I hear from a lot of investment buyers that are on the fence about purchasing a condominium for renting whether it’s a wise move or not. There are pros and cons to buying but it really comes down to running the numbers and finding out what makes the most financial sense for your investment purposes. Of course, those that choose an investment do so for either immediate or long-term cash flow income so if the numbers don’t make sense there’s really no point in pursuing the investment.
Some things to consider about buying a condominium in order to rented out is if the condo you are considering as even allowing any more rental units. Often times condominium associations vote to not allow any more rental units and prefer owner the only home area. This online lynch adventurous approach of a condominium complex.
Additional fees from a special assessments and reserves are often a big drawback to those considering an investment condominium. If the complex does not have enough money in reserves in order to cover large replacements or repairs such as siding or roofs, you may be liable to pony up the money which could be several thousands of dollars dipping into your cash flow income. Make sure the Association have enough money to cover these repairs or at least enough in reserve should a repair of this magnitude be necessary.
Condominiums are great investments especially in high touristy or vacation spots such as Panama City Beach. We are one of the top locations in the US for spring break so it makes sense to invest in a condominium were tourists and visitors are frequent. There are however, other markets where a single-family house would be more beneficial than a condominium but in our case, along the Gulf Coast of Florida, a condominium or vacation rental apartment unit makes the most sense.
Understand the condos rules. If everything else makes sense you’ll want to verify with the condominium associations CC&Rs, which stands for conditions, covenants and restrictions, that anything you or your renter plan to do is allowable. If you plan on remodeling the unit you’ll want to make sure that this is allowed by the bylaws. If there’s anything that stands out as a red flag, this may not be the condominium for you.
Remember all expenses. Only a condominium even for monthly rental income, still requires monthly fees and possible mortgage insurance depending on how you purchased the unit. You will have monthly fees that you usually cannot extend onto your renter such as homeowners association fees and possibly utilities depending on how the complex operates. Make sure you calculate all of these additional expenses into your monthly payments.
Purchasing a condominium is a great investment but only if the numbers make sense and the location is right. Because we handle a lot of investment properties throughout Panama City Beach and along the Gulf Coast, we can help you make the right decision by running the numbers and offering the best options in associations and the complexes.