First Deal a Condo????

Question

Hey BP!

I am gearing up for my first deal and one came into my path yesterday.  I want to know what yall think!

There is a Studio (0BR 1 BATH) Condominium in good condition in town where I went to college in New Paltz, NY and near where i grew up and here are the details:

The condo currently rents for 800$

Owner is asking 65K$

Taxes are 2000$ a year

HOA is 192$/Mo

insurance...?

I could put down enough to avoid PMI.

Theoretically it could cash flow right away (~200$/mo w/o vacancy) but im worried that it wont make out well enough in the long run and I should continue to look for houses in the area that can cashflow larger amounts and be a better asset.

What do you think?

Chris Wood · Answer

Man, I have owned a condo. And they are not all bad. But when it comes to investing and doing it long term. HOA fees (with future growth of expenses) are a great way for all you profit to disappear.

Mike Mcgregor · Answer

Hi John. Glad to meet you. I am a new member hear as well and have been looking into investing in New Paltz as it is in my back yard. I just priced insurance on a home valued at $240K and it came in at just under $200 a month. You should definitely get a quote before jumping in if you did not factor that into your cash flow equation. You can expect taxes to keep rising here - the middle school just passed a $50M improvement levy that has yet to hit the books. On the upside, I do know people here who pay 1k a month for studios that include utilities so there might be a little room to up your rent expectations and with the college there will never be a lack of renters. In my opinion $200 a month sounds thin when you factor in vacancy and repairs. In general the rental rule in NP is $1.15/sq. ft.

FYI, I was at the county tax auction on weds and two 2 bedroom condos on the edge of town each sold for $45K. I did not do due diligence on them so did not bid but in hind sight wish I had. The house I was interested in (the $240 above) was the only house to go over 80K in the auction but went for $150K.

I am interested in connecting with people who are active in this area. Let me know if you are in NP and want to grab a cup of coffee.

Cheers~Mike