Is a Condo Worth the Investment?
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Have you ever considered buying a condo? Are you wondering if a condominium investment is right for you or should you buy a home instead? There is no yes or no answer to this question. Condominium construction has been on a constant incline since the housing crisis.
In 2017 there were $42.9 billion invested in the condominium and multi-unit sector. This is almost $2 billion higher than the highest year we’ve seen in the past decade-and-a-half. So, this means that regardless of what some say, there are plenty of developers and institutions that have a lot riding on the viability of condos in the future.
You will have to decide on whether investing in a condominium is the right choice for you. Here we will give you a list of pros and cons to give you the facts needed to weigh your options.
Pro: Lower Purchase Price
The apparent pro at the top of the list is the fact that you can purchase a condo for less than a single-family residence (SFR) in the same area. The differential between the prices will be determined by geography. The cost may be as much as 25% to 30% less for a condo than an SFR.
Con: Challenging to Resell
On the downside, when you are ready to resell your condo, you may notice that it takes longer to find a serious buyer for your condo. You may receive some low-ball offers from buyers that want to pay less than you are willing to take. Some areas maintain their value better than others. For instance, Fort Lauderdale condos are in an area that is always popular among visitors and retirees.
Pro: More Amenities and Fewer Repairs
Those that purchase condos are able to enjoy amenities such as gyms, swimming pools, and clubhouse access. They also don’t have to worry about maintaining the exterior of the property. Any repairs that are needed on the surface are covered. This is all covered by the membership to the Homeowner’s Association.
Con: Monthly HOA Dues
The Homeowner’s Association (HOA) dues must be paid monthly. These monthly dues can offset the purchase price, tax, and insurance savings. If you are looking to invest in a condo, you should check with the HOA and find out what the monthly dues are before entering into a sales agreement.
Pro: It’s a Buyer’s Market for Condos
While the single-family residential market has become a seller’s market, it’s a buyer’s market for condos in most areas of the US. Buyers will find that condominiums will have fewer competing bids than single-family residences.
Con: Condo Prices Drop Sooner than SFRs
Another downside that must be considered before purchasing a condominium is the fact the property values of condominiums drop faster than that of single-family residences. On the other hand, condo purchase prices rebound more quickly than SFRs.
Conclusion
As you can see, there are many considerations to be made as an investor when deciding between purchasing an SFR or a condominium. Think about what is most important to you as an investor and weigh your options carefully. Let your due diligence guide your final decision.