Are Condominiums a Practical Real Estate Investment?

The short answer is a conditional “yes” because there are pitfalls to be reconciled. Identifying some of those issues is the objective of this article. Some investors will not even consider purchasing these properties but there are also those who would not buy any other kind of rental property for investment. On the surface, condo fees, slower appreciation and sales competition would appear to limit their viability as an investment vehicle but this is not necessarily true. In the long term the negative attributes can be offset by significant practical advantages. The primary advantages are that of low maintenance followed by a much lower purchase price than town houses or detached properties. Well located and properly managed condominium communities are much easier and less expensive to manage and the tenants tend to stay longer.

What are you buying?

Unlike detached homes and town homes where you own the land as well as the structure, condominium ownership is that of the individual unit only. The land is normally common ground owned by the community and executed under legal rights associated with the individual ownership. All common facilities are controlled by the association of owners that jointly represent ownership of the whole community.

Condominium Fees

These monthly expenses are usually based on a divided interest in the expense to manage the entire community. Obviously there is considerable cost efficiency in managing and maintaining a large number of units as compared to individual properties. The monthly fees normally cover all exterior maintenance including mowing and landscaping when those services apply. This is not a small convenience for the landlord since there is no roof to replace, driveway to seal, deck to power wash and seal, gutters to clean or weekends spent laboring with landscaping and other exterior maintenance issues.

The association is required by law to maintain a comprehensive master homeowner insurance policy protecting each unit owner against natural disasters as well as liability for any personal mishap. It is always advisable for the owner to purchase and maintain a tenant – landlord “rider” covering events not covered by the association’s master policy. Condominium fees frequently cover certain utilities as well.

Considering the protection against major maintenance expense, homeowners insurance, the other services provided and the convenience factor, the fees are normally quite reasonable and frequently provide a genuine asset in managing a rental property. I will recommend The Vales EC

Appreciation

In a stable economy, appreciation is primarily dictated by inflation and supply and demand. All residential property appreciates in a robust economy. Most American families would prefer a detached single family home to a condominium. A yard for the children and a traditional family oriented neighborhood is truly the dream of growing families but the condo has its place as well. The single person or young working couple beginning their life together may not be in a financial position to afford the house with the yard or they may not be ready for the time and expense of maintaining a single family home. Many homeowners scale down for the convenience of a condominium during their retirement years. The point is that each type of residence has appeal to its’ own segment of the home buying market.

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