Are Condos a Good Investment Property?
Are condos a good investment property? They can be. There are some pros and cons to purchasing a condo as a rental property or rental property investment. Condos are often much lower in cost. This makes buying a condo an easier investment for a wide variety of people. It can be a low-cost way to start for people just getting into property investments.
There are some things to consider when buying a condo as an investment property. We’ve written before about maintaining an investment property. We’ve also written about selling an investment condo. We recommend reading through that piece because it’s designed for the seller but can give the buyer great tips to look for, as well.
For this blog post, we’d like to concentrate on buying a condo as an investment property.
Are Condos a Good Investment Property?
As with all things in real estate, the answer depends on the location. A condo can be an amazing investment property if it’s in a location where people might like to visit. It can also be a great investment property for long-term tenants.
Condos are often a much lower price than single-family homes. This makes it easier for people to invest in a condo. As an investment property, condos can be a great way to enter the market. The lower cost means that your monthly upkeep will be more affordable if you’re ever left without renters for a substantial period of time.
Condos often have condo associations. This can be both positive and negative. Some associations stipulate that you can’t rent out your property. This is something that’s important to verify before purchasing. Many associations do have a percentage of units that have to be owner-occupied. There’s a reason for this. Statistically, owners take much better care of their properties than renters do. If you’re buying your unit as a rental property, this can work for you if you’re allowed to rent there. It will mean that your property values will stay high and your renters are more likely to be happy with the upkeep of other units in the building.
The Benefits of Buying a Condo as an Investment Property
There are some great benefits to buying a condo as an investment property. Here are a few of the things that make this option so attractive:
- Attractive Pricing. Condos are often much more affordable than single-family homes in the same area. This makes it far more affordable as a first investment property.
- Less Maintenance. One great feature of condos is that they often require less maintenance. When you own a single-family home, you’re responsible for everything from HVAC to roofing and lawn maintenance. In a condo, you’re really only responsible for the unit’s maintenance. Snow removal and lawn care might be part of your monthly fees, but you don’t have to take care of these responsibilities yourself.
- Association Rules. This can be both a pro and a con, so we’re including it on both lists. The condo association rules are put in place to protect property value. So that’s a benefit for anyone investing in the property.
- Property Amenities. In most condos, there are amenities you might not have in a private home. Your condo might include club rooms, office space, patio or outdoor entertaining areas, a pool, and a gym. All of these amenities are open for use by owners and residents.
- Security. Many condos have security features. This might include a door person and/or the ability to buzz people into the building. Some condos also have video surveillance and other features to protect the property and tenants.
The Cons of Buying a Condo as an Investment Property
While condos are attractively priced and lower in maintenance, there are some possible cons you should be aware of.
- Typically Harder to Sell. This depends on the market, but there are often fewer buyers looking for condos than single-family dwellings. So it may take a while to sell when you’re ready.
- Fees. Condos typically have association fees that take care of maintenance items. These fees can increase by a significant amount and you need to figure them into your overhead if you’re buying an investment property.
- Association Rules. We included this on the pros list because these rules are set to protect the property value. But they can also work against owners who are buying investment properties. Make sure you’re clear about the association rules. They may bar you from renting or stipulate items that you’re not comfortable with.
So, are condos a good investment property for you? A lot of it depends on your situation and the rental property you’re considering. Looking for more information on condos as an investment property or in the market to sell your investment property? Check out our Property Concierge Program and follow our blog for frequent tips.