also appreciate in value over time. Since external maintenance and upkeep is mostly taken care of for you, this releases an amount of stress off the unit owner. Most buildings also offer amenities such as pools, fitness centers, common areas which provide a social aspect for individuals interested in communal style living.
Looking for an ROI
If you’re in a position where you want to investigate investment properties, a condo may be something to add to your list of considerations. While renting can be an affordable option for those who aren’t ready to invest in real estate, buying a condo can be a rewarding move that sets you up for future financial success. How? Condominiums allow you to build equity in the property that you wouldn’t with renting.
While this might sound like the right move, you should also consider the drawbacks.
The Homeowners Association is a subdivision that makes and enforces rules for the property and residents. The contrast with having an association is some can be very restrictive about what members can do with their properties.
Depending on the location you are considering, condo association fees can be hefty. These fees can increase your monthly payment, which would cut into your overall return on investment. In addition to rental restrictions, there might be other restrictions in a condo community related to parking, common areas, pets, etc.
The association might also limit the types of modifications you can make to the unit. Not every condo community allows you to rent out the condo or limit this capability so short-term rentals like Airbnb are not allowed.
If you want to start investing in condos, make sure the location you select is likely to provide a good return. Consider how you will obtain financing and how much time and money you want to spend on maintenance and repairs. If you can keep up with the fees and the restrictions don’t prevent you from renting the unit, investing in a condo can be a senseful move for the first time buyer or property investor.