When it comes to an investment in property, potential investors will inevitably go through the Condo versus Houses dilemma. Which of the two will generate a better return on their investment? The answer will highly depend on the particular property- its location and the present market.
In this article, we will look at the pros and cons of investing in either condos or single-family homes.
Single Family Home Pluses
No Condo Fees
Surprisingly, condos will typically cost more to own than a single-family home of the same size. That’s also not to mention the elimination of the fees associated with owning a condo – typically monthly membership fees and the special assessments. These fees will be subject to a yearly increase which will, in turn, add to the cost towards your investment over a number of years.
Limitations in Rent
When you let your property to tenants, those interested in renting a place other than an apartment will become used to doing tasks for themselves such as removing their own trash and cutting their own grass. They are used to the responsibility of having to do these things themselves – unlike apartment renters who will typically have those things taken care of for them. However, renters of properties such as condos may be less understanding of a condo fee, and even less likely to pay the fee for you.
If a condo is the same size and quality as a single-family home down the street, then they will have the expectation of the rent being exactly the same.
No Restrictions on Property Use
If you had a condo, then Condo homeowner association rules may have a limit as to how condos can be used. If you buy a condo, these limitations may prevent you from letting out your property to others.
They Often Come as a Package Deal
For investors wanting to put their investments into multiple condos these larger investments could prove to be advantageous. Think of it like a bulk buying opportunity. Sellers of condos might be willing to drop the asking price for an individual unit for a buyer who wishes to purchase several units. This gives the new owner a potential to get more money back for a lesser investment as they sell them off individually.
Owning a condo, or several condos could be an opportunity for you to have your hands on an asset that will appreciate at a quicker rate.
No Additional Condo Fee on Small Condo Buildings
If you buy a building that contains only three or four condos that have all their units on the market at any one time, an investor will not have to pay a condo fee to an external party. This is because they have, in essence, become an association. As a result, the investor can, therefore, manage their costs much better.
However, if you are wondering about whether buying a condo to live in is worth the cost over buying a single family dwelling, then you may be considering the low maintenance lifestyle that comes with condo ownership. However, if you are looking for a larger investment for your and your children’s future, an additional revenue stream, then your money will be much better spent in single family homes, multiple family homes, or in commercial property.