1st possible deal

[Leon Trak]

Hi Guys,

I'm looking into my first potential real estate investment and would like all advice possible.

Option 1:

This property does not have a good appreciation potential, but financially appears to be cash flow positive. Based on the below info, would you recommend that I pursue this deal?

Type: Condo 1bed 1bath

Price: $28,900 (would try to pay $26,000 cash)

Current Rent: $550/month

HOA: $220/month (not sure what expenses/amenities are covered)

Option 2:

Next door is an efficiency unit with a remodeled kitchen listed for $32,000. Not currently rented. HOA is $186/month. Should be able to rent it out for $400.

Thanks,
Leon

[Roman Pak]

@Leon Trak I'll start by answering your question directly. In my opinion I would choose option 1. I don't know what other expenses you may have such as those listed my @Jordan Thibodeau But assuming all else was equal I would go with option 1. 

Now, my two cents. 

I wanted to start investing in condos as well, and asked a similar question here on BP, I received a reply from an investor that completely changed my mind. Here is the jist of it. 

A property with an HOA is like investing in a high risk stock. HOA's are notorious for changing renting rules, increasing fees and banning one thing or the other, or choosing to change what is covered under the HOA fee. You essentially have little to no control over the property you own. Furthermore, as an investor you would need to make it a priority to attend Association meetings and possibly even get on the board so you could provide insight and help maintain a friendly environment for yourself and your tenants. That is a responsibility that not may investors are looking for, because time is a precious commodity. The last thing I would want is to spend two hours in an HOA meeting instead of spending those two hours finding deals.