I’m new to real estate investing and I’m looking to make my first purchase. I have both the down payment and credit required to get financed through the banks and i’m in the process of getting my prequal now.
From a pricing standpoint it seems that condos are really what is going to work out best, I feel like I may be over extending or taking to much of a risk getting a higher priced home especially since this is my first purchase.
The condos i’m looking at are priced in the 50’s and are located on the main street about a mile away from a major university. They are a little bit older 1982 so I was concerned there but it seemed like for what I want to pay I may only be looking at older style homes/condos anyways.
I would appreciate any advice I can get and thank you in advance.
I agree that buying a condo as a rental is better than purchasing a single family home.
Be sure of property values so you don’t overpay, and do some homework on the rental market in the area: vacancy rates, rental rates, will it cash flow, etc.
I have found the statements from the country regarding the appraised value of the home which is 4 thousand over the asking price of 58k. So if I decide to make an offer after determining if it is feasible to make a decent return after all expenses, what would be a reasonable offer?
Also what information should I find out about the condo association? It looks like there are a few of the condos for sale in the same complex. Could this be a warning sign? Or just a sign of a good deal?
Hi tbran7587,
Like AJ said, you need to check out some market information there. Important basic info would be property taxes, recent comps for similiar condo units sold, market rent for that size condo, monthly condo fees, etc. Don’t put too much stock in what the assessed value is for tax purposes. That varies greatly from the actual value a lot of times. Have you looked thru the Rehabbing/Landlording forum posts yet? If you’re asking what to offer, you probably have a bit of homework to do before you submit an offer. Condos are eligible to have assessments when money needs to be spent on the entire building. That’s something to keep in mind. When hurricanes hit the Gulf Coast, many condo owners there get hit with really high assessments to fix everything. Yes, there’s insurance involved, but I’ve also heard of assessments in the tens of thousands for that too.
Make sure that you check into any condo association related fees and guidelines. Fees can be enough to kill the deal and some associations do not allow rentals. :beer
You might also want to check the new FHA guidelines for lending on Condo's and be aware if too many unit's are non-owner occupied rentals no lender will do mortgage financing on the property so exit strategy may need to be "Owner Financing" for 15, 20 or 30 years to get out!
Like Mdhaas said beware of the condo association fee’s and whether there are association regulations limiting or prohibiting non-owner occupied rentals!
Thanks for all the replys! I know that the condo assoc. fee is $175 a month which is standard for the few places that I have looked so far and the taxes are 1200 a month. I’m trying to get my pre qual right now so I’m sure i will figure out if they will finance it soon enough.
If I need to go with owner financing is there a good resource you know of to get information on that as well as a good resource in general to find info on property?
I will look into the landlord part of the site to get some info as well so thanks for the tip there.
Generally speaking though if you get a good enough deal and can turn a decent monthly profit are condos a good idea or should I just try to find a home for somewhere around 100k? I’ve heard of getting bank owned properties and such but i’m not even sure where to start w/ that.
I pretty much always would pick a house over a condo, the only time I think a condo is ever a good deal is if you can buy it for less than 5 years of of your debt service and positive cash flow, so you could actually pay it off in less than 5 years or buy it all cash and recover your cash and interest in less than 5 years.
Pick a house over a condo as homes are easier to sell and more desireable for buyers for your exit strategy!