With the economy strengthening, it’s looking to be a great time to invest in property.
But if it’s your first time investing in a property, the potential and the number of questions can be overwhelming.
We’re here to set one of your questions aside for you. Which should you invest in? A single family property over condominiums or condominiums over single family homes?
Our answer is Single Family Property. But why?
There seems to be less risk in a condominium. But a few major reasons exist as to why you should not invest in a condo.
Invest In A Single Family Property Over Condominiums Because Of Condo Fees
We would say the same thing about mobile homes and lot rent.
A condo is typically part of a building set. There is usually a nice clubhouse with a pool and sometimes security and lawn care included.
For someone who isn’t looking to get a return on their investment, this might be attractive.
But condo fees, which are on average $2400 or more annually, will eat into your ROI the whole time you own the condo. And these fees will increase over time to cover inflation and other factors.
Because of this alone, you should choose a single family property over condominiums if you want to invest.
A Condominium Equals Less ROI
If you’re hoping to cash in on the appreciation on a condo, consider this reason why you should choose a single family property over condominiums for investment.
Not only will your return be eaten away by the hungry mouths of condo fees, a condo is less desirable on the market.
And, not only are condos slow to sell, they also appreciate much more slowly than a single family property.
So, your money will “grow” much faster if you put it in a single family property over condominiums.
A Condominium Must Compete For Renters
If you’re thinking of renting, remember, you’re not just competing with other condos for renters. You’re competing with the single family property down the street as well.
You might tack on that condo fee when setting a rental price. But your condo might sit empty if you do so.
Before investing in a condo as a rental property, you should talk to others in the area who rent condos out. Do they tack on their condo fee? What do they do to compensate and recover that lost investment?
It’s a good thing to do research before buying a property as a rental investment anyways.
Another reason to do your research: condos sometimes have restrictions on rentals.
Condominium complexes might make you sign a contract that prohibits renting out the condo. Don’t get stuck with an un-rentable property if that’s how you want to recoup your investment.
If you’re looking for a solid investment, go with a single family home. You will lose less of your investment in fees and will find your property appreciating faster.
If you’re looking for someone to manage your rental property, contact us and we’ll make your life easier.