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- A Guide to Purchasing a South Florida Condo
Let’s get to the point: Condos can be a great investment. It’s not a good idea to buy a poorly managed condo. You don’t know what a poorly-managed condo looks like? We will help you to be smart when condo shopping, so that you can see the beauty in the weeds. (Read more below.)
If you have been overwhelmed by house hunting, a condo may be able to help you relax. We don’t mean to say that condos are still the most expensive purchase you can make. A condo is usually tens of thousands of dollars less expensive than a single-family home.
The National Association of Realtors’ bigwig numbers crunchers found that the median U.S. sales price for a condo was $1,050,000$257,100In May 2019, single-family homes were$280,200–meaning condos were$23,000 less expensive.1
Do Condos Appreciate in Value?
Condos are known to appreciate in value. This is true for any property, as long as it does not have wheels or comes from a trailer park. If you are trying to decide between a condominium or a home, remember that a single-family home will usually grow in value more quickly than a condo.
Example: The median price of condos increased by 3% between 2017 and 2018, while single-family homes experienced a 5% increase.
This is not always the case. You might find a condo in a desirable location, but a single-family home in a more secluded area. PoorThe condo will appreciate more quickly if it is in a prime location. You’ll be fine if you can find a nice-looking condo in a great location.
Is a Condo a Good First Home?
Let’s suppose you are buying a condo for your first home. Compared to other types of properties, condos are unique. Before you buy a condo, you need to understand what makes them unique. You will need to decide whether you are willing to live with the homeowners association (HOA).
So what is an HOA? It’s basically set rules and fees that are designed to preserve the condo complex’s value. It ensures that everything is in good condition and looks great. It is comprised of either owners who live in the unit themselves or outside investors. This would include you. The HOA collects a monthly or quarterly fee from each unit. This money is then put in a piggybank fund until it can handle maintenance and repairs to shared items such as roofing, parking, and pools.
These are the pros and cons of condos.
- ProsYou can delegate boring tasks like maintenance to your condo association, and you can avoid the hassle. This also means that the HOA pays for those costs as well, so you don’t have to pay it all yourself. Condos are great for people who enjoy a sense of community.
- ConsOne way a condo’s HOA might go is that it’s not managed well enough that major repairs like roofs, siding, and parking are neglected so much that the HOA board tags each unit with an enormous bill to cover any unpaid HOA fees. Your board members may be so dependent on their power they can drive you crazy by picking at every detail, such as how you park your car in a strange way or choosing the color of the wrong curtains. HOA rates and how they change from year to year are not your responsibility.
If you feel the pros outweigh any cons, you can make an informed decision about whether or not you want to buy a condo. Ask questions about your HOA. Find out what rules it has and how it is managed. Ask about maintenance schedules and whether expensive features such as HVAC systems or shared amenities are being maintained. Ask previous owners what their opinions were about the community and why they left. You’ll remove the junky owners one-by-one.
Are Condos a Good Investment for Rental Property?
If you want to build and maintain wealth, don’t jump into investing in a condo or any type of property without first following 7 Baby Steps. This will help you set yourself up for success and ensure that investing does not interrupt your other financial goals. We don’t recommend that you invest in condos unless your home is paid off and you can pay 100% cash for it. A second mortgage is not something you should have hanging over your head.
Now you are ready to purchase a condo. It’s a smart idea to start investing in local real estate when you first begin your journey. As you get to experience managing a rental property, it will be easier to keep an eye on it. These tips will help you avoid settling for a cramped condo.
Make sure that there are more renters than owners ask about the current “owner-occupancy rate.” Ask about the current owner-occupancy rate. This is simply a way to say how many people live there, rather than renters. A condo that has more than 50% owners is likely a good investment.
Renters are often less concerned about property and common areas than owners because they don’t have the same level of financial security. Renters are often more concerned about the property than owners, which is in direct violation of normal financing guidelines. This means that conventional mortgages, such as FHA, VA, or conventional loans, won’t be approved by the FHA and VA head honchos.
The condo prices are set to plummet like a rock. Why? Because at that point, cash buyers and investors will only be interested in condos. These buyers are bargain hunters, who only want the best deal. This will ruin your condo appreciation!
You should ensure that the HOA is properly managed. Condominium HOAs are a major deal. Before you purchase a condo to rent, make sure you know as much information as possible about the HOA. These are some questions you should ask:
- What are your reserves for maintenance (roof and paint, parking lot)
- Is the HOA able to pay its bills?
- Are the HOA’s bills actually being paid?
It should pass these areas if your condo passes. Consider: Would I want my family to be able to live here? __S.89__ You can make your family love it! Purchase that condo
Is a Vacation Condo a Good Investment?
Let’s suppose you are looking to purchase a condo close to your favorite vacation spot. Imagine your private beach getaway. Without having to leave your family or friends, you could say goodbye to the winter months. It can also be used as a vacation rental condo that you can rent to others when it’s not being used. Cha-ching!
If you purchase a condo close to a beach, lake, or tourist hot spot such as the Grand Canyon, you will have plenty of renters available at all times of the year. You will have more than one occupant, and you will not be living in the condo, so you may need to hire a management firm to manage the property. This can reduce your profit.
You can charge more per night for a condo than you would for a single tenant. You can also use the space whenever you like.
This post was written by Dayana Susterman Dotoli. Dayana is the head real estate agent for the Tiffany House In Ft. Lauderdale Beach. Dayana has assisted over 150 individuals with buying, selling, and leasing at Tiffany House. The Tiffany House Residences is a 12 story tower, offers 129 residences, including 1, 2 and 3-bedroom condominiums and townhomes, with exclusive, resort-style amenities and views of the Intracoastal Waterway and the Atlantic Ocean.