Posted by Tim (Atlanta) on April 20, 1999 at 12:43:05:
Condominiums and townhomes can be good investments, but you need to be aware of a couple of things :
Townhomes/condos do not normally appreciate as fast as single family homes. Do not count on appreciation to make your money. Make sure you monthly cash flow is good (I look for at least $250 per month per unit myself)
Count on a vacancy rate higher than that for single family homes. People will stay in a good townhouse longer than appartments, but shorter stays than single families. A good estimate is 10%.
Condo/Townhomes are harder to sell. If you are looking to hold these long term, this will not be a problem, but if you want to flip them, make sure you take into account that the average condo sits on the market for 6-8 months before selling. You have a smaller market than SFRs.
All that being said, I currently hold 13 townhouses myself for rental income. They have worked out well. They are easier to maintain, and rent quickly.
Good luck and get back to us with progress reports.