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Hi! This is Steve Rozenberg, I’m the owner and co-founder of Empire Industries Property Management Company located in Houston, Texas.
Today, what we are going to talk about is whether or not a Condominium is a good or bad investment and obviously there’s a lot of variables in any investment. Sometimes Condominiums, they can be quite profitable, depending on where they are located, and other times they can be quite a headache.
Some of the challenges that I’ve experienced with owning a Condominium in the past is the Home Owners Association (HOA) fees can be extremely high. And, when you’re looking at a deal you want to make sure that you factor in what those HOA fees are going to be. And something else that you cannot factor in is that a lot of times those can be raised at any time.
So, you want to make sure that you have a lot of variance in there for your profit margin so that if they do continue to raise the HOA fees, can the rent go up accordingly. And normally, there’s nothing you can do about them raising fees. The other challenges are that some HOA’s only allow so many rentals in a complex. So, if you buy the property and you don’t let them know it’s going to be a rental when you try to rent it out they may say that is not allowed, that’s another challenge.
Another challenge when you have a rental property is marketing them in a condominium complex. A lot of condo’s do not allow signs to be placed outside of the complex, so there’s no way to market the property to people driving by or walking by. There are restrictions on getting access into the complex. If you have a property with an agent, maybe it’s a lock box or something they will not have a key to gain access to get inside the property, And, they may not allow agents in there without the owner being present. You want to make sure you know what are the deed restrictions and what you can and cannot do in the HOA covenants when you have a rental property in a condominium.
And, the other problem that I have is you don’t actually own the ground in a condominium. Basically you own a block of air of the condominium but you do not own the ground that it sits on. So, yes it could be cheaper to purchase one but there’s a lot of variables working against you that are out of your control. For that reason, I do not like condominiums that much. Now, there are some areas if you’re down on the coastline where it’s vacation rentals or some place that’s a very high value you can get a lot more rent, but the standard rental that most people would get as a rental property can be quite challenging. So, if you are going to get a rental property just make sure that you’re looking at these factors and you’re getting some information. And make sure you factor that in to your potential costs and your potential expenses.
This is Steve Rozenberg with Empire Industries, if you’d like some help or want someone to help you find a property feel free to look us up online or give us a call.