Buying Condos Yay or Nah?

Question

So I been having this idea of buying a condos out in Orlando for a while now. Beside the HOA fees their pretty cheap and I think there could be a lot of money in them; buy and sell with a tenant, long term lease with tenants, or even short term Air BNB. what do you you guys think think?

Nathan Gesner · Answer

It's a personal choice. Florida condos can be competitive because a lot of investors bought them as short-term rentals, so supply and demand may hurt performance.

As a general rule, I would avoid anything with an HOA. The fees eat into your income and will only increase as time goes on. If it's not effectively managed, you may end up with a huge special assessment for capital expenditures. And if the HOA Board is not run well, the entire community can fall apart.

Tyler Gibson · Answer

As long-term rentals, they can be challenging to cashflow unless you buy cash. There are some good condos for STR near disney.

Chris Davidson · Answer

@Eugene DuShawn Smith I disagree with HOA's killing your cashflow. It will only kill it if you didn't account for it. While the HOA is a expense so is lawn maintenance or any other item you would have with a SF house. Run your numbers if you are happy with it go forward. They do tend to appreciate slower historically. They also can be tricky sometimes getting lending depending how many are owned by the same entity. Just make sure the CC&R's will allow for what you are looking to do with it.

I like condo's if the HOA is flush and not looking at assessments then the bulk of your Capex items are being paid out of your HOA dues and you don't have to worry about coordinating contractors.

Best of luck!

Stephanie Meeks · Answer

One more thing that I forgot to add. As a few other may have mentioned already, renting each bedroom out separately in a condo can be very lucrative. I closed on a 3bd 2ba condo last month and have rented out all three rooms on long term leases. After repairs costs and buying furnishings and decor, my COCR is 44%. I highly recommend this strategy for highly populated areas or in/around college towns.

Damon R Hysler · Answer

My wife and I live in Jacksonville Florida, we have one condo we purchased last year. We got a decent price on it, about 15k under market at that time. We have since had about 40K in equity since the purchase and it is currently cash flowing $500.00 a month. I personally like it and want to purchase more, but the purchase price has to be right and the numbers have to work to where it cashflows. Hope this helps!

Jacob Krafka · Answer

Oh yeah buy em up!!!! Investment condos barely sit 2-3 hours with us up in Denver!

Eliott Elias · Answer

Condo's will kill your cash flow with HOA

Ricardo Hidalgo · Answer

I think they are great for short term air bnb if you pick a building with good financials and reserves. There is less to worry about as an owner since the exterior of the building is typically managed by the hoa. I think condos have inflated the most in this market and I would wait. Right now I am seeing townhomes and beach houses producing better numbers.

Ben V. · Answer

I'll never buy a single condo for cash flow purposes...the numbers just aren't there. Actually...my general rule of thumb is that I wont buy anything with an HOA, or at least an HOA with a boat load of strict rules.

Good luck!

James Dainard · Answer

Hey Eugene,

Lot of great points mentioned here already.

The HOA will always eat at your cashflow and they typically only go up and any special assessments are liable to wipe out your cashflow for a few years.

It's typically better to invest in a house where, the appreciation rate is higher, and you have total control over the asset.

That's not to say that there aren't good condo's out there with well run HOA's, you just have to dig into those details to make sure you're protected and minimizing risk.

Buying Condos Yay or Nah?

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