Are Condominiums a good investment

[William Strom]

Are condos a good investment? I’m looking at getting one for a long term rental. 

[Bob P.]

Quote from @William Strom:

Are condos a good investment? I’m looking at getting one for a long term rental. 

They can be, but you have to be wary of the HOA and other condo owners near by. Remember that condos are the first to depreciate in a down turn. Plan accordingly and you'll be okay.

[Josh Young]

@William Strom

Generally speaking condos can have higher HOA fees compared to Single Family Homes, so this can sometimes translate to less appreciation, but that can also mean a lower purchase price, so you can sometimes get better cash flow on a condo. Sometimes the HOA can cover capital expenses like roof and exterior, so that can help cash flow as well, but the HOA might increase the dues when they have to pay for capital items. I will add that the rental prices of condos tend to be more similar to multi-family housing than SFH and in the greater Phoenix MSA a lot of new multi-family units have been built in the past couple years with more on the way, so rents have softened.

[Noah Corwick]

I echo the other comments already posted. 

One other note about condos in PHX is that your exit strategy needs to be accounted for even more with condos. Most condos in the valley are not FHA approved. Currently there are only 124 communities approved at the moment.

So if you end up needing to sell it in the future, would be a hinderance since it would eliminate FHA buyers all together + even some conventional buyers too.

If you do invest in a condo, I would suggest looking at if it is approved or not ahead of time. The approvals are always subject to change at any point, but at least you would know what you're getting yourself into ahead of time. 

[Jonathan Greene]

Condos can be steady and safe, but will not have the appreciation potential that single-family homes have, but also come with less maintenance. You have some great advice above. I would add one thing. The most underknown part of condos are assessments. You have to confirm there are no pending assessments and lawsuits against the HOA before buying and an assessment usually comes for roads, roofs, windows, decks, and stairs that were not done properly or have a safety issue. They assess when the HOA does not have the reserves to pay for it and then owners all share the cost.