As every savvy real estate investor knows, condos are good investments. Demand for these properties has never been higher and managing them is fairly easy relative to other types of rental property. With that being said, generating a profit from a condo investment is still predicated on implementing a good strategy and abiding by certain best practices. Novice real estate investors, in particular, should take a careful approach to the housing market when buying rental property. In view of this, what should beginners keep in mind when making condominium investments? And what are some of the valuable tips that you can use when buying a condo? This article will provide you with in-depth answers to these questions and share with you some essential best practices for condominium investing.
The Benefits of Condominium Investing
Before delving into our tips for condo investors, let’s examine the benefits of condominium investing. As you would expect, investing in condos is a highly effective real estate investment strategy that offers a wide range of benefits to real estate investors. Here are the main pros of condominium investing:
- Repair costs of new condos are substantially lower than other investment properties
- Demand for these rental properties will remain strong as urbanization continues to increase in various areas
- The shared amenities that condos boast attract a large pool of renters
- They are more affordable than single family homes
- Upkeep and maintenance of condos is a simple process
Let’s now outline a few tips for profitable condominium investing.
6 Tips for Buying a Condo for Investment
Real estate investing for beginners can feel a little overwhelming at times. After all, investors have to juggle various unfamiliar concepts and navigate a market that is riddled with pitfalls. However, buying investment property becomes a simple action once you understand all the moving parts of real estate investing. Here are 6 valuable condominium investing tips to help you get started.
1- Pick a good location
We can’t stress this enough, location is everything in real estate. In fact, your first step toward profitable condominium investing is picking a location that boasts all the essential qualities. Such a location guarantees a constant stream of potential tenants as well as a high average rental income. As for what to look for in an area, here are the main points that you should focus on:
- Invest in a location that is close to transit
- Look for areas that have a host of essential amenities such as restaurants, stores, and shopping centers
- If you wish to rent your condo out on Airbnb, opt for a location that draws large numbers of visitors on a regular basis
2- Invest in a condo that promises a high return
Picking a good real estate market will only get you halfway to profitable condominium investing. You still need to invest in a condo rental property that promises a high return. Examples of what to look for when buying a condo to rent out include the number of rooms and bathrooms, the quality of the amenities, and whether or not tenants have access to parking space and storage. All of these will allow you to charge more for rent. Fortunately, there is a tool that can help you narrow the search down to high ROI investment properties for sale that match your exact criteria. Thanks to its high-end AI technology and advanced algorithms, the Mashvisor Property Finder is able to find the top condos for sale in a matter of minutes.
To start looking for and analyzing the best investment properties in your city of choice, click here.
3- Explore less conventional financing methods
Financing a condo can be tricky for a beginner. In fact, lenders tend to treat condo loans differently than other types of mortgages. For example, obtaining a conventional loan for condominium investing is predicated on satisfying a myriad of requirements. Most mortgage providers will only offer you a loan if your real estate investment is situated in a properly insured complex. Moreover, conventional lenders are reticent to provide a loan when there is pending legislation.
If obtaining conventional financing proves too challenging, you should explore other financing methods. Less conventional approaches such as private financing and hard money loans might be able to offer you more favorable terms than conventional mortgages.
4- Ask about HOA rules and condo fees
It is important to keep in mind that owning a condo requires adhering to a number of regulations. These rules are set by the HOA (homeowners association) and cover everything from resident behavior and architecture restrictions to common responsibilities and fees. Furthermore, certain HOAs impose several limitations on rental properties and some outright ban short-term stays. Needless to say, the strictness of these rules vary from one condo complex to the other. This is why it is important that you inquire about HOA rules before investing in a condo.
5- Conduct an inspection
This is a very intuitive step, but you would be surprised at the number of beginners who buy an investment property without carrying out a thorough inspection of the premises. Retaining the services of a professional inspector is the only way to ensure that every aspect of the condo is in order. An inspector can also recommend the changes you need to make in order to get the condo rent ready.
6- Work with a real estate agent
Getting into condominium investing by yourself and saving on real estate agent fees might seem like a good idea. But in reality, this is not an advisable approach for beginners. Investing in condos involves dealing with a host of variables as well as a considerable amount of paperwork. An agent can help you navigate the entire process with ease, from negotiations to closing the deal.
The Bottom Line
Buying and renting out a condo is an ideal strategy for novice real estate investors. As long as you apply the tips above, you should start seeing a return on your investment fairly quickly. For more valuable real estate investing tips, check out our blog.