Condo investment - Requesting Feedback

[Michael P.]

Anyone have experience with purchasing condos as rentals. I have something I am interested in around the corner from me. It’s a foreclosure, below market price. Rent is 1175-1250. Purchase price 60-70, hoa 230, tax 2700, insurance should be maybe 40. It’s a great area, it’s where I live, the only issue is if it’s vacant for 4 months years profits are gone. Now it’s a long term play for me, not looking for appreciation but cash flow for retirement in the next 25 years. The place is around 950-1000 sqft. Requires some rehab, paint, bathroom I can place new tiles, new vanity, repaint the kitchen or maybe get a new one, nothing expensive, around 1500 plus install. Feedback please.

[Sean McDonnell]

@Michael P.

I am currently under contract for a condo with around the same numbers as your prospective rental. One major hurdle that blindsided us was trying to get financing for it.  Are planning on paying cash or getting a mortgage?  If you are going through a bank for financing you need to find out if that specific condo is warrantable (meets the requirements to be sold to Fannie/Freddy).  Two of the major pitfalls that make a condo UN-warrantable is that if there is less than 50% owner occupied and if ONE investor owns more than 10% of the units.  If a condo is in-warrantable, you will have a very tough time finding a bank that will finance for you..

In the case of my condo, the complex is only roughly 10% owner occupied. This got us excited and validated the fact it is a good investment based of other investors continued interest but has made it very difficult to find financing.  I don't think your purchase price meets the minimums for @Upen Patel but he gave me some great advice on how to try and find financing.  I would hit him up!  After many, many phone calls, we finally found a small local bank that would finance for us with a 25% down payment.  Again, if you are paying cash, no need to worry but it is worth looking into in my opinion.