Are Condos a Good Investment for Rental Property?
Condos seem to be all the rage these days. Modern designs, compact living spaces, attractive prices — it all sounds great. But once you break down all things considered, the real question arises: are condos good investment properties?
First, we recommend determining if a condo is a good fit for you. Then, you should thoroughly explore the pros and cons of condo investing. Sounds like a daunting task? We are here to help!
Should I Invest in Condos or Houses?
Determining your objectives, project timeline and budget is vital to the success of your investment property. Additionally, a variety of factors should be considered — including the market, location and your personal preferences before making a decision. All of this combined will help you figure out if a condo or house is a better fit for you.
Understand Your Target Market
The type of renters you will attract with a condo versus a house is quite different.
With a house, you’ll likely find families who have more members and personal property. You should seek renters who are willing to maintain the home to some extent. They will become the property’s primary caregivers.
Condos tend to attract single people or couples who live a more minimal lifestyle. The condo corporation will usually offer building maintenance and other services. This means your renters will not need to assume as much responsibility in that regard.
We highly recommended that you screen all potential tenants, regardless of your property type.
Advantages to Condo Investing
Condos are typically far cheaper investment opportunities than houses. Having said that, every market and location is different — so you should always make sure to do your research. Condos might be a more affordable way to get started in the rental market for many investors.
Less Maintenance and Fewer Bills to Manage
Since condos are smaller in size, they have fewer maintenance tasks and lower costs. It can be more practical and successful to take on a condo rental property, especially for your first experience.
Condo fees generally cover some of the expenses you would normally be charged with. This may include cable, water, snow removal, landscaping, garbage, etc. Although you are still financially responsible for these services, you do not need to worry about managing the monthly bills for them.
Condos tend to be in areas where people want to be — downtown centres, trendy districts and vacation hot spots. These areas usually contain a higher density of condos, which can certainly make your investment property more desirable to renters.
Disadvantages to Condo Investing
There is usually a condo board that sets a monthly fee that condo owners are required to pay. It is important to understand what exactly this fee includes and to factor this into your operating costs.
If you are hoping to purchase a condo and turn it into a rental property, you’ll want to make sure you are permitted to do so. Some condo corporations have restrictions in place and could even require a deposit.. We suggest doing your legwork on this one — it is well worth the effort. It is extremely important that you read your condominium bylaws and that tenants are also given a copy. Often, you are responsible for your tenant’s actions.
Lenders tend to be more inclined to approve financing for houses rather than condos. With condos, lenders factor in different variables when making these decisions. This may include the occupancy rate of the building, its delinquency rate and possible ongoing litigations.
Need help finding or maintaining a rental property?
Emerald Management & Realty Ltd. has been servicing the Calgary area for more than 40 years. We have experience with condos, apartments, houses and commercial spaces.
We can assist both tenants and property owners and we specialize in catering our services to each customer’s specific needs. If you think we can help, don’t hesitate to contact us today!
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