You envision more revenue flowing into your bank account in 2023, and you’re leaning toward real estate investing to make it happen.
Smart thinking. Rental rates are expected to keep growing in 2023, reaching historical highs during the first six months. This is expected to happen as property prices become more unaffordable.
However, succeeding in real estate means paying attention to the types of assets you purchase. In light of this, you may want to bypass the single-family house and buy a condo instead.
Here’s a rundown on why you should buy a condo for your real estate investment portfolio.
Let’s jump in!
What Is a Condo?
A condo, or a condominium, is an individual unit that is privately owned in a building featuring several other units, much like a hotel building.
You’ll usually find a condo in a high-rise building. In this setting, the condo you purchase will share two walls with two neighboring condos or one wall with a neighboring condo depending on its location in the building.
However, condos are also detached in some real estate markets. In this situation, condos are much like single-family houses.
Condos come in various styles and sizes. They may be large three- or four-bedroom units. Alternatively, they could be studio-style or small spaces.
Cost Benefits of Buying a Condominium
One of the top benefits of investing in a condo is the fact that it is usually cheaper than a home. That means the barrier to entry for investors is lower with condos than it is with houses.
The reason for this is that houses are generally larger, which makes them more expensive.
Perhaps you’re interested in buying a condo or a house in a beach location. If you buy a house at a higher price, you may have to charge more in rent to make the investment worthwhile. This could unfortunately turn away prospective tenants.
However, let’s say you buy a condo at half the cost. In this situation, you can still make a profit if you charge less for rent than you would have with a house. By setting an appropriate rent amount, you can generate an excellent rental income.
In addition to coming with cheaper price tags, condos feature less costly homeowners’ insurance. That’s because the insurance covers only the inside area of the home (more on this later).
Attractive Amenities Available at Condos
Another reason to buy a condominium as opposed to a single-family house is that condos offer enticing amenities that houses do not come with.
For instance, many condominiums have common areas with grills for barbecues, gyms, and clubhouses. Some also offer recreation rooms for parties or even rooms that tenants can reserve for meetings. This makes living in a condominium convenient.
Condos are also typically centrally located within areas that are densely populated. That means renters who live in condos have easy access to local parks, pet parks, restaurants, and shopping malls.
As a result, individuals who live in condos may be able to walk to area businesses rather than depending on the local public transportation system, which may be expensive.
Additional condo amenities to look for in an investment property include a laundry service or dryer and washer units on site. You might also find a condo building that includes a media room or library for students or remote workers.
Some condos even include classes and events designed to foster a feeling of community. These events may include parades or potluck parties. Meanwhile, classes may include art classes.
When you invest in a condo and promote it to potential buyers, the convenient location of your condo can be a major selling point. This might make it easier for you to draw would-be renters to your property.
Appreciation in the Value of a Condominium
Yet another reason to buy a condo for your real estate investment portfolio is that condos tend to appreciate in value.
In the past, the values of single-family houses appreciated more readily than the values of condos did. However, today inventory is lacking, and this is driving up the prices and competition for condos.
Also, keep in mind that the condo you’re interested in purchasing may be more valuable than the land it’s sitting on. For this reason, the condo might be a great investment if the area where the condo is located is set to be developed more in the future.
Condos’ Ease of Maintenance
Investing in a condo might also be a smart move because condos require minimal maintenance.
As the owner of a condo, you won’t be responsible for keeping up the building, grounds, or common areas. That means you don’t have to hire somebody to mow the yard or fix the roof.
The reason for this is that the particular homeowner’s association (HOA) that manages your condo and other condos in the area will handle maintenance. This association simply charges condo fees each month to cover these maintenance expenses.
As a result, other professionals will handle these tasks for you.
This is a huge advantage if you’re busy tending to other real estate properties or like to spend time traveling. It’s also a benefit if you don’t want to do maintenance jobs yourself, as you prefer for your investment to be as hands-off as possible.
Your future tenants will also like the fact that they don’t have to handle any maintenance, either.
As a condo owner, you should make sure that the rent amount you charge covers the HOA fee along with your mortgage payment, the insurance for the inside of your home, and your utilities.
Monthly Income Generation from a Condo
You may also want to invest in condominiums because they can be significant sources of passive income. This is particularly true if condos are in high demand in the market you’re investing in.
For instance, beachfront condos could easily bring in several thousand dollars a week for you during the hot summer months if you make your condos short-term beach vacation rentals.
In this situation, short-term rentals can easily produce enough money for you to cover your maintenance costs for an entire year. This means you could easily use your investment condo during other months if you wish.
Condominium Security Features
Finally, investing in a condo makes sense because it likely comes with security features.
For instance, condo buildings usually have lobbies featuring guard service. Alternatively, they may have call boxes. These are features that aren’t reasonable to add to a typical house.
With a condo, you can expect extra eyes to remain on your investment even when you’re not physically there. This eliminates the need to invest in a complicated and expensive security system when your property isn’t being rented out.
Condo buildings may also feature double locks and heavy security or fire doors. In addition, people who enter condos may be required to have keys to use these buildings’ elevators.
This further makes condos more secure for tenants. This is a major benefit worth marketing when you’re looking for tenants for your new condo. It’s especially true if the condo you’re eyeing is in a busy urban environment.
Detached Condo Security
If you’re purchasing a detached condo that looks more like a house, the condo setting can still feel secure. That’s because there will still be other condo owners and their families around the tenant who rents from you. That means if they need any help, they can access people who live near them.
For this reason, individuals and families both generally view detached condos as safe options. Like condos inside of buildings, detached condos also offer plenty of opportunities for residents to enjoy a strong social life. This is another draw for tenants.
At the same time, detached condos offer privacy. This may be appealing to a tenant who likes the privacy of the single-family house setting but also values the amenities of a condo.
How We Can Help You Buy a Condo Today
Buying a condo is a wise move for a real estate investor because condos are relatively affordable. They also feature amenities that will attract your future tenants.
Fortunately, at Johns Pass Condos, we can help you to buy a condo that meets your needs in Madeira Beach, Florida. We have already sold more than 20,000 properties and have more than four decades of industry experience.
Get in touch with us to learn more about our for-sale condos, and let’s build your portfolio today!