Condo Deal for rental what are your thoughts?

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Condos can be great, but you have less control over several variables. I would talk to people who live there to see if the community has any hot-button issues, like major projects in the works or proposed changes to rules and regulations. I would also call the association directly. Watch out for deferred maintenance issues throughout the community. I looked at several condo neighborhoods recently with potentially strong cash flow. One is in a great location but has older roofs and you can see rotting wood siding throughout. Another isn't well kept up and many units are currently for rent. I passed on both areas, even though purchase prices are good. As others have said, association fee increases can have a big negative impact on cash flow. I've been bitten by an early condo investment that now has a permanent annual insurance assessment. On the positive side, I've done well in townhouse-style condos in good locations that are well maintained and fairly easy to rent. The no-external-maintenance factor is a huge plus.

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What I also know about condos from my area is that it is all about: 1. The view, (the higher the more is worth and run less risk of structural damage) 2. The centricity,

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How old is the building? The older the worse (I would not get into something older than 20 years) Check for humidity in the walls. I currently have a situation in my condo in Puerto Rico that since the owner on top of my condo made a structural change that caused a leak on my wall, the HOA will not fix it. I will end this long story by saying that it has become a big do do for me. Ask to see the annual HOA balance sheet or Financial Statements. If the building is under water because other owners do not pay their dues, bad administration or the building need big repairs, most likely the HOA tends to make a loan and allocate the responsibility to each apartment. This could increase your HOA. Good Luck

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@Ron Snoes You need to check ALL the HOA rules ALL the planned future Special Assessments And you need to check the percentage of owner occupied units, this could be critical to your financing as well as your end buyer. You need to realize that HOA costs may rise much more than the inflation rate And you may have a difficult selling the condo in the future, for any of a number of reasons including the HOA establishing new rules capping the number of rentals allowed.

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It certainly beats the 2% rule if it rents for $800 and the purchase price is 28k. Total cost of $435 includes HOA. If HOA is healthy, allows renting, etc I'd say it's a good deal.

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great topic and this is a hill I almost climbed earlier this yr but chose not to. 1st. Hoa's are true nightmares. The condo I was buying was very inexpensiveas well so I thought it would be a no brainer deal as well. In speaking to the hoa, they informed me that a "special assessment" was coming up for some major repairs that needed to be done to the building. She continued to tell me the work was costing $135k and the hoa could either raise our monthly fees from $200 to $315 or just make all residents pay their portion of the $135K at once. She said they were leaning towards the monthly increase. This would cut more into my cashflow and I wasn't sure about other repairs that could come up. This building just like ur only allowed certain financing so the pool of already small buyers is even smaller. And the biggest issue I had was the hoa recently voted not to allow renters. Just becasue u can rent today doesnt mean u'll always be able. Good luck and let us know how it goes. I just took my ira funds and found a great 3bd 2bth 1car garage a month later. Was a shortsale and bought it $110k less than the previous sold....

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@Ron Snoes run your numbers here just like you would for any other investment. Just make sure you can afford the $225 HOA on top of everything else you need to account for. Don't count on any appreciation if you intend to Buy and Hold. It is a great bonus if you can get it, but I only look at condos from a straight rental point of view. I'm guessing that this place won't make you any money with that HOA fee overhead, but I wish you nothing but the best, and lots of appreciation on this deal :)

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Thanks Steve! Yes I have checked and you can rent the condo out.

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@Ron Snoes I would check with HOA to see if renting the unit is not against the rules?