Is a condo or a townhome a good investment in Orlando now?

Question

Is one better than the other when it comes to renting out? I am not thinking of a SFH until prices drop.  However, for now the strategy is to get a condo (or townhouse!) and then buy SFH in a year or two. I just want to make sure it is easy to rent when I move out.  Which one - condo or townhouse - best to start out with? Help, thanks!

Tyler Gibson · Answer

@Mary Ann There are drawbacks and advantages to both. Everything hinges on the HOA. If the HOA fees are too high or the rules too restrictive then a condo/townhouse would not be a good investment. That being said the only way to know if to start looking and when you find somethign you think might work look at the HOA rules and decide from there. The other thing to consider is the financial state of the HOS it's self. This can be a bit harder to determine but things to look for is how well the community is maintained. If it appears to be well maintained then there is a good chance the board has been diligent with the HOA funds. If you find the community to be in disrepair then for me it is a read flag. I am a realtor here in Orlando and so if you have any questions or need any help feel free to reach out.

Avery Carl · Answer

I'd go with a townhouse over a condo. I stay away from condos for LTR investing. The HOA's have too much control. Townhomes generally have looser HOA rules.

Shawn McCormick · Answer

Hi Mary Ann. For me personally, I stay away from Condos. I don't like the rules, lack of available financing should you decide to sell, 'surprise' assessments that the association springs on you and could hold up repairs and the ability to sell should the association decide not to make repairs. I have seen this happen to many sellers of condos and they can't get a buyer because of repairs that are in dispute. FHA has loosened financing requirements for condos last year, but still not favorable.

Also, most condo developments restrict the number of investors that can own in a community. So if its 60% owner/occupied and 40% investor and the investor portion is full, you may not be able to purchase and worse, when you go to sell, you may only have the option of selling to an owner/occupent...and if the owner-occupant knows that there are a bunch of renters in there, they may choose to buy elsewhere.

Again, just my personal opinion. Happy to talk about it more with you. I am a Realtor and could point out some good areas if you like. Also, if you buy new construction townhomes, many builders are offering some really good incentives right now to cover closing costs, upgraded finishes etc, plus you get a warranty on the unit. Something to think about....

Shawn McCormick · Answer

Well you can speak with your lender to see what you can afford for that payment, make sure you are including taxes, insurance, HOA. To stay at $1000 will be really tough unless you find a distressed unit and fix it up to add equity. New construction townhomes start around $225k down here in the majority of areas so that payment isn't going to work either. I am dialed in with a lot of wholesalers that have off market properties that you could pick up cheaper, but they are cash/hard money only...no financing. Let me know if I can help with anything.

Zach Whicker · Answer

Just going to give my perspective of what you could search for since you're interested in SFH. I don't know your financial situation but if you can swing a bit more money (250-300k), you can possibly buy a SFH with an in-law suite. With that in-law, you can either live in that or the main house, and subsidize the rest (or ALL) of your mortgage. You can also use that rent money to help qualify you for the loan.

I just purchased my first property, in the 32806 area code, which is a SFH 3/2 with a 1/1 efficiency. If I was living alone, I'd take the 1/1 and live for near free, but I'm living with my girlfriend (who needs a big kitchen) so we'll live in the 3/2 and either rent one of the extra rooms or pay a little extra each.. Either way, it's a great option to consider.

I used a FHA to purchase the home, but even with the mortgage insurance, it works out pretty well. Granted the property used to be a rental and some sweat equity is needed, it is a good fist step into REI.

Let me know if you have any questions or want more info...

Mary Ann · Answer

I want to buy/hold after I move out.I was only paying attention to what I want to pay in this crazy market and thought sticking to 150K or less puts me in a condo/townhouse.  I am well qualified for more than that but want to be very conservative.  That's what I stayed away from houses.  All in all I want my payment to be under 1K.  If possible under 1200K.  Thats it.  I'll look at the new constructions - I'm not crazy about the closeness of the homes or open floor plans. If the money makes sense, I can rent it out more easier than a home WHEN I move out.

Mary Ann · Answer

Yes so far things look good just worried about renting when I get ready to move out.  I also concerned about paying too much now for a SFH that is why I looked at condo/th as a temp solution.

Is a condo or a townhome a good investment in Orlando now?

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