Any tips, pros/cons, or advice on Condo Investing?

Question

I’d love to hear anyone’s story about their experience with Condo Investing.

I grew up in a Condo which we now own and I’ve been thinking about buying a couple units within our complex area. Location wise, the complex is right across the street from the university and several other public schools nearby. I thought it would be a good opportunity for student housing or family rental units.

Im sure it’s probably the same as SFH/MFH investing, maybe with less costs on maintenance. But id love to hear someone else’s opinion and their way of funding their deals. Thanks!

Jasmine Hu · Answer

If long term holding, condo fee will significantly reduce your return esp in low cost area. For short term it is OK.

Another issue with condo is that if there is some major repair coming up, they can charge special assessments to owner. This alone could stop you selling yours esp in touch market.

It is clear or expected that bad time would come and it is within 2 years.

I only own condos in CBD, very high cost place with high potential for capital appreciation.

Neil Henderson · Answer

Former condo owner here.

My biggest complaints with owning a condo revolve around the condo association, both the fees the associations charge and the control they have over your investment.

The fees can eat all your cash flow in a hurry and the people on the board of the association are frequently terrible at managing the funds of the association. Then, because of their mismanagement, they'll raise the association fees to make up for their terrible financial decisions.

The association board can also make your life miserable if they suddenly decide there are too many non-owner occupied units in a community.

My advice, if you decide to buy a condo (or two) as an investment property, is to become a member of the condo association board as quickly as possible. That will be the best way to protect your investment.

If you choose to do student housing, remember that their lease up period is very narrow, late May to early August. If you miss that window, you're SOL. They are also REALLY hard on rentals, so go in with a plan to tenant proof your unit the best you can.

I know @Sierra Crisp has purchased a lot of condos, so she may have more advice for you than me. I know she's traveling right now, so she might not be able to respond right away.