Hi all, my plan is to own rentals long term and receive cash flow. does it matter if I go for a single family or Condo? assuming the condo unit lets me rent it out. my plan is to live in the condo/ SFR for a year and then rent it since I already got approved for an FHA loan. right now it is looking like the condo might be a better option for me considering my area in jersey and the location of the condos. depending on the HAO fees I feel the cash flow may be better with the condo. Any suggestions or personal experiences in this?
if I get a SFR I am looking at the Monmouth and Middlesex county areas of jersey. but for a condo I am going to go for the Essex county/ city like areas of jersey near the train and NYC.
I made a few post with similar questions but I am trying to think of this from multiple aspects.
Purchasing a condo vs. a single-family home, offers another level of complexity, especially if you are trying to rent it out. You have to perform your due diligence on not only the unit but also the HOA. You want to make sure you can rent, make sure they have reserves, etc. I would also want to avoid buildings that are mostly (or a larger portion) investors. Investor condo buildings are notorious for having a lot of deferred maintenance, and not enough reserves.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
3y
@Brandon Morgan What is the most important thing when buying RE?... Location, location, location.
Regardless of condo or SFH you need to KNOW which locations are BETTER and why. You need do the market research and follow a strategy. What you described is a 1-3 year plan where your leverage an FHA loan, move out, rent it, and buy another property. It's similar to what I did when I bought my first SFH only I used a conventional with 5% DP. I used the rest of my savings (every dime) remodeling the property. I then refi'd the property and put some capital back into my pocket.
Every market is different but in our market single family is more desirable. Our houses are spread out and the city is pretty car centric. People like privacy, fenced in yards, garages, and basements to store their junk. You don't always get those things with a condo. SF appreciates faster than condos. Without knowing your market I'd spend 75% of my time search for SF, and 25% searching for condos.
Purchasing a condo vs. a single-family home, offers another level of complexity, especially if you are trying to rent it out. You have to perform your due diligence on not only the unit but also the HOA. You want to make sure you can rent, make sure they have reserves, etc. I would also want to avoid buildings that are mostly (or a larger portion) investors. Investor condo buildings are notorious for having a lot of deferred maintenance, and not enough reserves.
@Brandon Morgan What is the most important thing when buying RE?... Location, location, location.
Regardless of condo or SFH you need to KNOW which locations are BETTER and why. You need do the market research and follow a strategy. What you described is a 1-3 year plan where your leverage an FHA loan, move out, rent it, and buy another property. It's similar to what I did when I bought my first SFH only I used a conventional with 5% DP. I used the rest of my savings (every dime) remodeling the property. I then refi'd the property and put some capital back into my pocket.
Every market is different but in our market single family is more desirable. Our houses are spread out and the city is pretty car centric. People like privacy, fenced in yards, garages, and basements to store their junk. You don't always get those things with a condo. SF appreciates faster than condos. Without knowing your market I'd spend 75% of my time search for SF, and 25% searching for condos.
Purchasing a condo vs. a single-family home, offers another level of complexity, especially if you are trying to rent it out. You have to perform your due diligence on not only the unit but also the HOA. You want to make sure you can rent, make sure they have reserves, etc. I would also want to avoid buildings that are mostly (or a larger portion) investors. Investor condo buildings are notorious for having a lot of deferred maintenance, and not enough reserves.
Real Estate Agent · Holmdel, NJ · Member since 2014 · 38 posts · 11 votes
3y
I flipped a condo and a very close friend lived in a townhouse. I'm biased, but I won't invest in any property that has a homeowners association unless it's way too good to pass up. The flip wasn't THAT bad, but there were a lot of little extras along the way that ate into our profit. I can't imagine a long term hold on a condo as being something I would do. As @Charles Carillo mentioned, these HOAs almost never have enough reserves long term. You're bound to have a huge assessment at some point for a major repair like siding, roofing, or parking lot maintenance.
I flipped a condo and a very close friend lived in a townhouse. I'm biased, but I won't invest in any property that has a homeowners association unless it's way too good to pass up. The flip wasn't THAT bad, but there were a lot of little extras along the way that ate into our profit. I can't imagine a long term hold on a condo as being something I would do. As @Charles Carillo mentioned, these HOAs almost never have enough reserves long term. You're bound to have a huge assessment at some point for a major repair like siding, roofing, or parking lot maintenance.
Purchasing a condo vs. a single-family home, offers another level of complexity, especially if you are trying to rent it out. You have to perform your due diligence on not only the unit but also the HOA. You want to make sure you can rent, make sure they have reserves, etc. I would also want to avoid buildings that are mostly (or a larger portion) investors. Investor condo buildings are notorious for having a lot of deferred maintenance, and not enough reserves.
assuming the building allows me to rent out the property. since HOA fees always increase increasing rent would also be an option right?
I flipped a condo and a very close friend lived in a townhouse. I'm biased, but I won't invest in any property that has a homeowners association unless it's way too good to pass up. The flip wasn't THAT bad, but there were a lot of little extras along the way that ate into our profit. I can't imagine a long term hold on a condo as being something I would do. As @Charles Carillo mentioned, these HOAs almost never have enough reserves long term. You're bound to have a huge assessment at some point for a major repair like siding, roofing, or parking lot maintenance.
would I be able to increase rent with the HOA fees? considering there is a yearly increase.
Real Estate Agent · Holmdel, NJ · Member since 2014 · 38 posts · 11 votes
3y
I'd speak with an attorney on that. Each state has a maximum allowable increase per year but I'm not sure if something like an HOA fee would impact that.
Brandon Morgan - I personally chose to do a house-hack in a 2 Unit Building in Bayridge Brooklyn so I did not have to deal with condo or coop rules. Have you considered house-hacking?