Condos, cash flow & 50% rule

[Bienes Raices]

I've read a lot of negative things about buying condos for rental. But even though you would pay somewhere between $200-$400 in monthly maintenance fees for the unit, isn't that offset somewhat by the fact that you won't be paying for big ticket repairs in the future, like a new roof (or if you do, it's spread across all the condo owners as a special assessment)? As well as the fact that you never need to do any exterior maintance, or dealing with tree, fence and driveway problems?

So, for example, I buy a condo for $25K that has a $300 monthly fee, and will rent out for $700/month.
I subtract off the $300 and pretend the rent is $400/mo. for argument's sake. Do I still need to apply the 50% rule to that $400/mo., or is it more like the 20% rule now? From what I can see, the only costs would be insurance, property taxes, possible eviction, and minor repairs to plumbing, new carpet every couple of years, painting.

[Matt Eilers]

I don't think many HOA's budget correctly for future repair items.
When buying a condo, ask to see their Replacement Reserve Schedule & Replacement Reserve Fund.
This should show what items they have identified to fix, the life expectancy of each item, cost to fix (which is just a guesstimate) and how well they are doing putting the required yearly amount away for the items to be fixed.

Some places may jus say we have $20,000 in reserve and Buyers think great, that sounds like a decent amount of $$$$. But, this means they HOA has no idea how to budget as they don't have a proper Replacement Reserve Fund that ID's items and life expectancies and so on. Thus, when the roof goes, and it costs $50K to fix, the $20K doesn't sound so good anymore.
I don't mind HOA's actually, but some are not set-up well budget wise.

Matt