Buying a Condo Investment Property

Many clients ask me to help them find a condo investment property. Condo investments can make a lot of sense, especially if you are looking for a more “hands off” approach to investing. 

For example, if you are living in the suburbs and have one or two little ones, you may not want the headaches and responsibilities that can come with being a multi-family owner. 

If you buy a condo in good shape, in the right location and with the right layout and finishes, you could put yourself in a nice little sweet spot where the unit is rented quickly each year with quality tenants, consistently rising rents, and consistently rising appreciation. 

Of course, this all only works if you do the right due diligence. That means understanding if any special assessments are currently happening or in the works, ensuring the condo association’s cash reserves are strong enough to take on any new capital expenditures, and that your HOA is in general well-run. 

Some condo buyers might be thinking, what’s the big deal with special assessments or what does a poorly run HOA look like? Let me paint a picture for you. It is NOT pretty (and yes this actually happened):

Imagine a world where you purchase a condo and after a few years it’s discovered that there are structural issues with your building. And the cost to fix these structural issues will cost you $40,000. That’s right, $40,000 out of pocket to fix - either as a lump sum or through significantly higher condo fees for many, many years.

On top of that, you have a tenant in place paying you rent. But how do you think your tenant is going to feel, knowing their home is now a work zone for the next 12-18 months? You got that right - they aren’t going to be happy and they are going to expect a discount.

So now you aren’t only down $40,000, you’ve agreed to take a $400/month hit to rent for the next 18 months, which costs you another $6,000. This doesn’t take into account the stress of dealing with an extremely surprised and unhappy tenant nor the challenge of renting your unit to the next person while the work is wrapping up. (Spoiler alert: the new tenant will pay under market rent as well since the work is still ongoing).

So yeah, if you don’t do your homework and understand the right questions to ask, you can be in for a really not so good time. 

On the flip side, I have clients who have purchased condos that are essentially turnkey. They rent in a week or two every year and rents always seem to go up and the tenants and owners seem to get along great. 

If you are thinking of buying a condo as an investment and don’t know where to start, give me a ring and let’s make sure you start off on the right foot!