Is It a Good Idea To Buy a Condo To Rent Out (Ultimate Guide)
Is it a good idea to buy a condo to rent out? Yes, buying a condo to rent out can be a good investment opportunity. It can provide a steady source of passive income, diversify your investment portfolio, and take advantage of appreciating property values and it is important to consider various factors such as location, market conditions, maintenance costs, and legal requirements before making a decision. Conducting thorough research and consulting with a financial advisor can help you determine if buying a condo to rent out is a wise investment for your specific circumstances.
On my site RobinEsson I write about 100s of ways on how you can make money with different things. And this article about “Can I Rent Out My Condo And Make Money” is one of them.
So let’s start explaining what a condo is and how you can rent it out to make money.
What Is a Condo?
Let’s start with the most basic question: what is a condo?
A condo, short for “condominium,” is a private residence within a larger complex or building. Generally speaking, the owner owns the interior of their condo as well as the exterior walls’ structural components.
As a building has multiple condos, the owners jointly own the common areas, such as garages, gyms, elevators, outside hallways, and pools, within a community. Although most condos are found within a high-rise building, you can also find detached condominiums in some markets!
Investing in condos is both rewarding and convenient. Unlike an apartment or house, you only need to take care of the interior of a condo: everything else is taken care of by professional management companies.
Is It a Good Idea To Buy a Condo To Rent Out
is it a good idea to buy a condo to rent out? Yes, buying a condo to rent out can be a good investment for those looking to diversify their portfolio and generate passive income. However, like any investment, there are both pros and cons to consider before making a decision.
Pros:
- Steady income: A well-chosen condo can provide a steady stream of rental income, helping you meet your financial goals and offsetting any mortgage payments.
- Appreciation: Real estate is a long-term investment and over time, the value of your property can increase, providing you with the potential for capital gains when you eventually sell.
- Tax benefits: Owning rental property can provide various tax benefits, including deductions for mortgage interest, property taxes, and other expenses.
- Professional management: If you choose to use a property management company, they can handle the day-to-day tasks of renting out your condo, freeing up your time and reducing stress.
Cons:
- Upfront costs: Buying a condo, even as an investment property, can come with significant upfront costs, including the purchase price, closing costs, and renovation costs if necessary.
- Maintenance costs: Owning rental property comes with ongoing expenses, such as property taxes, insurance, and maintenance costs. These costs can add up and eat into your profits if not properly managed.
- Market fluctuations: Real estate markets can be volatile and fluctuations in demand can affect rental prices and the overall value of your property.
- Legal requirements: Owning rental property comes with a variety of legal responsibilities and requirements, including fair housing laws and zoning regulations. It’s important to understand these requirements and comply with them to avoid any legal issues.
Before making a decision to buy a condo to rent out, it’s important to consider your long-term financial goals, assess the local real estate market, and consult with a financial advisor. Thorough research and careful planning can help ensure that this investment strategy is a wise choice for your specific circumstances.
Is there more things I need to know?
Yes when you are discussing the idea “Is it a good idea to buy a condo to rent out” there are a few more things that is good to know and learn about so here are some additional interesting points to consider when deciding whether buying a condo to rent out is a good idea:
- Location, Location, Location: The location of the condo is one of the most important factors to consider when making a rental property investment. Look for a location with strong demand for rental properties and a stable, growing local economy.
- Rental demand: Consider the demand for rental properties in the area, as well as the type of property that is in high demand. A well-located, well-maintained condo can be an attractive option for renters, especially in areas with high housing costs or limited rental options.
- Homeowner associations: If you’re considering buying a condo, be aware that many condos come with homeowner associations (HOAs), which can have rules and regulations that may impact your ability to rent out the property. It’s important to thoroughly understand the HOA’s rules and regulations before making a purchase.
- Return on investment: Calculate your expected return on investment (ROI) to determine if buying a condo to rent out is a good financial decision. This calculation should take into account the upfront costs, ongoing expenses, rental income, and potential appreciation of the property.
- Timing: Timing is important when investing in real estate, including buying a condo to rent out. Consider the local real estate market, interest rates, and overall economic conditions when making a decision to buy.
By considering these points, you can make a more informed decision about whether buying a condo to rent out is a good investment for you. Additionally, it’s always a good idea to seek the advice of a financial advisor to ensure that this investment aligns with your long-term financial goals.
Can I Rent Out My Condo And Make Money?
Absolutely yes! You can easily make money by renting out your privately-owned condos. You can not only double, but can also triple your earnings by renting a condo to the general public!
Nowadays, buying a condo to rent out is considered one of the best real estate investments and there is no question that is it a good idea to buy a condo to rent out to give you a better perspective, below, we have compiled a list of reasons to rent out condo units:
Low Costs, High Demand
Not just condos but all real estate properties appreciate over time. Therefore, real estate is considered a good investment. If you have got yourself a condo, the demand will always be sky high, meaning you can make a lot of profit by renting your condo out!
Over the past years, rental demands for condo units in both big cities and downtown areas have been on a surge. Moreover, by renting your property out, you can also avoid paying the ludicrous amount of condo association dues, condo fees, and any additional fees, as your tenant is responsible for covering these costs.
Future Value
Compared to suburban homes and apartments, condos are more liquid when it comes to resale demand. So, if you think being a landlord is not convenient for you, you can easily rent or resale your condo in the near future!
One of the best things about a condominium is that it’s easier to price. You can easily calculate the cost associated with a condo and then rent it out to make a handsome profit.
Better Management & Security
Are you wondering, are condos good rental properties? Well, if you don’t want to worry about the upkeep, renting out a condo is the best option for you. Condominiums are cheaper and easier to maintain compared to townhouses as you only have to worry about the interior; professional management companies will handle everything else.
If you rent out your condo, you don’t even have to worry about the interior of your condo – as long as you have responsible tenants. Your tenants will be responsible for taking care of your condo, including paying maintenance costs, insurance, and repairs costs.
In general, property developers offer better security and management for condo owners. In addition, the electricity, water, and amenities are well-maintained to keep up with standards. This makes it easier for you to rent out a condo with a higher profit margin!
How To Make Money Renting Condos Out to People?
As the demand for condominiums rises as time passes, it’s not actually that hard to rent out your condo to other people. Condos are nothing if not flexible. As long as you are following the laws associated with condos, you can rent out your property to anyone.
Here’s a step-by-step guide explaining how a condo owner can rent their property to general people:
Step #1 Consider the Laws and Restrictions
Before you find a tenant, make sure you know all the laws and restrictions related to condominiums. First of all, ensure your condo building allows rentals. In some areas, the rental periods must be around 30 days long, while others require a full-year rental period.
If your condo building allows rentals, you need to learn about the landlord & tenant laws, rights and regulations. The laws will vary depending on your condo building and geographical location. So, you must find resources specific to your country and region!
Step #2 Determine a Price
Next, you’ll need to determine the rental price. You need to set the right rental price. If you charge too much, you might not be able to find good offers. Alternatively, if you don’t charge enough, it’ll affect your profit margin.
There are some pricing strategies that you can select to set the right rental price. First of all, calculate the condo costs (maintenance costs and repair costs). Afterward, add up to 30% for a profitable return. It would be best to consider advertisement and marketing costs while setting a rental price.
Step #3 Find Qualified Tenants
This step is quite important. Even if you set the right rental price, you might not be able to get qualified tenants – if you don’t know where to look! To help you out, below, we have mentioned some of the best places to get potential tenants for your condos!
It’s not recommended to rent out your condo to the first person who contacts you! Instead, create a shortlist and schedule interviews. Even if you’re renting out your condo, you are still the owner of the property. So, make sure you are selecting qualified and responsible tenants.
Step #4 Sign a Contract
Once you select a tenant, you’ll need to sign the contract or lease – a legal document summarizing your relationship and obligations to the tenant. Your lease will contain everything: from rental price to tenant laws.
That’s it! Once you sign the lease, you might need to share its copy with the board. Afterward, you will get the agreed-upon rent after each month or year!
Different Ways to Rent Out Your Condo
It’s recommended to advertise your condo using online platforms. With this approach, you’ll be able to target more people, increasing your chances of getting a qualified tenant faster!
Here are some of the most popular online platforms that allow you to advertise condos:
How Much Money Can You Make Renting Out a Condo?
Renting out a condo can be a great way to generate passive income and increase your financial stability. However, the amount of money you can make will vary depending on a number of factors, including the location and features of the condo, as well as the local rental market.
To give you a general idea of the potential income from renting out a condo, it’s not uncommon for condo owners to make around $400 a month, or $4800 per year. However, it’s important to keep in mind that this is just a rough estimate, and actual rental prices can vary widely depending on the specific circumstances of the property.
Location plays a key role in determining the rental price of a condo. Properties located in high-demand areas, such as bustling city centers or popular tourist destinations, tend to fetch higher rental prices due to strong demand. On the other hand, condos in less desirable locations may command lower rental prices, but can still be a good investment if they offer other advantages, such as lower cost of ownership or lower property taxes.
The features of the condo itself can also impact the rental price. For example, condos with modern amenities, such as high-end appliances, luxurious finishes, and scenic views, tend to command higher rental prices compared to condos with more basic features. Additionally, the condition of the condo can also play a role in determining the rental price, as well-maintained properties with updated finishes will typically rent for more than properties that need repairs or upgrades.
It’s also important to consider the local rental market when determining the potential rental income from a condo. For example, cities with strong job markets and growing populations may experience higher demand for rental properties, which can drive up rental prices. On the other hand, areas with high levels of competition among rental properties may result in lower rental prices as landlords try to attract renters in a crowded market.
Success Story
There are many success stories of individuals who have made substantial income from renting out condos. For example, Andries helped an investor buy a condo complex called Sandollar Condos last year. The complex consists of 15 units in two buildings, 9 in one and 6 in the other. The deal was a tax incentive buy and hold deal with 30% down payment.
The condos are located less than two blocks from Biloxi Beach and have very nice finishes, with 2 beds and 2 baths, 1250 sq ft +/- and a 200 sq ft covered balcony overlooking the pool. The units are currently occupied and rent for $800 to $890 per month. The monthly expenses include elevators, phone, pool and lawn, water, insurance, taxes, and management, totaling $6,446.75. The debt service is $4298.63 and the total payment and expenses is $10,745.38, resulting in a monthly cashflow of $1,914.62.
The property also qualified for Gulf Opportunity Zone tax benefits and the condos appraised at around $250,000 when they were built in 2007-2008 but are currently valued at around $100,000 each.
Is It Worth Buying a Condo
If you want to invest in real estate, you have unlimited options. You can get condos, apartments, and even houses. So, it’s reasonable to ask, is it a good idea to buy a condo to rent out? And are condos a good investment?
Well, the short and simple answer is, YES! Investing in condos has its own pros and cons. First of all, condos are relatively more budget-friendly than other real estate properties. Plus, you don’t even have to worry about maintenance and repair costs.
That being said, there are still some downsides to buying a condo. For instance, you will need to pay a monthly HOA fee for maintenance and security. In addition, as different condo owners (within a specific building) are linked together, the cost will fluctuate if some people struggle to make ends meet!
FAQ
How Do I Rent Out My Condo
Rent them out on any of these platforms Craigslist, Zillow, HotPads, Trulia and Airbnb
Can I Rent Out My Condo After Purchase
Yes you can!
How Much Should I Rent Out My Condo For
Monthly rent should roughly be about 1-2% of the property’s value, but do your research!
Can I Rent Out My Condo On Airbnb
Yes you can! Airbnb is a really good site that you can use to rent our your condo.
Can I rent Out My Condo Without Agent
Yes! Use one of these sites Craigslist, Zillow, HotPads, Trulia or Airbnb
Conclusion
Is it a good idea to buy a condo to rent out? Yes, renting out condos, apartments and houses is one of the best things you can do to make money. So if you are owning a condo that you rarely use and you feel that you could rent it out to get some extra cash I hope this article helped you decide if it is something you want to do or not.
If you want to continue on your money making journey I have more guides regarding different ways to make money on my site RobinEsson. If you have experience with this kind of business, leave a comment and tell me more about it.
Related:
