Condo properties can have different management strategies from traditional rental properties, so it is important that investors are aware of all the tips.
This article will cover all the information that an investor needs to know before buying a condo as an investment. We will then explore some tools that can guide you through difficult investment decisions.
What is a Condo?
A condo is also known as a condominium. The typical difference between a condo and a house is that it shares walls and spaces with the other residents. Condos are similar in that they are typically a property owned by the owner. condos can be described as an apartment owned by individuals rather than rented.
Condos and traditional houses are both similar in many ways. They are also similar to townhouses because they are often in shared complexes or rows.
Investors love condominiums. Investors can use them as income properties, whether they are renting them out or flipping them. Do extensive research before purchasing a condominium to make sure it’s the best investment property.
What is the difference between a condo and an apartment?
Although there are similarities between the two types of housing, ownership is the biggest difference. In most ways, a condominium and an apartment are similar. Both have shared walls, communal spaces such as lobbies and recreation centers, lots of parking instead of private spaces, HOA fees, and are usually characterized by common areas.
Both condominium and apartment owners do not have to take care of certain tasks that a homeowner would normally be responsible for. You are not responsible in any way for the upkeep or landscaping of your condo even though you own it. The property manager or HOA would be responsible for this.
The ownership of the property is the main difference between an apartment and a condominium.
What is the difference between a condo and a townhouse?
Condos and townhouses have many similarities. Montreal old port condo and townhouses provide ownership rights to those who buy them. Both are also under the HOA. This means that certain tasks such as landscaping or upkeep of land are not your responsibility.
A condo is different from a townhouse in that there are usually no people living below or above you. A townhouse is a hybrid between a condominium and family home. They share walls between the units but not between above and below. Townhomes can be designed to accommodate families better, while condos are more suitable for couples or individuals.
Types and Prices of Condos
You should be aware of all the types of condominiums if you are an investor who is considering purchasing a condo as an investment. Condos come in two basic styles.
Condos with freehold ownership are the first. The tenant owns the unit. This means that they occupy the same unit they purchased. Second, leasehold condominiums. These condos are rented by the owner.
There are six types of condominiums that can be found in the residential market, besides the two common ownership styles. The size and ownership differ.
- Condo Home
What is a condominium home? A condominium of this type allows the buyer to own the entire property. The land on which the property is situated does not come with the purchase. Condo homes are purchased by individuals to own without the hassles of traditional family style homes.
- Condo Coop
What is a co-op condo? The purchase of a condominium share is more common than purchasing the entire building. You do not own the entire building, but you are able to purchase a share of it.
- Non-Warrantable Condo
What is a non warrantable condo? This type of condo can be any condominium style that doesn’t meet the standard lending requirements. This makes it much more difficult to get financing. They can be risky investments and to buy.
- Site Condo
Site condos are one of the most sought-after types of condominiums. What is a site condominium? It is a condominium that is not connected to any other units. No garage or shared walls are present. These homes are typically stand-alone, and they are similar to the traditional family style home. Site condos and traditional family homes are similar except for the HOA fee. These fees are likely to be required for all condominiums, but not traditional homes.
- Condo Apartment
Condo apartments are usually condos that a landlord rents. Generally, they are harder to get. The application process for these apartments is much more complex than that of regular apartments.
- Condominium complexes
Condominium complexes, on the other hand, are more common. Condominium complexes are made up of several condos located in one location. This means that there are typically multiple units sharing walls, both above and below and side by side. Usually, parking spaces and yards also have to be shared.
3 Reasons To Invest In A Condo
You may consider investing in a variety of different properties. Here are some reasons to invest in a condominium property:
- Prices are Lower than Houses
Condos are typically less expensive than traditional houses, which is one of the main reasons why investors prefer to buy them. As an investor, you will have to put much less money down. Rent out the unit or renovate and resell to others. You can save money by purchasing a condominium instead of a traditional family home.
The amenities of a condo will attract renters if you’re looking to rent it out as a rental unit or for vacation rentals. Condos usually have common areas like gyms, pools and other recreational amenities. This will make the property more attractive, and you’ll be able to rent it out easier.
- Appreciates in value
You will be able to generate positive cash flow if you rent your condo out as an Airbnb rental or a traditional rental. Condos are always going to increase in value. You will also make more money and increase your equity in real estate.
The Risks of Investing In A Condo
As an investor, while there are many advantages to buying a condominium, you also need to be aware of certain risks. Here are the major drawbacks to investing in condominiums:
- Association Fees
You will have to pay monthly association fees if you own a condominium. These fees can range from a few hundred to several thousand dollars. If you’re not prepared, it will affect your Return on Investment. You should always research the costs in the area where you plan to buy your property.
- Renting a car is restricted
Some locations may have restrictions on renting out your condo. There may be restrictions on the number of people or pets that can live in a unit. This can have a negative impact on the number of renters that you are able to find. These restrictions can reduce the value of your income property.
- Financing Difficulties
If you want to finance your investment property, it can be hard to get approval. Financing restrictions may apply to certain types of condominiums, which can make purchasing the unit difficult. You should always be aware of the financing requirements for your property.