Real Estate & Real Estate Investing Want to Invest in a Condo? Read About This Real-Life Seattle Condo Investment
- Matt Miner,
- December 7, 2016
If you’re considering real estate as an investment, you should definitely take some time to think about which types of real estate offers the best returns with the least amount of risk. In this blog post, I focus on what it means to invest in a condo in Seattle.
For the under $500k buyer, a condo can work well as an investment. However, there are a few things you have to watch out for:
Real Life Example of a Condo Investment:
In early 2016, I sold a unit to one of my clients as a rental. We purchased the open studio for $295k; the unit had one car parking and the location for walkability is about as good as it gets. He rented that unit for $1950 per month.
I picked this building for him because of the friendly rental policy, the super walkable location, and low HOA dues. (This building meters all utilities separately which can be passed on to the renter.) So we will use 30% down as our clients ash investment, or $88,500. Now, for a condo we did really well with this one. The payment with HOA dues, taxes and insurance was only $1537 per month. (This is the nice thing about condos!) So we rented it for $1950 with parking, giving us annually a return of 5.6%.
Now for the appreciation: This same unit last sold for $235,000 in 2014. We purchased in competition with 10 other offers for $295,000. That equates to nearly 10% a year in appreciation. So this unit penciled out very well. But in fairness, most condos do not. So for that reason I prefer townhouses if you can afford the large difference of the purchase price. Plus, condos have a little more risk due to the HOAs. Still, if you have a sub $500k budget, we can make condos work with patience!