Buy and Hold without Renters?

[Christina V.]

Hello Everyone, 

I have a potentially crazy question. What are your thoughts on buying a condo and holding it for 1-2 years unoccupied without a renter? 

Here's the scenario: I found an amazing deal on a Riverview condo that I am currently closing on. I would be purchasing it and have instant equity $15-20K. However, I relocate quite frequently for work and would likely not be occupying the place for 6 months at a time. The HOA only allows two rentals at a time and both spots are occupied. My thought is, that even if I keep the place for 1-2 years and let the value appreciate, I would be able to sell it and have a pretty solid profit. In that way, it might make sense to snag the place now (I am getting it $15K below market value) even if it is unoccupied for months at a time. It is not an ideal situation but because of the instant equity and proof of a trend of appreciation in the area, I am strongly considering it. Any thoughts?

Thank you very much! 

[Christopher Brainard]

Sounds like a terrible plan to me, unless you think you're going to spend significantly more time there than your post indicates or the expenses of alternative local living arrangements outweighs this cost of owning this unit.

The way I see it, your plan hinges on market appreciation, which may or may not come. What I can promise will come are taxes, mortgage payments, utility bills, HOA fees, and possibly worse (break ins, squatters, flooding from an adjacent unit, etc).

If you do decide to do this, you need to make sure that your insurance policy covers an unoccupied property. I know someone who did this and the toilet fill valve broke and flooded his unit. Insurance wouldn't cover it because they have a clause which protects them if the property is left vacant for more than 30 days at a time.

-Christopher