Does anyone believe the condo market is worth the investment?

Question

I know of some condo high rise properties, that  are transitioning from leasing to selling.  I also have notice that price per square foot for low rise condo communities are considerably lower than SFRs, though that might be common.  Certainly there are requirement variables different in condo financing than in SFRs(owner occupant requirement ratios, current on payment ratios, and so on.), but does anyone believe that now would be a good entry point?   Thanks

Robert Adams · Answer

I believe you are referring to high rise luxury condo towers? Those units in Vegas are good for long term appreciation but not cash flow. The HOA fees are typically very high which kills your cash flow. If you are referring to apartment style condos you can still get some great CAP rates on those. Do you have a particular deal you are trying to analyze?

Teresa F. · Answer

Hi Antony,  Lots of great info here already.  I have a few condos and I love them.  Cash flow great, bought two for 28k each, my rehab was cleaning, rented for 1100 each.  The condo association is 244 per month, ins 256 per year and taxes 900 per year.  I purchased in an area that is gradually improving although if I had to sell now I could move to another investor and still sell at a profit, maybe offer financing.  For me the key is that my tenants know that this is NOT an apartment so the owners around them have expectations of friendly, quiet, clean neighbors and my tenants should have the same expectation.  I also attend and vote at meeting so I am known as an active and informed member of the community albeit investor.   Good luck, Teresa

Account Closed · Answer

It all depends on how you buy. I have 4 condo rentals and they cash flow very nicely. I was lucky to accumulate between 2010-2013. Wish I bought more, but im sure everyone feels that way

Jeff B. · Answer

I was shopping in Nashville and was shown some condos - - ran away as fast as I could.

Whole building was individually owned condos in various conditions (hint: no curb appeal). Insides were no better.

Additionally, many HOAs will refuse rentals, rooming and subletting, so even if the above does not apply in your case, get the hoa terms & conditions (aka codicil ) and in your offer include a contingency of approval thereof

Rachel H. · Answer

The tough part with condos are the association fees. They can creep up on you as the years progress. I know an investor who went this route but eventually got out of the condo market due to the excessive association fees. Best of luck!

Rob Gribben · Answer

I avoid condos, HOAs and special assessments typically kill cash flow, and they also don't typically appreciate as well as SFHs.  Not to mention the fact that much of the maintenance is out of your control.

Alberto Camacho · Answer

Condos usually are the last to appreciate and the first to lose value. While a well run association is a tremendous asset the inverse can be financially devastating to owners.  You also have to deal with tenant issues that you cant really control. When unit 1A rents to insert problem here..well you get the idea. There is money to be made in that market just it carries more risk than SFR. If you can buy to compensate for the added risk and tiime it can be profitable.

Michael Lee · Answer

Yes condos can be a good investment as long as the HOA does not surprise you.  I am 59 years old and I found BP about 3 months ago and I am still learning.  I graduated from college and I got a broker license in 1980.  I have been in the construction business since I was 17.  If you think I can be any help to you please do not hesitate to contact me.  I was born and raised in Dallas Texas.  I still live in Dallas County.  Good luck!

Russell Brazil · Answer

My condos are my favorite investments. However I have a pretty good idea which condo projects are good and which ones are bad ones to buy into.  There are certainly particular risks that come with investing in condos, limited appreciation...possibly not even keeping pace with inflation unless it is in a downtown of a major city, special assessments, hoa rule changes, increasing condo fees, to just name a few.

For me personally though the ease of management outweighs the risks along with my own due diligence.

Antony S. · Answer

Thanks for all the imput,  greatly appreciated!  Good information to consider.  New to the aspects of condo investing, but I see some potential.

Does anyone believe the condo market is worth the investment?

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