What to look for when looking at a condo with the Realtor?
May 10, 2010 by
Filed under condos for sale
I am about to purchase a condo to rent out in an apartment complex. There are many condos for sale in this building. I am planning to hold onto this property for anywhere between 2 & 5 years and then probably sell it. All the properties are around the same price and size, what should i look for when surveying the property with the realtor that will help me decide which property is better then the rest?
Comfort location location location and the maintenance cost of the building and if it’s older than 10 years old the cost to keep it maintained can go up very much very quickly as buildings are very costly to keep in good repair.
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The one thing to look at is to check out the neighbors. If they dont look clean or if is looks slummy then know when you go to sale in a few years your going to have a hard time because who wants to move into a bad neighbor hood. You also want to look at what benifits this home has for example is it near schools, freeways, or shopping area. Know whats around. The next thing you want to see is how old it is you dont want to put renters in the condo and have a none stop call from them about things breaking down. Some condos have community pools some have tennis courts look for some that do… good luck!!
Since you said most properties are about the same price and size, I would focus on location of your individual unit within the complex. An end-unit would likely be more quiet, and could be more secluded or isolated (i.e., there aren’t other tenants on both sides of you).
Other important factors are obviously the quality and condition of interior fixtures and finishings – you may find units that have updated or upgraded flooring, paint, light fixtures, built-in cabinets or storage, etc. These can really set a unit apart and increase resale value. If you’re planning to keep the unit for several years, you may be able to do some of these upgrades yourself (over time) and capture the increase in value yourself.
Of course, you also want to make sure that everything is in good working order, and that the plumbing, electrical and air conditioning systems are in good shape. This will hopefully help you avoid costly repairs in the next few years. Good luck!
You must check out the financials of the condo association to make sure they are solvent and allow for the condo’s themselves to be rented. Often there are rules that only a certain percentage can be rented out. I also recommend you check out the neighbors such that if you rent a unit next door to the crotchety old man who has lived there for decades, he could potentially make your ownership, and the lives of your renters less than hospitable.
Location in the complex, how close to the parking area, away from traffic/pool noise, upgrades already done to the unit. Investment property generally takes 5-7 years before you can turn them. If you can find anyway to buy a single family home, rather than a condo you’ll do better on your investment. Condo’s have association dues, many single family homes do not. Association fees are considered when qualifying for a loan, so if you can find a low priced house with no association dues you could qualify for a larger loan. Single family homes are easier to rent than a condo, and you don’t have an association committee dictating fines if your tenant doesn’t comply with the CC&R’s. During the first few years, you will normally have a negative cash flow on most rentals. Remember, location, location, location, price!
Study and know the bylaws. I live in a condo. My condo forbids renting under any circumstance and they will have the tenants thrown out. The only people allowed to live here are those that are both on the mortgage or deed and/or directly related by marriage or blood to the person/people on the mortgage and deed. This means only a husband, wife, son, daughter, mother, or father to the owner of the condo can live here. Depending on the state, your condo may be allowed to charge you above 100$ a DAY if they forbid pets and your tenant has a pet and the association finds out. They can fine you if your tenant’s car develops an oil leak. Expect replacement keys, if lost, to run upwards of 100$. They can fine you if your tenant leaves a broom on the balcony. All of these things have either happened to me or close friends of mine that live in condos.
That aside, the overall condition is important. How new are the appliances? Are the appliances even included? What is the age of the building versus last major renovation of the condo? A condo built in the 70’s with original fixtures, appliances and cabinetry isn’t going to be very appealing to renters.
Condo’s aren’t a really good renting tool as not only are you paying market value for the space, but you’re ALSO paying maintenance ABOVE and BEYOND the market value. We pay nearly 2000$ a month for the condo we’re in, and that’s including all utilities and maintenance. The mortgage itself is 1200, the maintenance is another 500$. Electricity, a phone line so we can buzz guests in, cable, etc are all additional expenses. The only thing our condo pays for is water.