Are condos a good investment? Or should I keep renting until I can afford to buy a house?
December 20, 2007 · Print This Article
carpediem104 asked:
I can’t afford a house in my area (at least not one I’d want to live in.) There are some condos, but I’m afraid if I buy one I won’t be able to sell it down the road. Should I wait until I can afford a house and skip the condo step?
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I can’t afford a house in my area (at least not one I’d want to live in.) There are some condos, but I’m afraid if I buy one I won’t be able to sell it down the road. Should I wait until I can afford a house and skip the condo step?
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Josh Dunaway has been a certfied Realtor in the suburban Chicagoland area for over 20 years. Aside from starting his own real estate company, he also owns a mortgage company as well.
Depends entirely on the area and size of the unit. LOCATION!
It depends. A condo can be a good investment if:
–it’s in a good neighborhood,
–it’s in a well-maintained building,
–monthly fees aren’t too high, and
–the assn has enough $ in reserve.
And of course you expect the value to increase.
Investments always have risks. You need to work with a realtor and make sure you get a condo at a great price, may try foreclosures and pre-forclosures. The only reason you should keep renting is if your credit is so horrible you would get a terrible rate and/or terms if you got a mortgage.
I think Condos are a good step to a single family home. At least you will get a good tax write off, and you can always sell it prior to buying a house.
Consider the finances involved.
Mortgage payments are tax deductible, rent is not. After several years you equity has increased in the condo, no equity for rent payments. The only drawback to a condo is the association fee, which is not a tax deduction but that’s better than paying all your money to rent. Also, you if decide to buy a home later, you can always rent the condo or sale if the market right.
I don’t think you should. owning real property is a great investment whether it’s a condo or house. I think you should buy the condo, reap the tax benefits, sell it when the market is decent and buy a house. There are some foreclosures there that might be a good deal. If you can get in to owning real estate DO IT! Check with a loan broker to see what loans are available and go from there. I don’t beleive in renting. When you pay rent, you pay MY mortgage and I write off the interest on MY taxes. When you pay a mortgage on your condo, YOU write off the interest paid on your taxes. Don’t let someone else get the benefits of YOUR money. Ya know?
The most important thing when buying (or selling) a condo is to look at the finances of the association. Your realtor can request them for you….. You want to be sure the association has enough money in reserves for big projects such as road repairs, building repais, roofing, painting, etc… You can alsways budget for the association fees but nothing will hurt your bank more than a several thousand dollar fee the association has given you (and every other owner) 30 days to pay so they can fix your roof!
My first purchase was a small 2/2 900sqft condo in a gated community. I owned it for 3 years and never had the association charge extra fees (I went over their finances when I bought)… I only made minor upgrades to the interior and when I sold it I doubled my investment! (no, this was NOT during the housing boom!).. I put $10,000 down on the condo and my mortgage (even with assoc fees) was the same as the rent I had been paying, and when I sold the condo - after all my closing costs, I walked away with $21,345! And, since condos are so much cheaper than houses, there was actually a good demand for my condo and I sold it in just under 6 weeks with 3 offers! (again, this was before the big boom!)
After that I was able to go and buy a small house. I was VERY happy with my investment in my condo.
Condo can be a great stepping stone in your ultimate goal to purchase a single family home. With the surplus of inventory out there right now, you can get a great deal and maybe even a car out of it.