I have been an investor in real estate for over 15 years. I am also a certified financial planner, and I have a bachelor’s degree in finance from the University of Texas at Austin. When I was first getting started investing, I was a big fan of buying single-family houses on the cheap, because that is what my parents did. And I loved it! But after doing some research into how to make money with real estate, I realized that I could really make more money by owning multiple properties instead of just one or two. As you probably know, there are many different kinds of real estate investments you can choose from, but here I want to focus on condos because they are a great way to invest your money and get a good return on investment.
The Basics of Buying Real Estate
Before we jump into why condos are a great investment, let me explain the basics of buying real estate so you know exactly where we’re headed with this article. If you want to learn more about specific types of real estate investments like single family homes, townhouses, co-ops, or apartments, check out our guide to making money with real estate.
When you buy a condo, you will be the owner of the building itself. You own your unit (which often includes common areas such as hallways, lobbies, laundry rooms, etc.), the common area (if applicable), and any other units in the building. However, if you live above or below your unit, you do not actually purchase a property; rather, you become part owner of the land in which the building sits on. In most cases, the owner of the land is the developer of the building. So when you purchase your condo, you will receive a deed to the unit, along with any other units in the building, a deed to the common area, and a deed to the land. This means you own the building and everything inside it, including any utilities. The only thing you do not own is any improvements you put on the land, such as landscaping or fencing.
Why Condos Are Great Investments
Now that we’ve covered the basics of purchasing a condo, we can talk about why investing in condos makes sense. First, condos are typically much cheaper than other housing options, especially in major cities. A lot of people think that a single family home is the cheapest option, but it isn’t always true. For example, in Houston, TX, a 2 bedroom apartment can cost nearly $2,000 less than a similar sized single family house on the same street. There are even a few neighborhoods in Houston where you can find 3 bedroom apartments that are less expensive than 2 bedroom single family houses.
Another reason that condos are a great investment is that they are usually more profitable than single-family homes. Why? Because condos are often more densely packed than single-family houses. Let me illustrate this using a simple example. Imagine that you own a 4 bedroom single-family home. That home has four bedrooms, each of which is approximately 400 square feet. It also has a basement and half an acre of land, both of which are unoccupied. Now imagine that you build an identical condo across the street. Your new condo would have three bedrooms and 1,200 square feet of living space, all of which is occupied. So you double the number of bedrooms while reducing the amount of total living space from 400 square feet to 200 square feet. This means you have to sell two more condos in order to equal the number of units you currently own. Since you are selling two condos instead of just one, you are going to make more money. This is the main reason why many investors prefer to rent their units instead of selling them. Renting makes more money per month than selling, plus the fact that it is easier to rent than to sell is another huge incentive to consider renting.
Another benefit of investing in condos is that you don’t need a lot of cash up front. Many investors will purchase their condos with no money down and then pay off the mortgage over time. So even though you may have to pay more in interest every year, you won’t be paying up front. This is a very important point to remember, because it is easy to get sucked into thinking that you need to spend thousands of dollars up front before you can start making money. Remember that if you can afford to make payments on your mortgage, you should be able to afford to hire someone to help you invest.
One final advantage of condos is that they tend to appreciate faster than single-family homes. This is mainly because they are newer, and therefore more valuable. Most condos were built between 2000 and 2005. During that period of time, housing prices went up by almost 30% nationwide. On top of that, most condos are built close together, like high-rise buildings, meaning that there is a higher chance that a given neighborhood will experience a price increase in general.
I got my condo from these guys and it was the best investment of my life as they offered me each detail of the condos. Besides they also offered me discounts and the maintenance plans to get eth future benefits. These guys insured me that this investment will provide me several benefits in the long run.
So those are some of the reasons why condos are a good investment. They are definitely a better choice than single-family homes, and in many ways, they are better than traditional rental properties. What do you think? Have you ever bought a condo before? Which type of real estate do you think is best? Let us know in the comments!