When considering real estate investing, the focus is often on one side of the scale — between apartments and single-family homes. Yet condos fall in the middle, often larger than the average apartment, and quite attractive for renters thanks to their ability to offer more privacy, square footage, and the freedom to “do their own thing.”
But can condos be good rental investments? As you think about your personal wealth management goals, consider whether condos are the type of real estate investing you could (or should) do and the factors that make it both attractive and more challenging. At Ark7, we help you make the best decisions for your investment goals. Let’s consider how condos fit that mold (or not!).
Consider condo basics
Most people living in a condo own an individual unit. They pay fees for shared common areas. Landlords of condos – those who purchase the units and then rent them out – are responsible just for the interior maintenance of those structures.Condominiums typically have association fees, which help cover the costs of shared spaces and features.
Before you invest in condos, consider the following
Condos sound like a solid option (no one likes the out-of-pocket costs of replacing a roof!) However, there are several factors to keep in mind before you jump into this wealth management strategy.
You have to meet the rules: Not all condo associations allow owners to rent their units. Some have strict rules about who can live on the property (such as in senior living areas). Know the minimum restrictions before proceeding.
Location makes a huge difference: Condo renters want to be close to public transportation, city amenities, and walkable communities. Many condo communities are also highly desirable because they offer community features like playgrounds and swimming pools. Choose the right location with the best amenities.
Monitor those fees: Condo association fees, like HOA fees, can be a tricky factor to overcome. As a property owner looking to invest, you’ll need to pass down those costs to your renters, and that could mean higher rental costs (which could limit interest in your property if your rent is much higher than others).
Going big: The costs of maintenance are significantly higher for those considering building a series of condos to rent and managing the property themselves. Ensure you are aware of the local trends that are beneficial within your condo markets. Discover the types of features that are desirable. Single-floor, multi-floor, and full community amenities are location-based decisions based on demand.
Don’t overlook the financing: When investing in condos to rent, you must consider the financing challenges. Lenders may be less willing to offer competitive loans on these properties.
Final thoughts: Unsure about renting in condos?
As you think about real estate investing from a holistic view, you certainly have dozens of ways into the market. Condo unit purchasing and renting is one of them, but the obstacles are somewhat challenging.
Do not overlook the value and importance of passive income instead. Passive income, as we offer at Ark7, allows you to invest as much or as little as you like in real estate investment properties across our large, diversified portfolio and benefit from the demand for rental properties. Then, you’ll be able to be hands-off, which means no worries about maintenance, meeting condo association guidelines, or dealing with regulations. Explore Ark7 investment properties now and find out how passive income could be the right path for your wealth management strategy.
