Would a condo be a good start for a real estate portfolio?

[CJ Moulton]

Hello Everyone,

I am a 25 y/o looking to invest in their first property. I just recently graduated college with a whopping $170k in student debt. Now that I am done with school and have a solid job, I wanted to focus on side hustles I was interested in to increase income and eliminate my debt.

I've been doing my best to monitor today's market and house prices in my area. (South Jersey) However, things are pretty expensive in my area, I wanted to start out with duplex/triplex however any one that I find needs a ton of work or is just way too expensive for my budget. While browsing, I found some condos that are within my budget, however, others around me have always said "Don't ever buy a condo, they are bad investments and are hard to sell".

My question is...

Would it be a good idea to start out a Real Estate portfolio with a condo using the House Hacking strategy? 

Let's say I buy a condo, and rent a room out to pay for some of the mortgage. Then after a year or so, I buy another property and fully rent out the condo. Would this be a good starting point? Are there any points that I am missing when it comes to this plan?

Any insight would be greatly appreciated!

[Richard F.]

Aloha,

With Condo/HOA properties, it is critical to thoroughly understand the Association financial conditions and the rules that apply to all Owners within a specific project. By-Laws, Declaration, House Rules, and other Governing Documents will provide a lot of pertinent details, while the actual Operating Budget, Reserve Study, and Reserve Funding Plan will reveal the actual financial condition IF you understand how these actually affect individual Owners. Assume that any HOA that has a recent or current "Special Assessment" or sudden, significant increases in monthly fees, has failed to properly plan and manage the project for at least the past ten years.

The problems stem from Boards that are not fulfilling their responsibilities. They focus on "managing" the monthly fees, rather than proper planning to make statistically predictable expenditures as they arise over the long period.