Condos may make you feel like an ideal rental property because normally, they often have lower prices than single-family properties. However, those lower prices may come with hidden monthly costs that must be included in your calculations. For these and so many different reasons, the condos you found in Brentwood may or may not be the best fit for you. Therefore, before buying a condo to use as an investment property, you should be very cautious and first get all of the facts and information you need.
What makes condos such a rewarding choice? Just like all investment properties, buying a condo to use as a rental has both benefits and drawbacks. The good news is, there are a few things that make condos an appealing option:
- Lower Cost: In many real estate markets, condos cost less than comparable single-family houses. If you are a new investor or if the price is a key concern, this makes purchasing a condo one way to get through the cost barrier to entry.
- Desirable Locations: Condos are usually situated near urban centers and vacation destinations, making them attractive to renters who aim to be close to such areas. In places where single-family houses are in short supply, buying a condo can help you gain access to new and different markets.
- Less Maintenance: When you buy a condo, some maintenance tasks are usually done for you. Condos often have small or no yards, and common areas are usually maintained by a building manager or condo association. This may mean lower maintenance costs than a typical single-family house.
- Amenities: Along with maintenance, some condo buildings will provide 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.
Without a doubt, buying a condo has several potential drawbacks. These negative aspects may even outweigh all of the benefits listed above. These drawbacks may include:
- Condo Association Fees: So many condos are part of a homeowner’s association that charges a monthly fee. For the most part, and depending 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 factor 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 more difficult to secure financing for a condo than for a single-family property because 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 oblige 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.
Eventually, buying a condo as an investment property only makes sense if the numbers make sense. By taking in 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 One to help you with your investing goals. Give us a call at 925-495-4953 or contact us online today!
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