With the rise in cost of living, everyone is in a quest for financial freedom. As much as our spending habits will define the kind of financial freedom we get, savings alone is not enough. Investment and diversification of incomes is the key to achieving our financial goals. There are many investment channels that one can delve into and one of them is condos. Condos have been fairly common for entertainment and currently they are also used as investment channels and that is why companies such as Peter & Adelaide are thriving. As much as it may be a good investment, it is good getting into the basics of the investment. Some of the things to keep in mind before considering a condo as an investment include:
The expense that you incur in an investment is what will determine your returns. For a condo, some of the expected expenses include: real estate taxes, insurance, and maintenance and repairs. Apart from that, you may also get occasional expenses such as legal fees in case of an eviction, advertising costs when you are looking for tenants, and repair costs in case of any damages. It is important to figure out the costs and try to balance with the returns to determine if it is an investment worth giving a try. As a rule of thumb, the expenses should not be higher than the expenses.
Condo assessment and association fees
In some cases, you may need to pay for assessment and association fees. The assessments may be periodical depending on the area and many other factors. For assessment, you will incur a cost to cover the common areas of the condominium property. An example of assessment costs may include landscaping costs, parking repairs and maintenance, paintings and building makeovers and any other expenses. They are expenses that cannot be ignored because somehow you will still face them.
Annual rent and appreciation rate
Different condos will have different rates of returns based on different factors such as the location, the make of the condo and many other factors. There are also some condos that have higher rates of returns than others. Maybe you can start by finding out if there are any nearby condos and the rates of return so that you can be able to do an approximation of the amount of rent that you are likely to receive from your condo. That will help you make a solid decision depending on how much you are expecting to get per month. You can also search for the appreciation rates of the nearby condos helping you to make an estimate of what to expect.
The demand of the condo will depend on the location of the condo. The condo will be a good investment if it is in a good location that can face high demand for example near a college or social amenities. You also need to consider the growth rate of the area to know if it is a good area.