There’s no one way to invest in real estate. Buying and selling properties, like many other things in life, depends on what goals you have and what your personal preferences are. Some real estate investors prefer landed homes and some love investing in commercial property. Others like buying multi-family units as rentals to supplement their income.
Buying real estate is a complicated process that takes time and research. You can buy a great house on a horrible street that turns out to be a bad investment. On the other hand, you can buy in an up and coming area before floods of people move in and push up prices. Capital appreciation (when prices go up) is always a fantastic bonus for property owners. Indeed, buying condos is one of the best ways to capitalize on development plans.
What’s a Condo?
First of all, let’s set some lingo straight. There’s often confusion around what a condo is versus an apartment. In general, a condo (short for condominium) is a unit in a multi-unit building that’s sold to individual property buyers. The buildings often have common areas and other facilities like gyms or pools that are shared. Most condominiums have associations that help manage the larger property and deal with trash removal, maintenance, and other upkeep. They’re paid for with monthly or annual fees paid for by each condo owner.
Why People Love Condos
People are drawn to condos for several reasons. Not everyone wants a lawn to mow on the weekends or have to worry about the condition of the roof. Condos offload most of the hassle of homeownership to other people. Condo ownership is great for people who have busy lives and just want to come home to a calm place that suits them.
Another thing many people love about condos is that they’re newer than a lot of landed properties. That means they have fresher designs and newer appliances than in most older homes. Condos with open floor plans are typically highest in demand. An open floor plan has a drastic effect on the flow of a property and makes smaller spaces feel bigger. That’s a critical benefit when you’re dealing with smaller total square footage. In condos with open floor plans, you can watch television as you cook dinner on your marble countertop or carry on a conversation with guests while you set the table. The living space seamlessly melds into other parts of the home.
Condos as a Financial Investment
There are certain things every home buyer should keep in mind when they think about purchasing a condo. First, the price of condos has much less to do with the interior than landed homes. What you do to upgrade the kitchen or bathrooms will have much less influence on the condo’s price. So, avoid making upgrades solely based on what you think you’ll be able to get for it in the future. There’s very little return on investment with interior upgrades.
Second, when you buy a condo, you’re buying into the development. You need to think about what the building will be like twenty or thirty years down the road. Sure, everything looks nice and new when you buy it, but drive around and look at some older buildings in the area. What’s demand for older condos like? How has their condition held up over the years?
You need to buy a condo in an area that has something going for it. Perhaps it’s in a part of a city that’s been designated as a new development zone. Maybe new retail locations are being built in the area. You can find out all of this information by attending local development meetings held by the local government. If you can buy into a condo development in its early stages, then it could mean a big payday when it comes time to sell.
Condo Owners Need to Stay Engaged
A condo can be a great investment if its owners stay engaged with the association. In a condominium development, the association usually votes on how dues are spent to improve the property for everyone. Whether it’s landscaping, a new sauna, or painting the exterior, you can have a say in how things go in your building. Condo owners should be active in their associations because otherwise, you’re letting other people dictate how your investment fares. If you’re actively involved, you have a say on how thousands of dollars a year are spent on your property.
Owning a condo in a nice area is a great investment. On top of that, you’ll love living in it if that’s your plan. Take the time to research what’s going on in the area and how condo prices have fared in the market. Get ahead of the trend and you can see a great return on your money.