Condos may look like an ideal rental property. At first look, they are charming because they regularly 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 other purposes, the condos you found in Auburn may or may not be the best fit for you. Before purchasing a condo to utilize as an investment property, you should be very cautious to get all of the facts and information you need.
What makes condos such an attractive option? As with all investment properties, buying a condo to manage as a rental has both benefits and drawbacks. On the plus side, there are a few things that make condos an appealing option:
- Lower Cost: In many real estate markets, condos cost significantly lesser than comparable single-family properties. If you are a new investor or if the price is a major concern, this would make procuring a condo one way to beat the cost barrier to entry.
- Desirable Locations: Condos are often situated near urban centers and vacation destinations, making them appealing to renters looking to be close to such areas. In places where single-family houses are in short supply, buying 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 tiny or no yards, and common areas are usually maintained by a building manager or condo association. This may mean lower maintenance costs than a regular single-family house.
- Amenities: Together with maintenance, some condo buildings will offer 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.
Buying a condo has several potential drawbacks. These negative aspects may even overshadow 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 contingent on how many services are given, 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 take in 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 trickier to secure financing for a condo than for a single-family property since 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 restrict 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 good option.
In the end, buying a condo as an investment property only sounds reasonable if the numbers make sense. By understanding 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. Once you find the right condo, make sure to contact Real Property Management Metro West-Worcester to help you with your investing goals. Give us a call at 925-495-4953 or contact us online today!
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