Is it Smart to Buy a TownHouse or Condo for a Rental Property?


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6 thoughts on “Is it Smart to Buy a TownHouse or Condo for a Rental Property?”

  1. Couple other points to consider when investing in properties with HOAs:

    1. Rental provisions. Be sure to understand the specifics around how the HOA will view renting the units. In one case, my HOA had a long list of current owners who wanted to rent their units. When it came time to rent mine, we had to get in line behind the other owners who wanted to rent.

    2. Supply/demand in the local area. We live in a very fast growing part of town and enjoy tremendous cash flow from our condo rentals. However, over the years, developers have torn down single family homes and built condos in an attempt to match demand. The result has been a sharp increase in the number of available units in the area putting downward pressure on rental prices. Be sure to understand the market dynamics for the neighborhood you are investing before jumping in. Look at the land use plats and understand the zoning changes. Your city land use office can help.

  2. Couple more points to consider:
    When evaluating whether the dues are reasonable take a look at where the association spends their money, particularly ask if the have a reserve study and if they are budgeting and executing capital projects in accordance with the reserve study. Ask for a historical record of dues increases, if they are erratic and/or have been none existent for a few years – beware. On the other hand if they consistently go up about the same percentage each year, plug that increase into your calculations to see if it will work.

    If the numbers work, the bonus is that when you have a tenant that trashes the place it costs far less to get the condo rent-ready than it would for a SFR

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