Rental Property TypesRenting Out a Condo: A Guide for Real Estate Investors by Heba Baker December 23, 2018February 5, 2019 by Heba Baker December 23, 2018February 5, 2019Thinking about renting out a condo? Give this blog a read first to make sure you’re doing it right!Buying a Condo for InvestmentBefore learning how to rent out a condo, you need to first learn how to find the right condo real estate investment. So, let’s go over some basics.What Is a Condo?Condo is short for condominium. It’s typically a residence owned by an individual in a community building. Condos do have multiple rental/residential units. However, they differ from an apartment complex in that condos have shared common areas for the tenants – such as gyms, garages, spas, pools, yards, and the like.Investing in a Condo: What to ConsiderOwning a condo as an investment is a great way to generate a strong flow of income if you do the math right. When searching for a condo real estate investment, there are a couple of things to consider. Here are the main calculations:Annual Rental IncomeAnnual Expenses: such as real estate taxes, insurance, maintenance and repairsOccasional Expenses: such as legal fees in the case of a tenant eviction, advertising costs to attract tenants, repair costs for damages, etc.To ensure the most accurate estimations and calculations, consider using a condo investment calculator. This is a digital real estate investment tool otherwise known as a rental property calculator. It can be used for any of the important calculations involved in buying and renting out a condo.Related: Follow These Steps to Learn How to Buy a CondoCondo Association RulesBuying and renting out a condo is a process made much simpler if you first determine whether or not this property is in an association. If it is, which is usually the case, there are certain rules you will need to follow. For example, the HOA rules can dictate if you’ll be able to rent out the condo or how profitable it can be.Renting out a condo might not even be possible in some locations. You’re going to need to look over the condo docs because one condo complex might allow leasing while another won’t. Someone else renting out a condo in the same complex isn’t even a guarantee that you can do the same. That’s because, at times, there is a cap on the number of rentals allowed.Condo Assessment FeesOwning a condo comes with assessment fees. Assessments are expenses incurred to cover the common areas of the condominium property. These could include:LandscapingParking lot/parking garage repairs and maintenanceImprovements to the exterior of the buildingAny expenses associated with common areas of the condo (main lobby, entranceway, etc.)Find out how often you need to pay these assessments because these expenses should be factored into your annual expense estimate before calculating the return on investment. In some cases, residents have been known to pay a special assessment. This happens when there is major damage or upkeep that exceeds the condo reserves. If your condo is a rental, then you can deduct HOA fees as a rental expense.Mortgage RatesMortgage rates are sometimes higher on condos, depending on the property itself. Certain condos will be warrantable and others are non-warrantable. If your condo is non-warrantable, you’re going to have to get a loan from a non-warrantable lender. This usually means higher interest rates and a higher down payment (25% and up).Related: A Step-by-Step Guide to Financing a Condo InvestmentRenting Out a CondoWe already talked about rules regarding whether or not a condo can be rented out, but there are also leasing restrictions. There are basically two types of lease restrictions:The first type limits the total number of leased residences within a complex/development. This restricts leasing to only twenty residences at the same time.The second type of leasing restriction when renting out a condo requires all new owners to live in the residence for a specified time before it can even be rented out.So clearly there are some limitations to renting out a condo, but if you do your research and know what to expect, it can be a successful investment.Screening TenantsThere are different tenant screening criteria for different types of rental property. Renting out a condo to a certain demographic can help you in deciding how much to charge for rent. Some condos attract older renters. In this case, it’s important to verify their income levels.A rent to income ratio is an important aspect of screening your tenants. Many landlords look for a 2.5-3 time multiplier of monthly income compared to rent. For older tenants who are retired, their rental expense is typically higher than that of a younger tenant. It is recommended to verify your tenants’ income by looking at 90 days of bank statements. A tip for verifying a retired individuals’ income is to look for “SSA Wire” on their bank statements which indicates their social security income.Related: Top 15 Cities for a Senior Housing Investment in 2019So depending on your tenant demographics, your rent to income standard will change. Another thing to keep in mind is your condo’s HOA rules regarding the age restrictions of your community. For example, some rules might specify a 55 year and older community. In this case, the tenant must meet these requirements.Finding a Condo with MashvisorNow that you have the basics down for condo investments, it’s time to find one! To find the right investment for your strategy and portfolio and to start renting out a condo in no time, check out Mashvisor. Our many tools make it easy for any real estate investor to start their investing journey or improve their current business.One of our many tools is the Property Finder Tool. Using this, search in your city of choice, and filter out the search results based on your criteria. With the option of specifying exactly what type of investment property you want, investing in a condo has never been easier.Do you have a free Mashvisor account? Use our Property Finder to find lucrative investment properties that match your criteria in a matter of minutes!Related: How to Find Investment Properties Using a Property Finder Tool Start Your Investment Property Search! START FREE TRIAL CondoCostsMortgageProperty FinderRenting OutTenants 0FacebookTwitterGoogle +PinterestLinkedin Heba BakerHeba is Content Writer at Mashvisor with a BA in Business Administration. Most of all, she enjoys writing about the constantly changing markets in the US real estate industry. If not writing, Heba is exploring and learning. Previous Post What Are the Best Multifamily Markets 2019 with High Cap Rate? Next Post 9 Things Every Tenancy Agreement Should Include Related Posts US Real Estate Trends: Mobile Homes and Mobile Home Parks Now Is the Best Time to Enter the Luxury Real Estate Market The Best Multi Family Homes for Sale in 2018: Where to Find Them Single Family Homes vs. Multi Family Homes – Infographic What Investors Need to Know About Buying a Condo for Investment What You Need to Know Before Buying Multi Family Homes for Investment The Best Types of Real Estate Investment for Beginners Buying a Multi Family Home for Investment Is Easy with This Guide How to Make Money in Real Estate: Invest in Corporate Rentals How Much Expense Goes Into a Luxury Rental Property? Multi Family Real Estate Investing: Debunking the Myths Investing in Luxury Rentals: Does It Make Sense?