Why I Will Never Invest In a Condo Again (in Chicago)

Early last year, my wife and I became interested in real estate investing. We have never owned a property before, and we were excited at the prospect of purchasing our first property together. We had the intention of househacking, possibly by renting out empty rooms to roommates or on Airbnb.  

After searching all over the MLS and looking at a dozen properties, we finally found an off-market deal on Craigslist. It was a 2 bedroom, 1.5 bathroom duplex condo in a popular area on the north side of Chicago called Edgewater. It was located right off of Lake Michigan with a balcony facing the lake. The area itself was incredible with Michelin-star restaurants and bars nearby, festivals all over the area, and public transportation right in front. We have to admit that we were a little emotional, but past is past and we do not have any regrets in acquiring this property. Knowing what we know now though, we plan to NEVER invest in a condo again mainly for ONE reason- 

THE HOMEOWNERS' ASSOCIATION (HOA)

We quickly realized after acquiring the property that we were basically at the mercy of the HOA for virtually everything. Our building was a high-rise with doormen 24/7 on the premise and cameras everywhere. It almost felt like, at times, we were being monitored. The HOA had rules/restrictions for everything including what kind of rehab was allowed in our unit, what common areas our dogs were allowed to be in, when we were allowed to grill on our balcony, what kind of doorknobs we needed to install on our doors, and even what kind of curtains were permitted on our windows. 

We felt as though we had no control. And because, admittedly, I am a semi-control freak, this was extremely frustrating. My wife and I had to fight with our HOA to allow us to make certain renovations in our unit. For instance, we needed to tear down some walls in the kitchen/dining area to open up the kitchen, and the HOA was simply against it claiming that the walls were load-bearing. I had several contractors look at our place and all of them agreed that the walls were drfinitely NOT load-bearing and in fact completely okay to tear down. However, the HOA just wouldn't allow it. To make a long story short, we ended up tearing the walls down anyway and our kitchen looked much more open, spacious, and modern in the end. We were, however, extremely lucky that they didn't slap a fine on us. As a disclaimer, we would never recommend going against the HOA for anything. It can cause issues in the long run.

Another element of frustration came from the fact that the HOA raised the assessment fees twice in a year period. And the year before we moved in, there was a special assessment placed on the unit that luckily the seller paid for. And, it occurred to us that, if the HOA deemed it necessary, they could raise the fees however many times they wanted throughout the year. And, unless we were part of the association board, we really had no say; we just had to pay. The uncertainty of how much the HOA fees could potentially rise in the next 5-10 years really disillusioned us from condos.      

The last point of frustration came from the fact that our HOA did not allow us to list our room on Airbnb. In fact, I found out that our building was listed in the "Prohibited Buildings List" for short-term rentals in the City of Chicago. This was definitely our fault for not finding out beforehand from our condo documents or from the HOA directly whether or not this was allowed. 

Now, I get it. There are many investors out there who invest in condos and have great success with them. Some HOAs are flexible and more understanding than mine. Some condos allow for short-term rentals. However, simply put, my experience with my HOA left a pretty bad taste in my mouth and I do not want to deal with it again.

I just know that condo investing isn’t for me. 

I'm soon closing on a duplex to househack. I plan on living in one unit, renting out the second unit to long-term tenants, and renting out the basement as a private room on Airbnb. 

Hopefully, this time I will have better success!