14 Reasons To Invest In A Condominium

While the US is riddled with a plethora of condominium buildings, many Americans aren’t still fully aware of the concept of condominium investment. For instance, they think that it’s only for the rich, which isn’t true at all.

In this post, our private lenders for real estate discuss why you should invest in a condominium.

Why do condos make great investments?

Due to the fees that HOA (Homeowner Association) typically charges on condo investments, most potential condo investors run for the hills – and that’s understandable. Yes, these investments can feel a little pricy at times, but look at the following things that HOA fees cover:

• Exterior maintenance and repairs
• Landscaping
• Basic cable
• Pool and roof maintenance
• Building insurance
• Water
• Garbage removal

In single-family homes, you’ll have to bear these costs yourself.

Since you’re an investor, you should know yourself before signing the dotted line. The majority of new condo investors make costly mistakes, which don’t serve them well in the future. By doing due diligence, you can easily avoid these mistakes.

Benefits of investing in a condominium

Compared to single-family homes, investing in a condominium comes with a number of advantages, making them perfect for investors seeking an easy time managing their properties and a higher return rate. Some of these benefits include:

• Homeowner rules allow investors to manage condo properties easier
• The rules related to condos limit tenant bad behavior and benefit landlords
• Due to shared building maintenance, renting out your condo isn’t expensive
• You can fetch a monthly rental or a premium resell price for your condo unit
• Tax and equity advantages
• Compared to single-family homes, their purchase price is lower
• Renters have a shared sense of community

Now, let’s look at 14 reasons you should invest in a condominium.

14 reasons to invest in a condominium

1.The elected condo board looks after your interests. This board guides your building’s day-to-day management. In addition, the regulations and bylaws set up by the condominium corporation protect the investors investing in condos.

2.Typically, new development condos have a decent deposit structure. This means, paying 20% instantly isn’t really a requirement. Why? Simple, because condo developers want investors to pay a specific percentage of the total contract price, which is usually in divided/deferred payments in 24-36 months. When this paying period ends, investors can go into bank financing, which can go up to 10-15 years. During this timeframe, you can make your unit a self-liquidating asset by putting it into a rental – but ensure that your rent price isn’t lower than your bank amortization. Here’s a simple formula to remember:

Rent Price – Bank Amortization = Money

For instance, $30,000 – $19,000 = $11,000

3.The barrier to entry is lower because condos are usually cheaper than single-family homes.

4.Since the resale demand for condos is high, you’ll be more liquid. If the investors need to sell, they’ll have a good exit strategy.

5.Usually, condos provide a number of stellar amenities that attract renters – spa, gym, pool, etc. This is because buildings are located near transportation and shopping centers, and are, therefore, equipped with a ton of amenities and services.

6.The renter community is now preferring to stay in small spaces.

7.Younger generations and millennials love living in the city. This means you can easily find an occupant.

8.The demand for condos has gone up due to increasing urbanization.

9.You’re not responsible for the upkeep and maintenance of your condo because you pay condo fees. The fees aren’t much considering the condominium corporations will maintain and manage any problems with your condo. This allows investors to not worry about upkeep and maintenance, which in turn, allows them to narrow down their focus to investment facets of their property.

10.Often, you’ll be purchasing a new condo, so the repairs would be considerably less.

11.Investing in condos allows investors to buy an investment property in a great neighborhood.

12.If you’re a long-term investor, investing in a condo will be your best bet – the longer you hold it, the greater return on investment you’ll get.

13.Investing in a condo is a less risker real estate investment, and is ideal for risk-averse investors.

14.Normally, condominiums appreciate in value, at a higher rate than the inflation rate.

Questions to ask before investing in a condominium

While it may seem tempting, location isn’t the only factor you should consider when investing in a condo. Here are some questions you can ask before you purchase a condo:

• What’s the rent you can expect to get from your condo on an annual basis?
• Is your choice of location getting more popular to unpopular?
• Is your condo located in an area with high rental demand? For example, near an institution.
• What are the financing requirements of the lender?
• Is your choice of building under any litigation?
• How long are you planning to keep the condo?

Condos are a great investment for both experienced investors (who want to take advantage of demographic changes) and entry-level investors. Therefore, if you’re thinking of investing in a condo, you’re doing your best to buy an asset that’s both valuable and in demand.

Get low-cost capital in the form of short-term loans at competitive rates from Insula Capital Group’s hard money lenders

Whether you need investment home loans for your real estate venture or a short-term business bridge loan, Insula Capital Group’s private lenders for real estate can help you build a better financial future. They’ll offer you the advantage you need to start financing your project efficiently and quickly.

Give them a call for more information on hard money loan requirements!