Are Condominium Investments A Smart Choice?
Monday Apr 13th, 2020Share
When it comes to real estate, there are several ways to make an investment. However, it is not necessary that if an investment is profitable for someone, it will give the same results to you. And this is precisely why you should never blindly dive into a new venture that comes your way. One of the most debated types of real estate investment is condominium investment.
Just like every other life decision, this one is also based on your individual personality, goals, and risk aversion. So, if you are planning to make a condo investment, here are some guidelines that will help you in the long run.
How to Invest in Condominiums?
Make the Right Choice – Determine whether a condo investment is right for you or not. There is no point in making condominium investment if it doesn’t help you meet your ultimate goal.
Research the Local Market – Research is the most important part of making a decision about investing. Pay close attention to a market’s current growth and future prospects. At the end of the day, it’s all about finding a market with potential.
Figure Out Your Financing – Before you start looking for a property, you better find out ways for investment. Get a lender as it’s easier to find a property when you have access to funding.
Get In Touch With An Agent – You will have to spend money on this one, but hiring a real estate agent is a wise decision. A right agent has a vast knowledge about the market that helps you invest more smartly.
Know About Homeowner Association (HOA) – Get to know about the HOA fees before sealing the deal. HOA fees can add up and cause trouble for the investor later.
Condominium Investment: The Pros and Cons
Condo Investment Pros
- The most significant selling point for a condo investment is it comes with convenience and low maintenance. You don’t have to shovel the driveway or cut the grass. All you need to take care of is minor landscaping such as plants and bushes. It may not seem like a big deal, but it can create demand in areas with extreme weather factors.
- Condominium properties are typically located in denser areas like university neighborhoods, city centers, and tourism destinations. Condo investors pay a relatively low purchase price but get to enjoy higher rental rate (particularly for vacation rentals). Hence, condominium properties have the potential to offer stable cash flow to investors.
- Every condo has some amenities in one form or another. These amenities may range from a 24 hours security to having a pool. The better the facilities, the easier it is to justify paying the common monthly charges.
- Condominiums are offered at a cheaper price than an average single-family property. There could be some exceptions, based on the market. But they are typically lower in price throughout the year.
- Most real estate properties look similar to one another in multiple markets. When it comes to condos, there are some noticeable differences. People have the same perception that condominiums look alike, in truth, each condo offers something a little unique than the other.
Condo Investment Cons
- No matter how great an amenity is, not everyone pays the price for it. Association fees can vary from $100 to as much as $300 per month, based on the compound. This is an addition to the regular principal interest and tax payments on the loan.
- Be familiar with the rental policies before you make a condo investment. Many associations have strict rules when it comes to renting. Moreover, there may be rules about parking your vehicle, whether a deck is allowed or not, and the color of exterior paint. Every association has the authority to enforce their own set of rules, so you need to read every rule carefully.
There is no right or wrong for a condo investment if you think a property is worth and the market is doing great – you must consider making an investment. Make sure to know what you are getting into before taking a final decision. If you are considering condo investment, you must need an expert’s advice - DanieleSica.com is the best real estate services, provider. Reach out to us anytime for all kinds of real estate advisories.