I strongly discourage you from buying any property with negative cash flow.

For a property to be attractive, IMO, you should be able to cashflow the property with a 15-year fixed loan. Be sure to have allowances in your plan for maintenance costs, HOA dues, PITI, vacancies, advertising expense.

Duane

Originally posted in thread: 586

Buy a house instead, even in a lower income area.

Condos are VERY risky...the main reason being that, generally speaking, HOUSES depreciate, except in high-interest times, but THE LAND THE HOUSES SIT ON appreciate.

When you buy a house on a piece of land, the "house" you think will appreciate in 10 years. Actually, the land appreciate more than the house, although you don't know that, since you buy or sell them together.

When you buy a condo, you are buying part of a structure. That part can be affected by so many things beyond your control....like neighbors, the home association, structural damage caused by others, etc. You are not, remember, buying any land. When you buy a condo, ALL you are buying that part of a structure, so anything that affects it is critical to its value.

When you buy a house on a piece of land, what happens to the structure of the house is more under your control. And even if the house's structure suffers damage, the value of the land is unaffected by that.

So...it's far less risky to buy a house on a piece of land as an investment than a condo.

(P.S.....It's also more difficult to sell a condo than a house. Sure, they sell. And sure, someone will always know someone who sold one quickly. But there's just a far smaller market for buyers of condos than buyers of houses.)

(A.P.S.....Don't underestimate the cost of the homeowners' association fee. This is beyond the condo owner's control. Sure, it provides a value. But when you own a home, if you want to pull back on maintenance costs for a month or two, you can. You have no suchoption in a condo. Also, you have no control over what the association pays for its grounds maintenance, etc. When you own a home, you can shop around and hire a less expensive lawn service, for example.)

Originally posted in thread: 586

The only thing you listed is negatives for condos and positive for houses

How about the other way around

- As a condo owner you don't have to worry about removing the snow. Big deal for older couples that don't have the energy to shovel anymore. The snow storm ended, and you go out and your area is nice and cleaned, already taking care of courtesy of the homeowner association

- You don't have to worry about taking care of the garden. Once again a big deal if you don't have the time to cut the grass and plant flowers. With today hectic life, that could be a big deal

- As a condo owner, you don't have to worry about maintenance the outside walls of your place. That's a big deal when your roof brakes and you don't pay for repairs, for instance... Owing a house you are responsible for ALL repairs done to your property

There are other advantages...

The bottom line is that there are advantages and disadvantages in owning a condo vs. a house. If you don't care about being totally responsible for all repairs done in your property, if you don't care about taking care of the gardens, if you don't care about removing the snow from your property, then a house is your best bet, otherwise wooing a condo is not that bad of a deal. Again, depends what you're looking for

Originally posted in thread: 586

Are you open to something different? Find yourself a commercial realtor and look into commercial properties. The down payment is usually higher, but the cash flow tends to be much better.

Originally posted in thread: 586

How did you arrive at rule of 15 yr fixed mortgage to manage cash flow? It is impossible to find a property at this price in our area(Long Island NY)

Raj

Originally posted in thread: 586

That is my own rule of thumb. I should have mentioned that I would personally finance with a 30-year fixed, but be able to pay at the 15-year rate (after all allowances mentioned above, like vacancies, maintenance, etc). This offers some margin of safety in case rents drop.

Again, these are my own rules of thumb. You are free to make up your own. Lots of people buy property with negative cash flow, but not me. If you can't find a property with decent cash flow, buy some nice blue-chip stocks or REITs.

Duane

Originally posted in thread: 586

You'll be sharing a wall with another unit, hope you have nice neighbors. You will also have a homeowners association to work with, have heard horror stories about them. Before buying, talk to neighbors living around you. Talk to more then just one or two.
All the money, savings or value will mean nothing if you have people living around you that are problems. Visit the place at different times of the day.

Originally posted in thread: 586

How about investing in pre-construction condo unit? At least with the new construction, I will avoid extra repair/fixing costs. However downside is paying high property taxes for the new unit.

Raj

Originally posted in thread: 586

You'll be sharing a wall with another unit, hope you have nice neighbors

A friend of mine who has a house with 3 acres land had major problems with his neighbor, guess about what? About a dog...
John, you're the perfect example how some facts can be twisted to prove your point. To me, condo or house, if you have a bad neighbor, you'll have to deal the same way

Originally posted in thread: 586