You can get a good return on investment by buying a condo as an investment property.
Condos are a great way to get started in the real estate market.
Condos are often more affordable than other types of investment properties.
Buying a condo as an investment property can be a great way to diversify your portfolio.
Have you heard any of this from your friends when you showed your slightest interest in buying a condo as an investment? Yes, these plain facts are very common, but you have to dig a lot deeper into this if you are about to make such a sound investment.
Whether or not to buy a condo as an investment property will depend on a variety of factors specific to each individual situation. Such as current market conditions in your area, the expected future growth of that market, and your own personal financial situation.
However, in general, buying a condo as a residential real estate investment can be a smart move if you do your research and are strategic about it. Here is an overview of condos in Canada and what you need to know as a real estate investor.
Let’s get started.
Buying Condo as Investment Property
Buying a condo is actually a great way to invest in real estate. It’s also a great way to live because condos come with all home ownership amenities without the cost of maintaining an entire house.
Condo buildings are typically managed by a homeowner’s association (HOA), responsible for paying for the upkeep of common areas and landscaping and any expenses related to security or maintenance issues.
So when you buy a condo, you get all the benefits of owning your own home but with a lower monthly cost.
Condos are also more stable than single-family homes and have proven to be more resilient during economic downturns.
It’s essential to do some research before you make the decision, though, so here are some things to consider:
- What kind of return on investment can I expect?
- How much time will I have to spend managing this property?
- Will I have enough money set aside for repairs and maintenance?
- How will this affect my ability to buy another property in the future?
Are Condos a Good Investment?
The popularity of condos has grown significantly over the last few decades, especially among young people looking for an alternative to renting an apartment or buying a single-family home.
The question of whether condos are a good investment often comes up. The answer is yes, and no. Many other factors need to be considered before deciding to buy a condo.
There is no doubt that condos have become one of the most popular real estate investments in Canada over the past few years.
The flexibility of condo ownership is especially appealing to investors who want to diversify their portfolio with multiple properties that allow them to grow their wealth while living comfortably in one location.
Buying an apartment or condo unit can be a great way to enter the world of real estate investing. You don’t need much money upfront to get started.
Condos are often seen as an excellent investment because they tend to appreciate value at the same pace as real estate.
That means if you buy a condo for $100,000 today and sell it in 10 years for $150,000, you’ve made a solid profit — especially compared to single-family homes.
What Is Your Primary Reason for Buying a Condo?
Buying a condo is a significant decision. You need to be sure that you are making the right choice for your future.
If you’re interested in buying a condo to rent out or use as an income property, you may wonder what your primary reason for doing so is.
The primary reason for buying a condo is comfort. When you buy a condo, you will be able to enjoy the benefits of living in an apartment without having to deal with any of the issues that can come up when you live in an apartment.
The following are some other reasons why people choose condos as opposed to other types of properties:
Buying A Condo Vs. Renting
Buying a condo for investment purposes is one of the best decisions one can make. Condos are generally more affordable and considered the entry-level investment before moving into single-family homes. Condos tend to be easier to manage and maintain because you usually have to maintain the inside of your unit while everything outside is managed by the condominium corporation as common elements/shared facilities.
Some people choose to rent a condo instead of buying because renting a condo is sometimes cheaper than buying one. It’s also much cheaper than buying a house which includes higher initial costs, higher taxes, higher maintenance and repairs over time.
Most people prefer owning their home over renting if they can afford it. Mainly because it allows them the opportunity to customize home in whichever way they like without having potential issues with the landlord.
Owning Condos for Rentals
Many people are choosing to rent out their condos instead of selling them. Owning condos for rentals is a lucrative investment.
You can purchase a condo in any city and rent it to make money. The key to success in this venture is to buy the right condo and manage it properly.
Condos are perfect for investors because they pay for themselves with rent each month. Most condos are rented long-term, so you don’t have to worry about finding new tenants each year.
Moreover, you need not worry about maintenance or repairs as the association usually takes care of it (if there is one). You can also save money by using appliances that are shared with other owners in the building.
Buying A Condo For A Vacation Home
One of the reasons to invest in condos is by buying them as vacation homes. This will give you somewhere nice to go when you want to get away from work or relax after a long day.
Secondly, many people who invest in condos do so as vacation homes. Condos are often located in popular vacation destinations, and if the property is located near a beach or golf course, it may be easier to rent out the condo while you are not using it.
In addition to being an investment opportunity, a vacation home can provide extra monthly income.
Do Condos Appreciate In Value?
Condo prices have increased over the past few years, but the returns have been uneven.
In Toronto and Vancouver, for example, condo prices have increased by more than 50 percent since 2011.
The main reason that condos tend to increase in value over time is that they are more affordable than detached homes. As demand grows for affordable housing options, the cost of buying a condo will also rise.
Redfin reports that in February 2021, about 41% of condos sold for more than they were initially listed for, up from 24.9 percent the year before.
But while condo prices may be increasing overall, there’s no guarantee that your particular unit will increase in value or even hold its value over time.
This depends on several factors, including how well-located it is and how much demand there is for units of similar size in your building.
Condo values also tend to increase as time passes because they appreciate at a rate faster than that of single-family homes. This is due to their relative scarcity compared to single-family homes and their ability to generate rental income for their owners.
What You Should Know When Buying A Condo
Buying a condo is a significant decision. Condos are a great choice if you like to be close to the buzz of city life but want your own space and privacy.
The good news is that condos offer many advantages over single-family homes, such as lower maintenance fees and the convenience of having so many amenities on-site.
But before you dive into the purchase, there are a few things you need to know about condos.
Condo Association Fees
A condo association comprises people who own units in a building or complex. The association has specific responsibilities and duties that it must carry out for the benefit of all members, including paying for repairs, insurance, and other expenses that come up during ownership.
One of these costs is called an association fee. This is usually paid monthly by each owner in their unit.
In some communities, these associations can be significant and may include several buildings within a single complex. When you purchase a condo, you must pay an annual fee based on the size of your unit and other factors.
It’s usually based on square footage or some other factor related to the cost of running the building; however, it can also be decided by a majority vote within the association’s membership.
Certain Restrictions
In addition to paying condo association fees, you will be subject to certain restrictions. You cannot make significant renovations or alterations without permission from the board, or you may face fines.
For example, if you want to paint your kitchen cabinets, you must first consult with your homeowner’s association before proceeding.
With these points in mind, it is essential to remember that buying a condominium is not like buying a house. Many factors are involved in making this decision, which should not be taken lightly.
Financing Difficulties
Condos are not as easy to finance as single-family homes. Because of their smaller size, condos can be more difficult for lenders to appraise than more significant properties.
In addition, some lenders may not be willing to lend on condos because they don’t have enough experience with them and are uncomfortable with the risk involved in condo lending.
Because of how condominiums are financed, banks often have difficulty determining how much equity you have in the property, making it difficult for them to lend money to your condo.
That means you’re more likely to be turned down for a traditional mortgage or equity line of credit than if you were buying a free-standing home.
If you’re buying a unit with an existing mortgage, that may not be much of a problem because lenders will look at your income, other assets, and the condo itself when deciding whether or not they’ll give you money.
But if you’re looking at purchasing one without an existing mortgage, you must have enough cash on hand so that banks or other financial institutions will accept your offer.
How to Invest in a Condo?
Condo investing is a great way to make money. Condos have increased in value over the last few years and are still on the rise. Many people are looking to invest in condos but may be hesitant because of how much work it takes to manage a condo.
If you’re looking for a simple way to invest, look no further than a condo investment.
Investing in a condo is easy when you take the time to do your research and find the right property. Here are some tips for finding that perfect investment condo:
- Find a Great Location
- Invest in a condominium that offers a high return.
- Know Your Market
- Learn HOA rules and condo fees.
- Perform an examination.
- Utilize the services of a real estate agent.
Let’s discuss them in detail.
Find a Great Location
The location of your condo will have an impact on its value. If you’re looking for an investment property, finding one in a good area will help you make money down the line.
The more desirable the neighbourhood is, the more likely people will want to live there — your condo will be rented out more often.
A great area also means that property values will go up over time, which means that you’ll be able to sell your condo for more money than if it were located in an undesirable area.
Invest in a condominium that offers a high return
Before making your purchase decision, you need to know what other investors think about your chosen location.
When choosing an investment property, consider the resale condo value and the rental income it may generate.
Find out how many people will live in your unit and what nearby amenities are available. A common area with pools, gyms and other amenities can increase the value of your team.
You can also ask friends who already own condos in this area how they feel about their investments and whether they think they will appreciate further over time or not.
Know Your Market
There are different markets across the country, so you’ll want to research where the condo market is doing well and where it might be struggling. Check out local newspapers and real estate websites for information on your area’s recent sales prices and rental rates.
Learn HOA rules and condo fees
If you’re considering buying into a development governed by an HOA (Homeowners Association), make sure you understand the rules and regulations governing the condo building before buying in.
These may include restrictions on pets, parking requirements, and even how much time residents can spend on their balconies or patios.
Perform an examination.
Before purchasing a condo, inspect it by a professional inspector to ensure it’s structurally sound, has no leaks or mould problems, and all appliances work correctly.
You want to ensure that this is where you want to live for years to come — even after all those maintenance costs!
Look at the roofline and windows for signs of damage or leaks; check out appliances like furnaces, water heaters, and air conditioners; examine walkways for cracks, and check out paint jobs for peeling paint or chipped wood trimming.
This will also help determine whether any maintenance issues need immediate attention before they become problematic later on down the line.
Utilize the services of a real estate agent.
One of the most important things you need to do before buying a condo. A real estate agent will help you find the right property and negotiate with sellers.
They also guide you through the entire process and ensure that all your questions are answered.
Investing in Condos vs Houses
Buying a single-family home is a big decision. You’re responsible for your mortgage, taxes, and upkeep on your property.
But if you want to live in a larger space or are looking for more flexibility and freedom of choice regarding where you live, consider buying a condo/pre-construction condo.
The key differences between condos and houses are explained below.
Costs: Condos can be more expensive than houses because they often have more amenities than homes.
However, the price of condos is usually lower than that of houses because fewer expenses are involved in maintaining them than single-family homes. For example, there are no lawns to mow or snow removal costs to worry about when living in a condo building.
These tasks fall under the responsibility of the community association or homeowner’s association (HOA).
Repairs: Because condos are part of an entire building rather than one home at a time, restorations tend to be more accessible and less expensive because other units in the building share similar needs.
For example, if one unit needs new carpeting and another team have damaged drywall from water damage from a leaky pipe, both units can get their carpeting replaced simultaneously.
Renting: If you rent out your condo, it’s likely that your landlord will take care of many of the repairs and maintenance issues that come up during your tenancy.
If you own a house, however, you’ll be responsible for ensuring everything works correctly and maintaining it over time (although there are some exceptions).
Taxes: Taxes on rental properties income from a condo tend to be lower than taxes on rental income from a single-family home. This is because condos are treated as personal property (like cars or furniture) rather than real estate for tax purposes.
As long as your condo is considered your primary residence and you don’t claim it as an investment property, you won’t have to pay capital gains taxes when you sell it later down the road.
FAQs
How Much Do Condos Appreciate Per Year?
It really depends on the location and the age and size of the condo.
Generally speaking, condos in desirable areas or new buildings will appreciate at a rate higher than the average rate of inflation, while older or less desirable condos will appreciate at a lower rate. And smaller condos will tend to appreciate more slowly than larger condos.
So it’s impossible to give a definitive answer without more information about the specific condo in question. But on average, condos are estimated to appreciate by about 3-5% per year.
Do Higher Floors Have Fewer Bugs?
There are a few reasons why higher floors might have fewer bugs.
First, pests tend to congregate near the ground, where there is more food and moisture.
Second, taller buildings tend to have better ventilation than shorter ones, which can help prevent infestations.
Finally, higher floors are often cleaner and less cluttered than lower ones, making them less appealing to pests.
Of course, these factors will vary from building to building, but overall, higher floors tend to be less hospitable to pests.
How Long Should You Live in a Condo Before Selling?
It depends on a number of factors. You’ll need to weigh your own personal circumstances to make the best decision for yourself.
That being said, here are a few things you may want to keep in mind as you’re considering whether or not to sell your condo:
1. How long have you lived there?
If you’ve only been in your condo for a year or two, it’s likely that you won’t get much of a return on your investment if you sell now. On the other hand, if you’ve lived there for ten years or more, your condo is probably worth significantly more than when you first bought it. So selling sooner rather than later may not be a good idea.
2. Are you comfortable with the market?
The real estate market can be unpredictable, so it’s important to make sure you’re comfortable with whatever decision you make. If you’re not sure whether now is a good time to sell or not, you may want to consult with a real estate agent to get their be a wise choice.
3. What is the current market like?
The real estate market goes through ups and downs, so it’s important to pay attention to trends before making a decision about selling your condo. If prices in your area are on the rise, it may be a good time to sell. But if the market is down, you may want to wait a while longer.
4. Are you prepared for the costs of selling?
Selling a condo can be expensive, so you’ll need to make sure you’re prepared for the costs involved. These can include things like real estate commissions, legal fees, and closing costs. If you’re not sure you can afford these costs, selling may not be the right choice for you.
5. What are your long-term goals?
Are you planning on moving soon? If so, selling your condo may make sense. But if you’re planning on staying in your current home for the long term, it may be better to keep your condo and rent it out.
These are just a few things to keep in mind as you’re deciding whether or not to sell your condo. Ultimately, the decision is up to you and should be based on your own personal circumstances.
What Should I Look for When Looking at a Condo?
There’s a lot to think about when you’re looking at condos! Here are some things to keep in mind:
Location is key.
You want to make sure the condo is in a location that you’ll be happy with long-term. Consider things like accessibility to public transportation, schools in the area, and crime rates.
Size and layout.
Think about how much space you need and what kind of layout you’re looking for. Do you want a spacious open-concept unit or something cozier?
Amenities.
Many condos come with great amenities like pools, fitness centers, and community rooms. Make sure the condo has amenities that are important to you.
Maintenance fees.
Every condo has monthly maintenance fees that go towards the upkeep of the building. Be sure to factor this into your budget when considering a condo.
Condos can be a great option for those looking for a low-maintenance housing option. Just be sure to do your research and choose the right one for you!
Which Is Better, Apartment or Condo?
Whether an apartment or condo is better for you depends on a variety of factors, including your budget, needs, and preferences. Here is a brief overview of apartments and condos to help you decide which one is right for you:
Apartments are usually less expensive than condos and offer more flexibility in terms of leases. If you are looking for a short-term rental, an apartment may be the better option. However, apartments can be noisy due to thin walls and close proximity to neighbours.
Condo ownership often comes with amenities like a pool, gym, and underground parking. Condos are also generally closer to downtown areas than apartments, which can be a plus if you work downtown or simply enjoy being close to the action. On the downside, condos are usually more expensive than apartments and can have strict rules regarding noise and renters.
The best way to decide which type of dwelling is right for you is to consult with a real estate agent who can show you a variety of options in your price range. You can also search online listings to get an idea of what is available in your area.
Final Thoughts
Condos are one of the hottest investing opportunities around right now. They’re currently in second place only to houses and the usual investment options.
New condominiums continue to sprout up across the country every year. These new condos offer a great return on investment, primarily if located in desirable areas such as New York City or Toronto.
Condos are also attractive options for investors because they are often a more accessible and palatable alternative than single-family homes. With so much money being poured into these properties, it is wise to take advantage of this opportunity.
So if you want a safe and lucrative investment, condos may be worth looking into. Just make sure you do your homework and research before making any commitments.
