Investing in Condos to hold ideas

[Kevin Fletcher]

I've been doing research online and have seen some possible opportunities in buy and holding condos, maybe with a little rehab. Ive never owned a condo, so I was hoping that if anyone who had experience with them could let me know some of the pros and cons of this strategy. I'm seeing In my area I can buy some condos for around 60-70k and they are renting for 1100-1400 per month with HOA fees from 200-300 per month. I'm wondering about dealing with HOA's, if its difficult to do rehab, and any other feed back people may have is greatly appreciated.

[Eric Y.]

@Kevin Fletcher

I briefly looked into condos as well early on (I see we're both in the Denver area). To me, the hassle of the HOA's killed it. Besides the fact that 60-70k (@ 20% DP) will still be ~$400/mo for mtg/tax/ins then you add in the HOA fee of 200-300 for a total of $700. If you can truly get $1400/mo rent it would probably work out well, but you have to worry about the HOA being friendly to landlords and things like building maintenance. If they need to replace the roof or do something major they will come to each condo owner and request a lump sum. The problem is when someone/a few people don't pay. Also a risk of an HOA going bankrupt. There are a lot of other strict rules for FHA financing on a condo (in regards to the condition of the HOA and % of non-owner occupied condos in bldg) which might play some into your decision if you're looking into unloading the unit at some point.

If the numbers work and the location is good, it is a very viable approach though.