How to win with Condos?

[Gregory L Hobbs]

Hello!! First and foremost, I want to say thank you for allowing me to be part of the BP community. This is my first post here and it’s centered around using condos as investment property. I just wanted to pick the community brain and figure out is there any successful strategies to owning condos. The reason I am asking because I purchased my first one as investment property. Also, everything I read about condos the information is negative. To me, I know that someone has to be doing well when it comes using condos as rental properties as an investor. I just want some insight and perspectives. Thanks for the help!

[Ray Johnson]

@Gregory L Hobbs The Condo versus Single family is a never ending debate on BP. At the end of the day they both have advantages and disadvantages depending on your investment criteria and the type of portfolio you have, some people even have both products in their portfolio.

I invest in Condos as a main part of my portfolio, It started with my first purchase after college I bought condo to live in and rented it and continued to acquire additional properties. 

Location is one of the main must haves in Condo investing, those that discuss Condos not appreciating or talking about Condos being a bad investment may be buying in bad areas, small towns, or the wrong type of product. I only buy in major metropolitan cities, Los Angeles, Orange County, CA, Washington, DC, and Arlington/Alexandria, VA. I also Do Not buy the typical C- and D class properties chasing higher cash flow, those properties will not appreciate at a good rate, I'm getting cash flow between $200-$300 per door on Class A and Class B condos, this has worked well for me and I get great appreciation.

Some of the other thinks I look for beside being in large major metropolitan cities are:

1) Choose condo buildings that are low-rise or mid-size, Since the HOA dues contain cost to maintain the common areas, the less common area the less the dues.

2) Make sure the HOA Board reflects a minimum of 12 month leases in the bylaws, this means they've already addressed renters and have agreed on the line in the sand.

3) make sure you're on the Board or at the very least attend every meeting to vote on this that may change your investment.

4) Only do major metropolitan cities to increase your applicant pool, I've been doing this since 2003 and I've never had an empty unit more than 1 month.

5) Don't try to compete with the large apartment buildings with large pools and gyms. If you follow the aforementioned metrics of staying with small buildings to minimize cost, a small building with a pool is a waste of your money, you want the tenant that doesn't use the pool and doesn't want to pay the extra $100 a month at the complex down the street from you that has a pool.

6) If you can purchase and move-in as an Owner Occupant for the first 1-2 years that works out great as you can get OO financing and rate which helps with your long-term cash flow.

There are many more, these are the basics that I go by as a starting point.