Are condos ever a good idea to invest in? My latest article for BiggerPockets answers that question. And the answer is: Usually not.
And the biggest (albeit not the only) problem is the dreaded HOA fee,
Far and away, the biggest problem with holding a condo or co-op is the HOA fee. Now, HOAs do valuable things, so they are by no means useless. They will usually do all exterior maintenance and repairs, as well as pool maintenance if there is a pool. They will almost always pay for trash removal as well. HOA’s provide insurance on the exterior of the building (you will need insurance on the interior of your unit of course). Sometimes, they provide maintenance and replacement of the HVAC and electrical systems. Sometimes they pay for water and sewer. Sometimes they pay for a doorman. It all depends on the HOA in question.
This often kills the possibility of holding a condo, but it can also hurt the possibility of flipping a condo as that HOA fee substantially increases your holding costs and eats away your profit. Furthermore, condos tend to be less liquid than houses, so it can take longer to sell.
That being said, there are times when it makes sense to invest in a condo. We own a handful, for example. I go over when it makes sense as well as all the other problems to watch out for with condo investing, so if this is something you're interested in, please check it out.
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