You can only buy one primary residence, but the world of investment property accumulation has fewer boundaries. In a time when real estate seems to be the ONLY investment that is easy to understand and value, many smart investors are just getting deeper and deeper into their portfolios with real estate. Personally, I think you could have as much as 50% in real estate and still be considered diverse, but there is one thing I would avoid…buying a condo investment property.
We discussed both the pros and cons on today’s Mr Credit Radio show. Check out the podcast here:
– Less maintenance because there is no yard or exterior work required. This can be really nice when you are a landlord.
– Lower price ranges. Condos are cheaper so you could potentially own more of them and potentially become more diverse as a result, which would be a wise idea.
– You can get extra amenities like a gym, pool, rec room, etc.
– Occupancy requirements for financing. Most lenders want to see the complex has 50% owners occupying the residences in order to give loans out to new buyers. This is something that is completely out of your control, but could impact the value of your home.
– Speaking of things out of your control, the common areas can become unsightly or smelly which could really hurt the value of your unit. Even if your unit is spotless and perfect, how the garage smells can make a big difference on the value of your unit.
– HOA’s are hard to deal with and unpredictable. If the HOA isn’t run properly, they can run out of money and ultimately come to you with their hand out. Just another monetary aspect of owning a condo that you have no control over.
– Also, with HOA fees, it digs into the amount of a mortgage you can get to purchase a home. Make sure you compare properly when considering a condo vs. a detached unit.
Bottom line is this… I’ve heard every real estate horror story you can think of and MANY of them are attached to condos. I say steer clear in most cases. However, there are some instances when it can make sense. Always consult professionals before making these big decisions.