investing in condo/real estate

[Sonia J.]

Hi All,

I am new into investing market. I am looking to invest in CT or NJ. I looked at some properties in CT.

For example: I looked at 2 family which has been rented for last 20 years. One tenant pays 1100 and other pays 900 and heat and water paid by landlord. Price for this 2 family is 300K. Taxes is 5600.

Another is a one bedroom condo for 69K. It is vacant and rents in that area is nearly 1000 to 1100. Association fee is 272 a month and taxes 1400/yr.

When I compare the above two the ROI for the condo looks much better compared to the 2 family. I am just concerned with the HOA since I have heard many horrible stories. I am seriously confused on what should my decision be?

thanks,

Sonia

[Kevin Siedlecki]

@Sonia J., Paying for utilities and only bringing in $2k a month gross on a $300k house is a loser in almost any market, especially with our CT taxes! The condo looks better, but still not great. The way I see it:

Income: $1000

HOA: $272

Taxes: $116

Insurance: $30

P+I: $275 (borrow 51,750 after 25% down)

Management: $100

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So your NOI in a perfect situation with no vacancy and no capex is $207/month.

That is an awfully slim margin. Throw in 10% vacancy ($100) and 15% capex ($150) as rules of thumb, and you're losing money. 

Keep looking!