Why condos suck for investors

[James Anderson]

Hi guys, 

I have been checking out Hillcrest Condos in Hollywood Florida.   I believe they started building these in late 60's and last one was built in 1988 There are 27 buildings in a very nice area.  Most are 55+ but some are all ages and allow for renting.  They are very nice and larger than the average condos and each building comes with a security desk and lobby.   There are 1 bed 1 and 1/2 bath and 2 bed 2 bath the best are the 2 2 corners.   I have run the numbers on these, the deal killer for a condo is the HOAs the smaller ones are $336 a month and bigger ones can be $500 a month.  Prices go from $98,000 up to $170,000 I just ran the calculator on one in market place which claims 6.72 Cash on cash roi which isn't attractive to start with but my numbers are worse! On a small unit at $115,000 with rent of $1200 a month: LOL $3.06 monthly cash flow! and .15% cash on cash return! You can live large lol. Though they are nice and rent well they are no deal. Kiled by HOA.

Only if you have a spare $115,000 laying around-respect! and then you could make cash flow after HOA and expense but condos I have seen are a no go.

$1,200.00MONTHLY INCOME. $1,196.94MONTHLY EXPENSES. $3.06MONTHLY CASHFLOW. 5.13%PRO FORMA CAP$5,896.00. NOI. $25,000.00TOTAL CASH NEEDED.   0.15%CASH ON CASH ROI.   5.13%PURCHASE CAP RATE.   ExpensesIncome50% Rule

Total operating expenses:	$708.67
Mortgage expenses:	$488.27
Vacancy:	$60.00	Repairs:	$60.00
CapEx:	$36.00	HOA:	$336.00
Insurance:	$50.00	P&I:	$488.27
Property Taxes:	$166.67

$115,000PURCHASE PRICE

Purchase Closing Costs	$2,000.00
Estimated Repairs	$0.00
Total Project Cost	$117,000.00
After Repair Value	$115,000.00

Down Payment	$23,000.00
Loan Amount	$92,000.00
Loan Points	$0.00
Amortized Over	30 years
Loan Interest Rate	4.900%
Monthly P&I	$488.27
Total Cash Needed	$25,000.00