Condos can be attractive investment opportunities. They often have lower prices than comparable single-family or multifamily homes in a given market and they have fewer maintenance issues for owners to worry about.
On the other hand, there are some drawbacks that you need to consider. For one thing, condos often have monthly fees that can increase significantly and unpredictably. And condos can be more difficult to get financing for.
Condos make good investments in the right situation, but it’s important to know what you’re getting into before you sign a purchase contract.
Here’s a quick guide to help you determine if investing in a condo is right for you.
Low cost: In many real estate markets, condos are significantly cheaper on average than single-family homes.
Cost is the biggest barrier to entry in real estate investing, and a condo can be the most affordable way to get started.
Desirable locations: Condos are often located in areas where single-family and multi family rentals are in short supply.
Lower maintenance: Condos come with additional fees, but they tend to have significantly fewer maintenance expenses than single-family or multifamily investment properties.
Fewer individual expenses: Condo fees generally cover some of the expenses you'd ordinarily have to pay for. Depending on the condo building, the included fees and services could include building insurance, cable, garbage collection, water, pest control, and more.
Potential drawbacks of investing in a condo
Condo association fees: Condos generally have a homeowners association that assesses a monthly fee, and in some cases these can be rather high.
Rental restrictions: If you’re planning on investing in a condo, make sure that you can rent it out as you like. Some condos prohibit rentals altogether, while others have specific rental restrictions.