Property Q&A in Union City>Question Details

ÃŒrent, Home Buyer in Union City, CA

buy 2 rental condo at $ 150,00 each, rent 1300 each or 1 SFR at 330,00 rent 1600-1800. which one is better

Asked by ÃŒrent, Union City, CA Sun Jul 17, 2011

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You will have to run the numbers and see which works best for what you are trying to do. You should also take into consideration whether the areas are comparable, associated fees with the different types of properties, likely-hood of appreciation, and schools.

You can use the following link to help run your numbers, click on the Real Estate Investment Analysis Spreadsheet link:
http://www.sunilsethi.com/Calculators.htm

-Steven Fong
Realtor
Sunil Sethi Real Estate
Web Reference: http://www.sunilsethi.com
0 votes Thank Flag Link Tue Jul 19, 2011
You really need to sit down with an accountant and have them run different scenarios with you. Make sure you talk to an accountant familiar with investment properties – I can recommend one if you wish.

Every investor is different, every one has different risk profiles, different reasons for investing, expectations and so on. An accountant can run models for you so you can see the potential cap rate, immediate tax relief, long term tax benefits, operating costs and more.

You also need to make sure you have realistic potential rent numbers when looking at investment properties: too many potential investors are “optimistic” when running the numbers and end up with a rude surprise.

As an owner of investor properties, I can vouch for the fact that ongoing maintenance can be very costly for single family detached homes. With condos, even though you pay a monthly HOA fee, you essentially “pay as you go” for maintenance so that you are not saddled with an unexpected bill for a roof or other large ticket item. You don’t have to worry about exterior maintenance, landscaping and so on.

Also make sure you closely examine whether or not you want your properties managed for you: this also has to factored into your costs.
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0 votes Thank Flag Link Sun Jul 17, 2011
Hi I'rent, with the condos you have HOA to pay and you do not own the land...So in my opinon I think owning the SFR is a better investment. Even though 1300.00 twice is more rent coming in, when you deduct the HOA the 1800 will be more....Dawn
0 votes Thank Flag Link Sun Jul 17, 2011
It certainly will depend on your personal investment plan and preferernces.

All things being equal, as to location, condition and desirability, and provided the condo HOA aren't through the roof, and for purposes solely for rental and not as a personal residence....

Also....assuming that the condo complexes have room for rentals (some complexes have strict rules of % available for rentals)

There are some advantages to condos: if one unit becomes vacant, there is still income from the other unit. Additionally, with condos, there will likely be less maintenance issues on the outside and common areas since the HOA takes care of that. Whereas a tenant for an SFR may not always be counted on to maintain the yard, etc.

However, do note that typically, SFR values appreciate better than condos...so if your intent is to sell in a few years, you may find that the SFR may have better return on your investment.
0 votes Thank Flag Link Sun Jul 17, 2011
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