Condos have not been treated like an investment opportunity in the past. If you want to make money in real estate, you need to look at houses and commercial properties. That thinking has changed of late, not only because houses have become so expensive, but because condos have improved as far as quality and square footage.
Buyers are looking at these options, especially for a primary residence. The cost of living in a home, when you include insurance and other expenses, can make a home unaffordable for most. A condo on the other hand is much more affordable and major expenses like a new roof are shared among your fellow tenants. There’s no denying that condos are a smart investment, but what about when you compare them to an apartment?
Buying Vs. Renting
Apartments are affordable and can sometimes offer you something a house or condo cannot, peace of mind. If something breaks, it’s the apartment’s responsibility, not yours. If something needs to be addressed, it’s not your property. This is one of the major appeals of these types of units but recently, people are wondering if they are getting the best possible deal.
A two bedroom apartment in a nice area may cost you $2,000 a month. A condo of the same size in the same area may cost you the same or more when you factor in the HOA fees. If you put aside the finances for a moment, it’s easy to see the advantages one has over the other. However, if you do have the money to buy and are stuck between a condo and an apartment, there’s lots to consider.
Why Condos Are A Smart Investment
From an investment standpoint, condos make a lot of sense, especially when you compare them to an apartment. You are paying relatively the same for the same type of property. The difference is the financial commitment you are making which can be hundreds of thousands of dollars. Over the years, your condo will not go up or down rapidly in price. However, that steadiness may be exactly what you are looking for.
Imagine buying a house for $500,000 and it needs $250,000 in work. You put the money in but when you’re ready to sell the market is down and you are lucky to break even. This happens often in the real estate investing game and people lose money because they have to sell whether the market is strong or not. On the other hand, if you were to buy a condo, you would not need to invest the same to either get it, or to remodel it. Those savings mean you can wait out up and down markets and it’s also easier to find someone to rent a condo from you than an entire house.
Mistakes Buyers Make
When making an offer, a common mistake buyers will make is that they will focus on getting the monthly payment as low as possible. Yes, this means you have to borrow less which is never a bad idea. However, if you can hold onto $20,000 in cash and use it, not as a downpayment, but as money needed to fix the place up, that may be a better use of your time, and funds.
Most properties can use some improvements and using that $20,000 for remodeling will not only immediately raise the value of the property, but it will also make it easier to rent or sell when you are ready to. Keep in mind as well that apartments will usually not have the same costs, but when you leave, you get nothing back in return.
Working With A Realtor
The key to finding the right condo in the right area is to work with the right realtor. Realtors who specialize in condos are able to help you select the best ones based on what you are looking for, where you want to live as well as what makes sense for a long-term investment. This insight is valuable, especially when you are considering what property is best and which one will increase in value over time.
As you are looking for options and trying to determine what is best for you, take a minute to consider things like square footage, laundry, the pool area, and other things you are getting. If the apartment you are looking at is more accommodating to you now, maybe it’s worth living there for a year. Take everything into consideration and look for which options fit you the best.
