Investing in single unit residential can be expensive, and generally condos could be a less expensive option for an investment. As of all real estate investments, it depends on factors like location, ease of rentability, and return on investment. Here are a few considerations of benefits and possible drawbacks to investing in condos.
Condos generally provide more security to the renter’s, which is a positive for prospective tenants.
Condo Association Rules
Condos typically have rules in their associations, which can deter activity that might lead to depreciation, helping protect an investor’s property.
Less to Maintain
Since the condo association takes care of exterior maintenance of the property, an investor will only have to maintain what is inside the unit. There will be no costly expenses such as replacing a roof or maintaining the landscape of the property.
Some condo’s provide various amenities, which can help the marketability of the property.
Condos are typically less expensive to purchase than single-family homes, so it may be a good option if you are looking for something with a lower purchase price.
As with any investment, there is other factors that could be considered drawbacks, depending on certain factors.
Could be Longer to Sell
Compared to single-family homes, condos could be harder to sell later since most regular buyers are looking for single-family homes.
This could be a positive or a negative, but there is always a chance a tenant might have noisy or disruptive neighbors. This could leave a tenant unhappy, and bad neighbors could lead to high tenant turnover.
Condo Association Rules
On the downside, condo association rules can limit your freedom as an investor to choose number of tenants, lease length, and other factors can inhibit rentability. Always check with the association to see if there are any restrictions with rentals.
Poor property management
If the property management does a poor job maintaining the common grounds, it can reflect poorly on the investment. Also, condo’s typically have a property management company that manages the entire building property. If condo association fees are mishandled, there could be a chance that the building investment becomes insolvent.
This are just a few considerations for purchasing condos as an investment. As an investor, always do your due diligence and consult with a fellow real estate professional.