Top 7 Tips to Find the Right Investment Condo

If you’re the “buy and hold” versus the “fix and flip” type when it comes to condo real estate investment, there are a certain set of factors that warrant some serious consideration. The most successful real estate investors are those who’ve put a lot of time and thought into an effective long-term real estate investing strategy from the get-go.

Whether you’re a newbie to condo real estate investment, or need to improve on your existing strategy, the following tips can help you sharpen your skills and increase the odds of being successful.

1. Decide on Either Pre-Construction or Resale

There are obvious pros and cons to both, and it’s up to you to weigh them according to your finances and your goals. When you buy a unit in a new condo building that’s still in the pre-construction phase, you’re likely to pay a lower price compared to a resale unit because of the price appreciation over time. You’ll also be able to have your input in the layout of the unit and the fixtures that are installed.

But buying pre-construction also means you’ll be sitting on the sidelines waiting for the building and your unit to be finished, which means a delay in raking in the profits from your investment. In the meantime, your deposit is sitting there when it could have been working for you elsewhere. 

On the other hand, a resale will almost certainly come with a higher listing price compared to pre-construction. However, you can typically get your hands the unit a lot sooner, and won’t have to put up with construction delays that are  common in new developments.

2. Make Sure the Condo Has a Decent View

It might be worth it to pay the premium for a view that renters – and buyers – would be thoroughly impressed with. If there are other units in the same building that are being offered for rent, you want to have the unit that stands out.

A unit that overlooks a cityscape, park, ravine, or any other attractive feature will likely get more interest and demand a higher rental price compared to a unit that’s overlooking the garbage dumpster and parking lot. And when it comes time to sell in the future, you’ll be able to ask for a higher selling price too.

3. Look For Condos With Sought-After Amenities

What do people in the area that you’re looking in expect to have at their disposal in a condo building? If the general consensus is that a swimming pool and fitness center are must-haves, for instance, then make sure the building you’re buying into offer those amenities.

It could very well be that a prospective renter is comparing your unit to the one across the street. If the other building has a pool and yours doesn’t, you could be losing out. Of course, it’s important to note that along with all these added frills comes a higher HOA fee. Make sure you account for this fact when crunching the numbers to see what type of income you can generate from your investment.

4. Buy Into a Good Location, and Learn Everything About it

Real estate is all about location. It’s the age-old mantra of the industry, and it plays a key role in property values. Ideally, you want to look for a property that’s close to public transit and local roadways, and offers quick and easy access to city centers.

Check the building’s walking score to see how easy and fast it is for residents to stroll over to shops, restaurants, parks, and so forth. Zero in on a few areas that offer these features, and learn everything there is to know about them. The more of an expert you become on an area, the more knowledgeable you’ll get when it comes to local property values. This type of info is invaluable to a real estate investor.

5. Consider the Maintenance Fees

Look into the average HOA fees in certain areas. Pick an area or two, and compare the fees from one building to the next to see if they’re on par. If the fees in one particular complex are too high or low, these are potential red flags that prompt further investigation.   

High fees might eat into your profits. And while low fees are definitely appealing, dig deeper to find out why they’re so cheap. Many times new condo buildings offer low fees during the first year or two after registration, but then jack them up in subsequent years to cover added expenses. Make sure you take a magnifying glass to the fine print.

6. Understand the HOA Rules

Condos are governed by HOAs, which means there will definitely be a rule book that owners and residents need to strictly follow. Aside from not allowing gas barbecues on the balconies or having rules about the maximum size pet dogs can be, many HOAs have rules about renting units.

HOAs have the legal right to restrict rentals, within certain boundaries. If these restrictions will affect your particular rental unit, you could wind up losing money instead of making it.

7. Work With a Real Estate Agent Experienced in Your Local Condo Market

Your best ally when it comes to finding the ideal investment condo is a real estate agent. Working with a professional who is well-versed in investment properties in specific areas, and understands the condo market inside and out will be able to provide you with invaluable insights into which properties are duds, and which ones are potential gold mines.

At the end of the day, your real estate agent can help you spot a good investment and avoid a bad one in order for you to maximize your profits and protect your capital.