What do you include as expenses for Condos?

[Tajinder Kandola]

Do you include all the typical Expenses associated with Single family homes same with condos or do you not include some like Cap ex etc?

[Jacob Pereira]

@Tajinder Kandola, I'm glad you're asking this question, because I'm struggling with this issue myself. I generally try to avoid condos for a number of reasons, but lately I've run into a couple dealsthat have made me re-think this position.

On my first few condos, I treated them the same as regular small residential properties, as @Nicole C. seems to be suggesting you do, but I've quickly realized that the equation can be a bit more complicated on a condo regime. As you're question implies, your capex tends to be lower on a condo. At a minimum, you're not paying for your roof, outside paint, and foundation repair by yourself. On the other hand, your control over how that money is spent is close to zero, most of the HOA fee is likely going to other expenses such as landscaping, poll, gym, etc., and you always run the risk of special assessments being levied.

Keep in mind I'm still navigating my way through this idea myself, but I've come up with a rule of thumb of assuming about 30% of my condo HOAs can be assigned to my capex estimates. If you go visit the condo and it looks dilapidated, dangerous, or otherwise mismanaged, you should probably lower that estimate.