Condo investing is one of the most discussed forms of real estate investing. Many agree that it is a rewarding form of investment, while others prefer other forms of investment. There are others, particularly the first time investors, who are reluctant to put their money on condos and wary of the risks it involves.
This article discusses some of the pros and cons of investing in condos to help you determine if this form of investing is suitable for you.
The pros of condo investing
- It is less expensive
A condo relatively costs less than an actual home. The main reason for this is because the cost of the land is distributed among all the condo buyers. So you, as the buyer, don’t have to pay a lot of money for the land on which your condo building is built. You share this cost with all the other buyers who will purchase a unit from the building. This is not like the situation you’d have if you were buying a residential property. Aside from the house, you will also have to pay for the land. This is becoming more and more depressing as the cost land is continuously increasing as time passes by. So even if your house is relatively small, you’ll still pay a lot more for it because of the land than you would if you buy a condo unit.
- There are a wide range of styles to choose from
Condos come in a wide range of variety. There are garden type condos, which includes a single or two-story building with 2-4 separate units. There are also townhomes or row houses where the units are constructed alongside each other. And of course the more common stacked and urban high-rise condos, where the units are constructed on top of each other in a building that is several stories high.
- Condos are perfect for those who are not yet ready for permanent homeownership
When you buy a condo to rent it out and earn from it, target young professionals as these individuals are looking for some sense of homeownership without the complete responsibilities of maintaining it – particularly, taking care of the lawn and tending to repairs. They also don’t have the time for these tasks as they are often always on the go as they are still working on building their career and creating a name for themselves. There are lots of these individuals looking for a place to live in that they could call their home.
The cons of condo investing
- Paying monthly dues on top of the monthly installment payments
Because you are considered part owner of the building where your condo unit is located, you share the responsibility of maintaining the building with the other condo owners. And part of that responsibility is paying the monthly dues, which is what the condo association uses to pay for the professionals who clean and maintain the swimming pool, sports area, and all the common areas in the building – such as the entertainment room, ballroom, and meeting halls. This is also what is used to pay for high-tech security cameras and security guards to ensure the safety of everyone living in the building.
- You will need to get the support of other condo owners if you want to suggest a policy change or addition.
Policies in the condo building are handed out before you decide to purchase a unit so you know and understand completely what are allowed and not allowed inside the condo building and inside your condo unit. Should you think of a suggestion to improve the policies, you will need to get the support of other condo owners to make the condo association listen to you. Keep in mind that members of the condo association make all the necessary decisions regarding the condo. Although you are also a member of the condo association, you are only one of the hundreds of the other members so you need to get the support of the other homeowners to make your voice heard.
- You will be required to pay for a reserve account
Although this is quite beneficial because you’ll know you’ll have the money to replace the roof after several years, some don’t agree with it because it only adds to the monthly fees that a condo owner is required to pay. If you decide to pursue investing in a condo unit, make sure you do a lot of research on how the reserve account is created, how much money is added to it every year and how much each condo owner is required to pay for it.
Jerry Pinkas Real Estate Experts will help you provide you with more condo investing information. Call them now.
Jerry Pinkas Real Estate Experts
604 N. 27th Ave
Myrtle Beach, SC 29577
Your condo investing experts!