I plan to buy property with cash, for rental only. Which is better investment? To buy a $250k new house? or buy Qty 3 of 1 bd new condo of $80k each?

Asked by Donna, Atlanta, GA Mon Jun 18, 2012

Help the community by answering this question:

+ web reference
Web reference:

Answers

9
Chuck Green, Agent, Norcross, GA
Fri Jun 22, 2012
REO homes like other homes built in that time frame may have HOA fees depending on the subdivision....you may have a challenge @ $ 800 for a 1 bedroom...
0 votes
Donna, Home Buyer, Atlanta, GA
Thu Jun 21, 2012
I am also thinking of buying foreclosed 3 or 4 bedroom single family homes bulit no older than 2000 to rent them out, in order to avoid HOA fee and rental permit limits, like some of you have mentioned. Will I have more difficulty finding tenants for a $1500 per month rent 3br , than a $800 per month rent 1br, let's say if they are all in solid locations?

Thank you for all your answers!
0 votes
Jim Olive, Agent, Key West, FL
Wed Jun 20, 2012
Vivian...
I think Chuck hit the nail on the head. Take a close look at some 3-4 unit multi-family homes. There's often more leverage in them because you don't have HOA fees to zap your profits. You can often find quads for little more than a single family home. If the rental market in Atlanta is anything like here, you can keep those apartments full 95+% of the time and take in a good rental revenue. I also agree with Diman, save some of your cash to handle contingencies that arise after you own it. Leverage your cash by getting a good loan at today's incredibly low rates. Best of luck in your endeavor...Jim
0 votes
Chuck Green, Agent, Norcross, GA
Wed Jun 20, 2012
Vivian,

It depends on where these homes and condos are located along with rental demands for the area,the costs associated with each, and of course your ability to maintain and manage the property. Another option you may want to consider would be a quadraplex in a solid location.

Chuck
Web Reference:  http://chuckgreen.com
0 votes
Priscilla Ha…, Agent, Powder Springs, GA
Tue Jun 19, 2012
Vivian it sounds like you may need some rental comps because the combination of properties you buy won't matter if they're not in an area to meet your rental income expectations..
0 votes
, ,
Tue Jun 19, 2012
Most every condo complex will have a cap on the number of investment properties allowed. You could find yourself with a property that cannot be rented if you don't do your proper research upfront.

Also, any property with an HOA can place a restriction on rentals.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing
0 votes
Diman Nyembwe, Agent, Sandy springs, GA
Tue Jun 19, 2012
Vivian,

If this is your first investment , i would encourage you to buy a 2 br 2 ba condo that has a good roomate floor plan as it rents well and easy to resale. Do your research and homework, make sure the rental cap is not met so you are able to rent. do the numbers and see that you have a reserve fund.
Once you are comfortable with the first investment, i would then encourage you to buy the house and finance 50% so you are not tying up all your money. keep some reserve and be a proactive landlord. Do not use your equity and invest long term.

Sincerely,

Diman Nyembwe
Buyer's Agent
Southern Reo
404-314-4277
dimann@southernreo.com
http://www.southernreo.com
0 votes
Joseph Finne…, Agent, Bethlehem, PA
Tue Jun 19, 2012
Hi Vivian,

Another thing to consider is vacancy rate. Using Fred's example below:

if the house goes vacant you are out $2500/month until you rent it out again. With the condos, if one goes vacant you will still have the income from the other 2 (hopefully).

Can you afford to cover the vacancy costs in the different situations?

On the other hand:

Taking money out of the equation do you want to deal with 3 tenants or 1?

If you don't get long term renters in the condos you may be dealing with finding a new tenant and rental applications 3x more.

A lot of factors fall into the decision.

Hope this is of some help.

Regards,

Joe Finnerty
Prudential Patt, White Real Estate
Lehigh Valley, PA
http://www.lehighvalleyhomesonline.com
0 votes
Fred Yancy, Agent, Woodstock, GA
Mon Jun 18, 2012
Vivian:

There is a lot to consider here. What are the costs associated with the properties: HOA, insurance, annual taxes etc.? With the codo's multiply that times three.

How much income would it generate? Let's say for example the condo's rent for $800 a month and the house rents for $2500 - subtract from that the costs associated with the properties. Which is more profittable?

With a condo you will be renting to either single individuals or a young couple with no children. With a three or four bedroom house you will likely be renting to a family with children. What type of renters would you like to have? One bedroom units are difficult to rent out.

Think of resale value~it is easier to sell a family home than it is to sell a one bedroom condo.

If you have any additional questions, feel free to call me to discuss. You may also go to my website to review articles about home ownership and investing.

Fred Yancy, Broker
Crye-Leike Realtors
(678) 799-4663
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more