Perhaps you have considered the notion of purchasing a luxury condo as your next investment? Since condos are usually less costly than one family home, they could make available in investments for those who have little cash or that are new to property investing. But they occasionally get a bad rap about their investment possible.
Like most things in real estate investing however, a great deal of preparation and attention to detail may empower everyone to create a profit. Here are a couple facts to take into account about condos as an investment.
Tough Math Trumps Dumb Luck
The main reason people sometimes wind up losing their shirt over a condo investment, is nearly always because they didn’t understand that the expenses involved. Individuals new to land-lording often concentrate primarily on the lease they can bill, without giving full credence to http://parkcolonial-official.sg they’ll also incur.
Apart from your mortgage expenses, you’ll also have real estate taxation, insurance, and possibly mortgage insurance, in addition to upkeep and repairs. Along with that, you might also incur advertising prices for locating renters, legal penalties if a renter has to be evicted, or the cost of a property management company in case this kind of job doesn’t seem like your cup of green tea.
If after subtracting each these costs from the lease you think, based on challenging search, that you’re able to charge, you’re still creating a much more attractive return on your investment than you’d investing in an index fund, then it normally makes sense to purchase.
For example, assume you find a condominium for $55,000 that you’re able to pay cash for. Rent costs for a comparable condominium are approximately $750 a month or $9,000 annually, providing you a return (before costs) of 16.4%. Let’s talk costs. Taxes, insurance, and maintenance and repairs on this home will generally cost a bit less than $2,000.