10 Dec Landlords: Should You Buy a Single-Family Home or a Condo?
Many people advise avoiding condominium ownership because of all the issues with homeowners associations. However, single-family homes have many less obvious issues as well.
Here are some things to consider:
As a general rule, single-family homes typically have lower cash-on-cash returns than condominium properties. A typical deal for a single-family home has a cash-on-cash return of 3 to 5 percent, while a condominium might have 4 to 7 percent returns.
Every time your tenants leave, you’ll need to re-rent the property. This is a very labor intensive task that involves advertising, responding to inquiries, showing the property, performing a credit check, and moving the old tenant out and the new tenant in. That’s if you can find one! And even if your old tenant left the place in perfect shape, you’ll still most likely need to paint and have the carpets cleaned.
Condo units typically turn over every other year, while single-family homes typically have three to five-year leasing periods.
The biggest complaint about condominiums is dealing with HOAs and HOA fees. While HOAs can have strict rules, those rules also keep harmony in the neighborhood and stops tenants from doing some less favored things that might happen in a single-family neighborhood.
As a single-family residence owner, you will need to schedule and handle all the exterior issues — roofing, painting, landscaping — which is going to take up a lot of your time and energy. It’s much less work owning a property in an HOA — and that’s why owners pay HOA fees.
There is no clear answer on which is a better investment… let’s hear your opinions! Condo or single-family home? Post your comments below or on our Facebook page!