Should Real Estate Investors Buy Condos?
So you want to become a real estate investor? I'm talking about buying a home and renting it out, having the tenant pay your mortgage and a little cash-flow on top of that! In our hectic market, with the lack of houses for sale, one option of home ownership is often overlooked, but carries a lot of advantages: Condominiums! There are a number of benefits to owning a condo as a rental property, especially for first time real estate investors just starting their portfolio.
For example:
Get a nicer place for less money
Finding a $200,000 to $275,000 house in a decent neighbourhood is nearly impossible in Winnipeg, unless you're willing to put some money into renovations. In the end, the investor will still be left with a 60-yr old house.
On the other hand, for the same money, you'd be able to find a new, or nearly new condo, which will not need any renovations, but is ready to be rented out. One big reason for considering condos when investing in real estate.
Lower Management costs or headaches
Condos come with landscaping maintenance and snow clearing services built right in. No calls from neighbours, upset at the fact YOUR tenants are not keeping up the property. Often, water is included in the condo fees already, and hydro (electricity) is usually the means of heating the place as well, meaning only 1 bill, which can be either part of the lease, or left for the tenant to pay themselves.
Fewer Repair Issues
Since you're able to buy a newer condo for the same money, odds are that there will be fewer repair and maintenance issues inside the unit. And since the building itself is part of the condo-collective, most exterior maintenance is handled (and paid for) by the condo fees.
On the subject of condo fees, its important to point out that a large percentage of those fees help to reduce, or outright pay for, costs you would incur in a house. Read this article to see why condominium fees are not the big bad wolf some people think them to be.
Lower Insurance Fees
insurance costs for stand-alone, or even attached, houses are expensive. If that property is used as a rental home, the insurance fees go up, doubling or even more.
The same is not true for condos. The building is already insured (part of your condo fees) so you only have to pay for your condo interior upgrades, significantly less than insuring the entire home. Like, 80% less. A bonus for first time real estate investors.
More Control Over Tenants
Ever drive by a house where the yard is not kept up, confederate flags hanging out the windows, derelict vehicles in the driveway?
That won't happen in your condo! The tenants HAVE to abide by the condo rules, which prohibit all of the above behaviour.
Here are some examples of currently available condos. Local restrictions prevent us from displaying the actual listings, but we can share the general outline and description:
- 1600+ sq ft townhome condo in Transcona for approx. $270K, with condo fees of $225 per month, and taxes of $300 per month, includes garage. Expected rental income approx. $1700+ per month.
- 1100 sq ft townhome condo in Bridgwater, approx. $260K with condo fees under $200, taxes approx. $250 per month, with garage…. expected rental around $1600 per month
Summary for first time real estate investors
If cash flow is the MAIN focus of your investment strategy, I agree that there are better options available. For example, you could be buying older properties in run-down areas. You could get a $150K house which rakes in about $1200 in rent, but you will need to be prepared for issues such as maintenance, late night calls for service, etc.
If your real estate investments entry strategy is to start out with one solid, nice property in an upscale area, consider condominiums. Contact me for info via email or phone me at 204-333-2202.
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