If you are looking at buying a condo as an investment property, how do you know if it’s a good investment? There are many things to consider:
- What are the annual expenses for insurance, maintenance, repairs and taxes?
- How much rent will you receive?
- What are the legal fees you may have to pay for an eviction?
- How much does it cost in advertising to get a new tenant?
- What are the repair costs if the tenant damages the property?
Other factors to consider
Before you invest in a condominium, it’s a good idea to assess some of these factors:
- Is the location in a high-demand area, such as a university?
- Is the location becoming more desired or less popular?
- Are there large employers in the area that could cause the rental market to increase or decline?
- Is there new development in the neighborhood?
Another major factor to consider is the home owners association (HOA) fees that you will incur each month, and how often you are required to pay HOA assessments. Assessments are expenses that pay for the common areas of the condominium property, such as landscaping, club house, pool, parking areas, tennis courts, building maintenance and improvements. These expenses must be factored into your cost estimate for the total purchase price of the condo and your rate of return on the investment.