Buying a condo as an Investment

Compared to homes, condos can be relatively easy-care investments and a great way to increase net worth. Determining whether or not the condo will be rented to third parties or your primary residence will help you decide where the investment condo should be located. If you're going to live in the condo, it should be in the best neighborhood that you can afford and convenient to your job, shopping and recreational activities.

Location is still important if you choose to rent the condo to third parties. Choosing a safe neighborhood close to public transportation and large employers is ideal for stable income and long-term tenants. You can also purchase a condo in a resort area and rent it out during peak seasons to tourists. With this choice, you can use the condo for a vacation getaway when it is unoccupied.

Renting an investment condo gives you dividends in two ways. Ideally, the rent you charge will be more than the monthly expenses and provide you with a monthly positive cash flow. When setting a price for the rent, factor in the monthly mortgage payment plus maintenance fees, homeowner association dues and annual taxes. The real financial reward from an investment condo is the payoff from appreciation when you decide to sell the unit. The longer you hold onto the condo, the larger the return will be on your investment. For maximum appreciation, condo investments should always be viewed as long-term holdings.

Maintaining a positive cash flow is vital to the long-term success of any condo investment. A careful screening of tenant is required, and it is best to hire a company that will do a detailed background check. Even though it is an extra expense, it will avoid the chances of getting bad tenants that will need to be evicted from nonpayment or destruction in the unit. Paying a little extra for peace of mind is worth it. If your condo investment is in a resort area, there are full-service management companies that will help market the unit and collect rent. Many of the full-service management companies will also make sure that the unit is clean, and the property is not damaged when renters leave. It is a great way to protect your investment; just make sure to factor the fees into the rent payment.

The features of a condo are important and vary depending on the usage. A long-term tenant will prefer different features than a resort tenant. Long term-tenants prefer condos with flowing plans, adequate storage and garages. Vacation renters tend not to care about those features. Vacation renters prefer condos with extra space for people. Typically, investment condos in resort areas should have wall beds, sleeper sofas and screens for additional privacy. Investment condos with smaller kitchens are perfect because of more space for sleeping. It is important to select the right condo for its intended use.

Using a professional Sales professional to find an investment condo is a wise decision. These professionals have access to the multiple listing service and industry knowledge to help you select the best investment condo for your needs. They can provide you with appreciation rates, current condos on the market and information on local rents and rent ratios in each area.

Daniella Aitken

Daniella Aitken

Sales Representative
CENTURY 21 Miller Real Estate Ltd., Brokerage*
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