Many real estate investors are attracted to single-family homes and apartments. Traditionally, these are considered “safe investments” because both types of properties are generally affordable and desirable to people and families. However, when it comes to buying a condo for investment purposes, there is a great degree of hesitation. Rightfully so, the average person hasn’t been inside a condo and doesn’t know much about its characteristics.
Nonetheless, there are many reasons why you should buy a condo for investment purposes. There are also reasons why you should try other investment opportunities. To help you make an informed decision, this guide will explain the pros and cons of buying a condo for investment.
Pros of Buying a Condo for Investment
You may be asking yourself, “are condos a good investment?” The simple answer is that investing in condos is a great decision under specific circumstances.
Here are some of the benefits of buying condos for investment purposes:
Tons of Different Amenities:
Condos traditionally have more amenities than single-family and multi-family homes, as well as apartment complexes. These amenities include:
- Children’s playground
- Fitness center
- Laundry center
- Indoor community lounge
Because of these unique amenities, condos may be more desirable for homeowners who want to downsize in the future.
Condominiums are more secure than apartment complexes. They even have devoted security staff that works around the clock to prevent theft and other criminal activities. In case an emergency takes place, tenants can call on security for assistance rather than being on their own and having to wait for the police to arrive.
Fewer Maintenance Worries:
One of the major concerns when buying real estate properties is dealing with maintenance. Maintenance seems to be an urgent expense property investors have trouble minimizing. The good news is that when you invest in condos for investment, you can significantly reduce maintenance costs. This is because there is already staff available to clean the premises, cut the grass, and rake the leaves.
If you or your tenants don’t have time to handle these chores, investing in a condo may be a great option for you.
Close Proximity to Popular Attractions:
Condos are usually located right next to major cities and attractions. This is a motivation factor potential tenants will look for. It’s also a benefit that can improve your property’s value. Generally speaking, your tenants will be able to take public transportation, visit restaurants, and go to nearby shopping malls. Nearby attractions will go a long way towards improving your condo’s occupancy rate.
Since condos are located in strategic locations next to popular attractions, their values are much more likely to appreciate over time.
Condos are sold at much lower prices than homes. This is incredible, considering that condos can be large and extravagant with lower price tags. This makes investing in condos a realistic goal for real estate investors.
If you want to build your real estate portfolio on a gradual basis, acquiring condos is a great avenue for achieving your goal.
Cons of Buying a Condo for Investment
While there are several pros of purchasing condos for investment, there are also some consequences to watch out for. Here are the cons of buying a condo:
Lack of Privacy:
One of the disadvantages of buying a condo is that your tenants may feel boxed in. After all, they won’t have as much privacy as single-family homeowners. In fact, their neighbors will either live above, below, or beside them. This isn’t ideal for people looking for serenity, peace, and quiet, significantly lowering your tenant pool.
Depending on where you live, there are strict rules for renting out condos. For example, some condos use rental caps to even forbid owners from renting to tenants. Many other condos make it set limits for owners to rent to tenants. Before investing in condos, it’s best to do your research and learn if there are rules that are against having multiple tenants.
Condominium developers and associations can encounter a wide variety of legal issues, such as:
- Construction defects
- Deceptive trade practices
- Professional malpractice
Because of this, investors may have to wait for these legal issues to be resolved before gaining full ownership of your condo. There is also the possibility that you could lose your property if these legal issues cause the associations to disband.
For this reason, performing your due diligence is essential if you’re considering investing in condos.
While it may be easy to buy a condo, it can be difficult to sell your condos. To begin, not everyone wants to live in a condo. Single-family homes have universal appeal from individuals and families. Most families would never consider buying a condo, especially if they have small children and pets.
The high fees and stringent rules can also play a role in the difficulty to sell your condo after you buy it.
Should You Buy a Condo?
As you can see, there are many pros and cons of buying a condo for investment purposes. Your success in buying a condo will ultimately depend on your current portfolio. If you have a massive portfolio and the funds to experiment with a new real estate investment, pouring money into a condo isn’t a bad idea.
However, if you’re just getting started, you may want to accumulate more traditional investments before investing in condos. Nonetheless, investing in real estate will lastly depend on your knowledge of the market. If you fully arm yourself with knowledge of the benefits and risks of investing in condos, you can make your own decision on whether or not this route is great for you.
I personally believe that investing in condos is a great way of building passive income and generational wealth for both first-time and experienced investors.
Start Buying a Condo for Investment Purposes Today!
If you’re considering buying a condo for investment purposes, you’ve come to the right place. Contact us today to learn more about how you can succeed with your future real estate investments.0