Condos may appear to be a perfect rental property. At first sight, they are fascinating as they regularly 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 other factors, the condos you found in Davenport may or may not be the best fit for you. Before purchasing a condo to use as an investment property, you should be very cautious about gathering all of the details and information you need.
What makes condos such an attractive option? As with all investment properties, buying a condo to use as a rental has both benefits and drawbacks. On the positive side, there are a few things that make condos an appealing option:
- Lower Cost: In several real estate markets, condos expenses are smaller than comparable single-family house. If you are a new investor or if the expense is a top consideration, this makes buying a condo one way to overcome the financial burden to entry.
- Desirable Locations: Condos are always situated close to urban centers and vacation destinations, making them attractive for renters wanting to be near these areas. In areas where single-family houses are short supply, purchasing a condo will help you enter in new and different markets.
- Less Maintenance: When you purchase a condo, some maintenance tasks are always carried out for you. Condos regularly have little or no yards and common areas usually maintained by a building manager or condo association. That may mean lower maintenance costs compared to a standard single-family house.
- Amenities: Together with maintenance, individual condo buildings will give a selection of added amenities. Depending on the condo and management, contained services could range from cable and internet, garbage and sewer costs, pest control, and more.
Indeed, purchasing a condo has a lot of potential drawbacks. These negative factors may also balance out all of the benefits listed above. These drawbacks may include:
- Condo Association Fees: Almost all condos are part of a homeowner’s association, which charges a monthly fee. At times, and depending on how many services presented, these fees can be surprisingly high. If such fees cover a lot of attractive amenities and services, they can be reasonable to pay. But you have to include all associated condo fees, and any potential special assessment fees, into your calculations. If you don’t, you could wind up making a costly investment mistake.
- Financing Options: It may be more challenging to secure financing for a condo than a single-family property because conventional lenders often have strict rules for such loans. Some lenders would like assurances like proof that the condo building is at least 50% owner-occupied or that there are no ongoing lawsuits from the condo association.
- Renting Restrictions: Several condo associations restrict when and to whom you can rent your condo. Others will even demand you to live in or own the condo for a full year before allowing you to rent it out.
- Lower Appreciation: Condos usually gain in value at a different rate than single-family properties. If your investment goals do not focus on keeping a property for several years, buying a condo that won’t appreciate very quickly isn’t a good idea.
Lastly, buying a condo as an investment property only makes sense if the numbers make sense. By understanding information as much as you can about the true costs of buying and owning a condo, you can determine what best meets your investing goals. If you’ve found the right condo, don’t forget to message Real Property Management Lakeside to assist you with your investing goals. Contact us at 863-302-8752 or contact us online right away!
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