Thoughts on condos?

[Jerry Poon]

I'm a newbie and I'm just getting started. What are you thoughts on getting a condo as your first property? After listening to a few podcasts, it seems like a good idea to stay away from them due to HOA fees. Is there any way to force the HOA fee on the tenant? I'm also in the Southern California region, and they are the only things I can really afford if I want to stay in a decent area. I'd love to know what you all think.

[Account Closed]

Good condo, bad condos. Good SFR, bad SFR's. Usually what makes a good condo investment is picking an established building in a irreplaceable area. If there are tons of amenities make sure they are the ones that tenants are willing to pay for. HOA's use the fees to maintain the property. A good HOA will protect you from coming up with large sums of money for deferred maintenance. A lot of people's cash flow is just them deferring maintenance and they lose that money when the have to make the repairs or when they sell at a lower amount because the property is not maintained. I keep track of the reserves to know that the money is there when needed.

I think it's easier to deal with a problem board than an out of state PM.  The PM can take his money and leave.  The board member will have a harder time to walk away if they are not doing their job properly. 

I deal with middle class to luxury  condos in areas that are not replaceable.  In over 40 years I've experienced 6-7% annual rent growth, 9-11% annual appreciation and not one day of vacancy or an eviction!  And, I've got hundreds of thousands of dollars in the maintenance bank so my cash flow I actually get to keep.