Condos appreciate at a slower pace than single-family homes. According to a report by Redfin, the median condo sales price increased nearly 10% over the previous year. However, the median sale price for single-family homes increased by more than 15% during the same period.
Condos appreciate at a slower pace than single-family homes but they are still likely to increase in price over time. Some factors that could impact appreciation are:
- Community amenities
- High growth in population
- Low-maintenance living options are in demand
- How well the property has been maintained
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There Are Many Benefits To Buying A Condo
A condo is a smart investment, especially in an extremely competitive real estate market. Condos are often less expensive than single-family homes, and you don’t have to worry too much about repairs or maintenance.
These are the main benefits of purchasing a condo.
Single-Family Home Costs Less Than A One-Family Home
The main draw of owning condos is the price. According to the National Association of Realtors in April 2021 the median condo sales price was $300,400, while the median home price was $347,000.
Condos may be attractive to investors because of the record-low inventory and rising prices.
A Variety Of Amenities Are Available
Condos are a great option for those who want to live in a community. Condo communities often offer common areas such as grilling areas, swimming pools, and gyms. These amenities make it easier for guests to rent a condo or find renters for Airbnb.
External maintenance and repairs are not required
Condo fees are very affordable, as you don’t have to pay for all maintenance and repairs.
A single-family home means you are responsible for the roof, patio, and gutters as well as painting. Condos are different. You pay your regular fees and the homeowners association takes over the exterior upkeep, including snow removal and yard work. For a beginner investor, this can be a great way to make life easier.
Cash flow is provided by the appreciation of the value
A condo can generate cash flow whether you rent it or make it available for Airbnb. The condo increases in value over the years, increasing your equity while you receive this cash flow.
There Are Some Drawbacks To Buying A Condo
Condos are convenient and less expensive than single-family homes. However, there are also some drawbacks to condos. HOA fees and Rental Restrictions are two of the disadvantages condo owners and investors should be wary of.
These are the main disadvantages of buying a condo.
Condo association fees vary depending on where you live. They can range from a few hundred dollars per month to several thousand dollars, or even more. You will also see an increase in your monthly payment due to condo fees, which can reduce your return on investment.
Restrictions On Rental
Some condo communities do not allow you to rent the condo out. You might also be allowed to rent the condo to long-term tenants, but you cannot use it for short-term rentals such as Airbnb. Be aware of the restrictions if you intend to rent out your unit.
Restrictions On Association
There might be additional restrictions for condo communities, in addition to restrictions on the rental. The restrictions imposed by your homeowner’s association may limit what modifications you can make to your unit, or restrict the pets you are allowed to own.
These restrictions could be a deal-breaker for some investors.
It Is Difficult To Get Financing
A condo can be more difficult to finance. Condo mortgage rates are typically higher than single-family home rates. The lender may also require that a certain number of units be occupied by owners (e.g., more renters than owners) before they offer you preapproval.
What Should You Do If You Want to Buy A Condo?
Consider your financial goals and situation before you make a decision to buy a condo. Also, consider how much time and money you are willing to invest in maintenance and repairs. An investment in condos can be a smart financial decision as long as you are able to pay the fees and that the restrictions don’t prohibit you from renting it.
This post was written by a real estate expert from the Dotoli group. Josh Dotoli is Paramount Residences #1 Selling Realtor with nine sales in 2021, 3x more sales than any other Realtor selling in the building. The Paramount Residences enjoys a prime beach area location. It is a Ft. Lauderdale oceanfront condo located across from the beach.