Condominium Investment: Pros and Cons

Condominium investment is a great way to get started in real estate. Even though there are a few cons to this form of investing, it’s generally one of the better ways to start building up a portfolio of rental properties.

Here are a few reasons both for and against condominium investment:

Pro #1: Lower Upfront Costs

Condos generally cost less than a house simply due to less size. This makes it much easier to get the financing required to purchase the place, especially since it is likely not your first property (assuming you own the place you’re living in.)

Getting a mortgage for real estate isn’t as difficult as getting a large business loan, but it still helps to aim lower and work your way up as your properties gain more equity.

Pro #2: Lower Maintenance Costs

A landlord with single family homes or duplexes have more things that can go wrong than a condo owner. The roof, yard, driveway, and all of the windows are a few examples.

Meanwhile condominium investment means all you have to worry about is your unit. When a new roof or driveway is required, at least you share those costs with the other owners in your building.

Pro #3: Less Upkeep

A single family home with a yard may need all of the following services done regularly:

  • Pest control
  • Weed spraying
  • Pressure washing
  • Lawn mowing
  • Bush trimming
  • Raking/leaf blowing

Not to mention other necessary services like trash and recycling. Condominium investment doesn’t include all of those things. As the landlord, that’s more money in your pocket each month to invest in more property.

Pro #4: Stable Neighbors

Unless most of the other condos in your building are being rented out, there’s a good chance your unit’s neighbors will stay the same for years to come. That means they’re likely to take good care of their unit and the building as a whole, which is great for your unit’s value and tenant!

But even though there is a lot of upside to renting out a condo, it’s not all sunshine and rainbows. There are a few cons to think about:

Con #1: No Control Over Neighbors

When you live in a detached home with noisy neighbors, at least you have 10-20 feet between your residences. When you’re in a condo and have a noisy neighbor, you only have a few feet separating you!

And having a noisy neighbor may be the least of your worries. If the other people in your condominium building don’t take care of their units, the property value of yours will suffer too.

Con #2: All for One, One for All

When a condo’s roof leaks, guess who is responsible? That’s right- everyone. And while it’s nice that you get to share the cost, managing the contractor, paying for the service, connecting with all of your neighbors, etc. can prove a pain.

Con #3: Homeowners Association (HOA) Fees

Perhaps the worst part of condominium investment is the HOA fee. Even though HOAs have a place, high fees can eat into your profits very quickly. Paying thousands of dollars a year just for the HOA is pretty common.

Wrapping it Up

If you’d like to get started in real estate but don’t have a lot of time or cash to invest, condominium investment may be the best route for you. The condominium market is more volatile than detached houses, but has several benefits that make it a great option for new investors.

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Justin Stowe

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