The problem I have with condos is the lack of control you have on the cash flow because of the monthly condo dues. If there are 100 units in the project, you have one vote. And the work that is included within the monthly dues, lawn care, outside maintenance and repair, are always charged by the contractors at a premium.
Then you have what’s called special assessments. When the roof goes and there is not enough money in the till often a special assessment is needed to raise the money. This puts another dent into the cashflow if you keep as rentals.
As far as resale, your market is more limited than it would be with selling a house. Not everyone wants a condo.
Others may have good things to say about them and have made money. And maybe they would be ok for yourself. I try to stay away from them.
Posted by steph in tex on March 28, 2000 at 07:51:02:
I have more condo deals than I know what to do with all of a sudden. 5 new ones!
I know a few of you have had negative experiences with condos, and I’d like to get some feedback.
I’m very tempted to go forward with all of them, because at a minimum, they’ll make good rentals- but if there is an overwhelming negative response I may have to think twice.
I have buyers for a couple, but I am wondering also about financing and holding these notes. Condo pitfalls?
my hard money lender won’t lend on condos. Makes me wonder…?
I can pay cash- but don’t really want to. SO-
what’s the diddly? any feedback appreciated. I know condos even suck in cashflow 101…HHHMMMMMMM…
allow me to chime in about HOA’s in condos as well. I don’t have any for this exact reason. I have a friend who has one, he just lost $2000 due to a corrupt HOA. They have way too much power, and are run by residents who live in the same complex. Talk about a conflict of interest. Guess who’s deferred maintenance gets done first?
It’s also area centric. I know in N. Virginia where you have high population density, they can be a real cash cow, but you have to do your due diligence. Talk to the Home Owners Association (HOA) and find out how they are managing all fees and assesments. Also, talk to the neighbors and get a feel for how they are doing. I know in Texas I wouldn’t do a condo deal because the demand is just not there.
When I get back to N. Va, I’ll be closing on a townhouse. I could have rented it the day I put the for sale sign up, but I was looking for a buyer(I’ve turned down about 10 people who just basically wanted to rent). I would approach it from the stand point of a commercial deal. You have to look at the big picture of the development and the area and what kind of competition (apts, etc.) you have in the area.
Posted by Mark (SDCA) on March 28, 2000 at 10:48:20:
I 2nd all of Phil’s comments. Also, they do not appreciate as well as SFR. And the association aspect can really, REALLY be bad. They have virtually unlimited power over you, including but not limited to raising the monthly assessment, requiring or preventing specific actions (painting, flowers, drapes etc) for your unit even up to the point of placing a lien on your property.