Most people talk about purchasing a home in the US as an investment but what about buying an apartment/condo?
Obviously, strata fees may apply but wouldn't it be easier and more cost effective to maintain? What's more, I have seen a few articles talking about American's "downsizing" into multi family units and condo's which say to me that the rental demand for these types of property will increase.
Thoughts please?
when the market goes south like it has Condo's bear the brunt.. IE Strata fee's which we call HOA fee's and in extreme cases there are not enough Strata ( HOA) fee's to effectivly run the building, there are some very real horror stories for those invested in Condos and for sure banks that ended up with them.
If I was looking at a Condo I would be slanted for something that I would eventually live in. I would not buy unless at least 75% or more of the units were owner Occuppied…. In the old days you could not get FHA financing until you hit 60% Owner occ sales.
As the banks have already been through the boom and bust cycle back in the late 80's.
Again if your looking for something to eventually use for yourself there are some fantastic buys Nationwide. To buy as a cash flow rental I would be very cautious
I agree with Jay above. I just mentioned in my other post that condos are rarely a good investment deal, because of the reasons Jay mentioned above. Also, because you NEVER own the condo free and clear, you ALWAYS have the monthly HOA bill whether you have a mortgage or not.
If you must buy a condo, like Jay said, purchase in a complex that is mostly owner occupied. If the whole complex is owned by investors, you will have a HOA that doesn’t care much about the complex and condos will not be kept in the best shape.
With condos, you never have the full control of your investment, because of HOA. You are always at HOA’s mercy. You can easily make over 10% NET return in this market, don’t settle for anything less or inflated returns.
Good luck and happy investing!
HOA fees suck and can ruin cash flow..Condo's versus singe family is no brainer ….
Alex
HOA fees will impact your bottom line, in many of our nicer communities you can be looking at paying $300-$400 per month, so it will eat into your cash flow significantly – as has been pointed out, you also want to make sure it's either owner occupied or at least make sure that the HOA is in good shape.
Also, many of the HOA's will have restrictions on rentals and even on resales (who you resell to, although they're not exactly pick right now) so that is something to factor in.
The upside is most of the time you have less maintenance (no exterior work) and also it can be more secure to own v. a single family if the property is vacant,and many of the communities have on-site lettings- and management companies.
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