Does anyone have any success stories on condos they own??

Question

Is it really all doom and gloom regarding condos? I know someone out there has a condo as a rental that is doing well for them. Please share your story and give us details about the expenses and income. Thanks!

Aaron Mazzrillo · Answer

Here is a story of two friends of mine who are also friends;

One was buying, flipping, and keeping single family houses.

The other was buying, flipping, and keeping condos.

After 10 years, the first guy was still working hard. He ran into the 2nd guy who had just come back from a very long cruise. The condo investor asked him how business was. He replied that he was working hard, getting his properties fixed up and rented out, looking for deals, and paying down the debt on his houses. The house guy asked the condo guy how his business was. He said all his condos were rented and he had no worries about landscaping, exterior repairs, or roofing issues. His condos stayed rented to good qualified tenants. He got great rents because the communities he purchased in had swimming pools and tennis courts.

He then added, because his condos were less than a 1/4 of what it costs to buy a house in the same market, his portfolio of condos was all paid off already.

I last saw the condo investor about 6 months ago. He is in his late 60s. Looks great, stays in great shape, and takes lots of vacations. He told me he had over $1M cash he had made from his condos placed with a local hard money lender and he was collecting a lot of interest off that money. He still owns a bunch of those condos and was buying more since the prices were so low.

I own 1 condo and 1 townhouse and I have to agree with him; I don't ever have any issues with the landscaping, exterior painting or repairs, or roofing problems. I've had the same tenant in my condo since I purchased it 5 years ago. The townhouse turns over about every 2 years, but I have never had more than 2 weeks vacancy.

Look for good communities that have a stable HOA. Before you buy, ask if there is any pending litigation. Walk the community and ask the people you meet if they like the community.

I flipped a condo last year and made just under $30K on it. I spent less than $500 on cleaning it. There is a video about it on my youtube channel, IEInvestor. They are often over-looked by many investors, but there are some very smoking deals out there.

Account Closed · Answer

I helped an investor pick up a condo complex last year.  15 units, 2 buildings.  9 in one and 6 in the other.  This was a tax incentive, buy and hold deal.   The complex is functioning as apartment rentals and is known as Sandollar Condos.

Here's a link to some pictures on my website [REMOVED]
 
We got it for $1,000,000  5.5% 25 yr 5 balloon 30% down
Each unit similar, very nice finishes, 1250 sq ft +/- with a 200 sq ft covered balcony overlooking pool, covered parking, elevator for each building, gated,  less than 2 blocks from Biloxi Beach.

2 beds 2 baths

Rents run 800-890  (4 - 800) (5 - 840) (2 -850)  (4 - 890)  
Total 12,660

We started out renting for $800 military and $850 civilian
Now we are up to $840 military and $890 civilian

All units currently occupied

Expenses 
Elevators $300/mth
Phone   90/mth
Pool & Lawn $400 mth
Water $600
Insurance $1833.00
Taxes- $1963.75
Mgmt $1,266
Total Expenses $6,446.75

Debt service $4298.63

Total payment & expenses $10,745.38
$1,914.62 monthly cashflow

Notes:  Taxes are based on a much higher property value.  Re-assessment year is this year.  Property was also divided from another 6 plex just prior to sale and that reduction in taxes has not taken effect. Taxes should drop to somewhere around $1,000 mth this year.

This property also qualified for Gulf Opportunity Zone, Go Zone, tax benefits which was designed as 50% accelerated depreciation bonus after Hurricane Katrina.

The condo units themselves appraised at around $250,000 at the height of the real estate boom when they were constructed in 2007-2008.  Current market valuation puts them around $100,000 each.

[SOLICITATION REMOVED]

Andy M. · Answer

I bought a condo 4 months ago that I have kept as a rental. Purchase price 26k, rents for $600/m HOA $95, taxes and insurance are about $50/m. All in all I figure it will put about $350 in my pocket every month so I'm happy with the investment.

There are definitely more problems that come with condos but they aren't all bad. I wouldn't build an investment strategy around them though.

Franklin Romine · Answer

Mike true... I plug 50 per month for reserves/repairs.  No mgmt fees, i do it for free.

Sharon Rolel · Answer

I own 2 condos in Toronto, one of those I am selling now. I put down 90k and am selling 3 years later for a return of 170k after sale fees. By selling I mean it's listed, and there have been 5 viewings in the first 2 days so I hope the price is right. I have seen basically no cash flow from this one.

@Aaron, I also own SFHs which are managed by a management company, and I can't see the difference between that and HOA, as far as headaches go. The fees for the condo were 30% of the rent, and include everything except taxes which are another 10%. The rest I (well, the bank) have been pocketing for 3 years, only other expense was doing some touch ups for 3k to prepare it for the sale.

I would say it was a success. Appreciation was I would say 7-8% a year and the mortgage rates were 3% for 2 years, 3.8% now.

Michael D. · Answer

Frank, you're not including management, repairs (even condos have some) and vacancy in your expenses. I think those should consume $100-150/mo. Still, nice work.

Franklin Romine · Answer

I only own one condo and it looks like this....

Purchase price 27k
Previous forclosed amount 100k

Monthly....
Rent 675
Hoa 180
Taxes 35
Insurance 15

Net cashflow 445

Mike H. · Answer

So you bought for 1mil and put down 30% (300k) but your net income is a little less than 2k per month (24k)?  That doesn't seem like a very good deal.

8% cash on cash for something bought last year?  I would think there would be better deals than that out there - especially for condos.

Then again, I could see where it might be a huge equity capture play given they were once appraised around 250k apiece.

Mitch Kronowit · Answer

I purchased a condo back in 1992 or so and lived in it for about 5 years. When I moved away, I turned it into a rental and it's been a great performer. Not only has it been self-supporting (positive cash flow), it's worth double what I paid, even after the recent crash. At one point, it was worth triple its purchase price. We plan to have it completely paid off in less than 10 years.

We just recently bought another condo nearby in our home town. It's in a similar type of neighborhood, i.e, solid middle-class, blue to white collar area.

I have one friend who only invests in condos for rentals and has had good luck with them. They're simple to maintain (no yard) and there's plenty of potential renters.

The only reason I can see people having such bad luck with condos is either they have a poor HOA/property manager or they're buying condos in crappy low-class areas that only attract the least desirable type of renter.

Jeff S. · Answer

Mixed bag here. Bought one probably 15 yrs ago, lived in it a few yrs and then rented it for 10 yrs or so. Everything wonderful as a rental then the renters seemed to deteriorate. Figured it was because low rent of $535. Bought $47,500, sold $88,500.

The one I live in bought about 10 yrs ago for 130k and it went to 225k in 2007 now back down to below what I paid. Association board a continuous nightmare. More sleepless nights. Love the place, hate the boards and committees. Can't find anything close to as a low value to replace it with. Only had so much time to run it via board.

Does anyone have any success stories on condos they own??

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