I suggest looking at several condos, if you can find them, and checking the rent you are likely to receive versus the expenses you will difinitely pay: condo association monthly fee, taxes, repairs, liability insurance.
Then, look at a multi-family property that fits within the price range you have in mind. Your expenses will included taxes and insurance.
Then, compare the expected rate of return on the condos against the expected rate of return on the multifamily property.
If your condo is empty, there is no income on it. If you have a four-plex, for example, and you are lacking one tenant, you are still bringing in income.
Long term, you are probably best off with a multi-family property because you are able to calculate the expenses on a long term basis. With a condominium, you have no idea where the condo fees are likely to go. Usually, that direction is up. And if you purchase condos in distressed buildings where there are numerous foreclosures and short sales, that means large numbers of owners are not paying the condominium fees.
Those fees are necessary to cover the expenses of running and maintaining the condo. If you are an owner, you may find your assessments rising because someone has to pay the condo fees. Those who are committed to the condo are the most likely to continue payment because they know that if they don't the value of their investment will continue to fall.
Your multi-family property has fixed expenses: taxes, insurance, and reserve for repairs. Eventually, you will have to fix things, but if you maintain a steady reserve year after year knowing that that money will be needed over time, you are likely to make a profit on your investment.
If you purchase for cash, your cash on cash returns are likely to be lower, and you will lose the tax advangages of leverage. If your credit is sufficient, you may want to purchase using a mortgage -- typically you will need to put at least 30% down -- because your cash on cash return, in terms of percentage, is likely to be higher.
Marc Jablon, The Jablon Team
RE/MAX Complete Solutions