Although there are many different types of investments you can make, one solid type of investment is real estate. It has been used for years to invest money and to make a lot in return. That being said, there are many different types of real estate you can invest in, including going big and investing in a condo complex. If you have been considering doing this, it’s a good idea to look at both the good side and the bad side of purchasing such a unit. It can help you to make a decision if it is the right purchase for you.
Enough time has now passed since the bottom fell out of the real estate market that investors are now out there and taking part in some real spending. They are still looking for bargains and that is not only true of individual homes that will be flipped quickly, it is also true long-term investments, such as a condo complex. There is no doubt that there is some money to be made when it comes to owning such a complex but there are certainly also some downsides to consider as well. Here is a quick look at both the pros and the cons associated with such a purchase:
Let’s first take a look at the positive side of investing in a condo complex.
Price – perhaps one of the most important things to consider when making any real estate purchase is the price. Condominiums are always going to present a lower cost than any type of single-family home or other options that may be in the local area. It is important to take a look at the price carefully and to ensure that it is in line with what is taking place throughout the region.
You may also find that you are saving additional money because of taxes. The taxes that are associated with a single-family home are almost always going to be higher than those who would pay for a condo. One of the primary reasons why that is the case is because the building actually owns the walls, including the walls between each of the individual units. You don’t have to cover the inside with insurance as you would with a single-family home. Of course, if you were to purchase the entire complex, you may find that there are some tax issues that need to be considered as well.
Maintenance – although there is always going to be a limited amount of maintenance that is associated with purchasing a condo complex, it is going to be far less than purchasing single-family homes. Some of the types of maintenance that may be necessary include mowing lawns, trimming bushes and trees and picking up the property on a periodic basis. This is something that could easily be hired out to a third-party company that would cover the entire complex.
Repairs – the owner of the condo complex, you, would be responsible for any repairs that take place to the exterior of the unit. If you are renting out the condos, you would also be responsible for the interior repairs, but these would also be covered by the rental cost in most cases. In addition, you may be able to raise the rent to a certain extent in order to cover any additional repairs that are needed.
Amenities – if you purchase a condo complex with plenty of amenities, you will not have a difficult time filling the units. People love being able to take advantage of all that condo living has to offer while at the same time, avoiding some of the drudgeries of mowing the lawn or maintaining the outside of the property.
Although these are some positive factors associated with making such a purchase, it is also important to include the negative as well. Here are some cons for your consideration:
Resell – if you are planning on making a purchase of an entire condo complex, make sure that it is a long-term investment. You don’t want to make such an investment and try to flip the individual units for a profit. When compared to single-family homes, condos are inherently difficult to sell. Part of this is due to the fact that many first-time mortgage owners want to own some property along with their living space. Condo mortgages are also not as popular anymore with the lending companies. You may be able to flip the condos, but the profit will be lower. To find multi family homes for sale in Cincinnati Ohio, click here.
Recovery time – when you consider how difficult it is to sell a condo, it might come as a surprise that they recover very slowly as well. Single-family homes will likely see an increase in price after a downturn in the market relatively quickly. Condo prices tend to lag behind and sometimes, they may not regain the price that they were when you purchased the complex for a very long time.
Market drops – when you look at the history of real estate market problems, you will see a relatively common fixture in place. People try to hang on to their single-family homes, but condominiums tend to end up on the foreclosure market very quickly. In part, this is due to what we talked about previously. They do rebound very slowly but if you’re looking for a long-term investment and don’t plan on involving yourself with the market fluctuations, it can still be a wise investment.
Regulations – one final thing to consider when it comes to owning a condo complex is the possibility of running into some government red tape when you’re trying to sell the individual units. The condo communities may have certain restrictions that are placed on them by lending companies as well. This could include the fact that they are often considered to be an investment purchase and if you are purchasing the entire complex, that certainly is the case. You also need to research the foreclosure rate in the complex closely because that can end up hurting you in the long run.