Condominiums, or condos, are housing complexes that can include attached homes that share walls and detached dwellings. An individual owns each unit and pays a homeowner's association (HOA) fee. The fees cover expenses such as exterior maintenance and amenities. Condos are often less expensive than homes and are typically well-located. But are they suitable investments? The answer depends on the current housing market and the owner's intended home use.
A Condo's Purpose Influences Value
There are various reasons to choose a condo instead of a home, and your reason for buying a condominium helps determine whether it is a good investment. Some people look for condominiums so they can stop renting, investors purchase them to rent, and others want vacation homes. Each can be a wise investment.
Renters who buy condominiums can own a home and pay less than they would for a house. If they choose well and the market is good, their new homes will increase in value, and owners will build equity. Condos are generally smaller than houses, and buyers should consider the monthly HOA fees.
Many travelers now prefer to stay in vacation homes instead of hotels, especially if properties are in popular areas like the coast. With that in mind, some investors buy and rent condominiums, which can be an excellent investment. Prospective buyers should review each community's bylaws before purchasing since most include rules about renting. Some allow only short-term rentals, and others prohibit renting.
A condominium can be an ideal vacation home for those who plan to spend a lot of time in their favorite locations. Owning a home can be less expensive than staying in a hotel. A vacation condo can become an affordable second home or even a paid-for retirement residence. Those who don't spend much time in their vacation homes may be able to rent them to cover HOA fees and mortgage costs.
A Good Market Can Mean Profits
Condominiums typically appreciate more slowly than homes, but their value does increase. According to U.S. News & Report, investors often buy properties to sell within five years at a profit. However, like any other investment, turning a profit depends on the market and purchase price. How fast and how much depends on a home's walkability, location, community amenities, demand for the condo lifestyle, and the property's condition.
There's Minimal Upkeep
Bank Rate experts say a condo is a good option for those who want a home requiring minimal maintenance. HOA fees cover exterior maintenance, landscaping services, and often exterior pest control. Communities generally have staff to make minor exterior repairs, and HOA fees can include reserves that pay for major projects such as painting or roof repairs.
The Amenities Are Attractive
Depending on location and community design, most condominiums offer resident perks. Some have car-washing stations, gyms, and grilling areas. Most have pools and clubhouses residents may be able to use for personal gatherings. Communities might also host events like holiday parties at clubhouses.
Amenities can be valuable for investors who rent their condos. For instance, advertising a short- or long-term home with a pool can make it easier to find tenants. While individual units may or may not have washers and dryers, many communities include laundry facilities.
Condominiums are popular housing choices for those who want affordable, low-maintenance homes with community amenities. Investors can often buy a condo, allow it to increase in value, and sell it for a profit. Some buyers rent their condominiums, which provides a steady cash flow. Buyers may also choose condos as personal, vacation, or retirement homes.
