Are Condos a Profitable Investment Choice?

Condos may give the impression as if it is an ideal rental property. The usual first glances would seem like they are attractive because they often have lower prices than single-family properties. But those lower prices may come with hidden monthly costs that must be included in your calculations. For these and more reasons, the condos you found in Jasper may or may not be the best fit for you.  So, before choosing to buy a condo to use as an investment property, you should be wary and make sure you have all of the facts and information you need.

What makes condos such a great choice? As with all investment properties, buying a condo to use as a rental has both benefits and drawbacks. Fortunately, there are a few things that make condos an appealing option:

• Lower Cost: For so many real estate markets, condos cost less than comparable single-family homes. If you are a new investor or if the cost is the main issue, this makes obtaining a condo one way to overcome the cost barrier to entry.
• Desirable Locations: Condos are often located near urban centers and vacation destinations, making them enticing to renters looking to be near to such areas. In areas where single-family houses are in short supply, acquiring a condo can help you gain entry into new and different markets.
• Less Maintenance: When you buy a condo, certain maintenance tasks are often done for you. Condos often have small or no yards, and common areas are usually maintained by a building manager or condo association. This may translate to lower maintenance costs than a typical single-family house.
• Amenities: Along with maintenance, some condo buildings will provide a selection of added amenities. Depending on the condo and management, included services could range from cable and internet, garbage and sewer costs, pest control, and more.

Of course, buying a condo has several potential drawbacks. These negative facets may even offset all of the benefits listed above. These drawbacks may include:

• Condo Association Fees: Most condos are part of a homeowner’s association that charges a monthly fee. At times, and depending on how many services are provided, these fees can be surprisingly high. If such fees cover a lot of attractive amenities and services, they may be worth paying. But you need to include all related condo fees, plus any potential special assessment fees, into your calculations. If you don’t, you could wind up making a costly investment mistake.
• Financing Options: It can be harder to secure financing for a condo than for a single-family property because conventional lenders often have strict rules for such loans. Some lenders may want assurances like proof that the condo building is at least 50% owner-occupied or that there are no current lawsuits against the condo association.
• Renting Restrictions: Some condo associations limit when and to whom you can rent your condo. Some may even require you to live in or own the condo for a full year before allowing you to rent it out.
• Lower Appreciation: Condos typically gain in value at a different pace than single-family properties. If your investment goals do not rely on holding a property for many years, buying a condo that won’t appreciate very quickly is not a great choice.

Lastly, buying a condo as an investment property only makes sense if the numbers make sense. By knowing as much as you can about the true costs of buying and owning a condo, you can make the decision that best fits your investing goals. The minute you find the right condo, make sure to contact Real Property Management Results to help you with your investing goals. Give us a call at 812-461-1676 or contact us online today!