Investing in real estate is one of the best (and most complicated) long-term investment strategies that one can have. A growing economy, increased demand, and affordable home prices will keep housing investment returns on an upward trajectory. It makes it more stable and rewarding investment item for your money.
However, there are a lot of factors that enter into whether or not your investment will make returns, how soon it will make a return, and if you’ll be able to make a profit from your investment. To identify some of these factors we’ll be taking a look at condos, one of the best first-time investor properties, and some questions you’ll have to ask yourself before you invest.
- Is there a rental cap?
Many condo buildings have what are known as ?rental caps.? This is a limit, set by the Home Owners Association, that sets a limit to the number of condos that can be rented out instead of lived in or occupied. Knowing if you can rent the property you want to rent is always a good place to start. Some buildings don’t allow renting at all or may have a wait time. Be sure to inquire.
- Check rental rates and vacancy rates!
The second thing that should be checked is the vacancies in the building. Are there a lot of vacancies? If so, why? The answer might change your mind about getting a condo in that location.
Also, check realtors or online real estate listings for the local rental rates for condos. This will allow you to understand what sort of return you can expect. You can also contact the building and inquire about the current rates in it.
- Check the local attractions!
An area can tell you a lot about what you can expect prices to be like there, at least a rough estimate. A beach property will obviously net a good price for rent (and investment), but a property in the city could be surrounded by local attractions and venues that really raise its prices. Breweries, restaurants, theaters and other entertainment can make a big difference.
- What are the lender requirements?
A condo can have tighter restrictions than a detached home rental. Investment properties (condos or otherwise) typically require a 20-25% down payment, and some lenders require you to live in the condo for a year before renting it out. If they don’t expect you to live in it, you might have to pay more upfront.
It’s recommended that you contact your lender about specific rules and regulations if you’re considering an investment.
Make sure to do your research and check all the laws and regulations in your area before making an investment. It’s your money, and you deserve a good return on it!