There are a lot of decisions involved when it comes to being a landlord. How much money can you spend? In what area do you want to purchase a property? How much rent will you charge? How will you screen potential tenants?
While these are all very important questions that will have to be answered at some point in the process, one of the first things you must decide upon is what will be the best investment property for you. Do you want to purchase a house or a condo?
To help you make the best decision for your situation, following are a few details to keep in mind along the way.
To have success as a landlord, you must be able to find qualified renters, and this requires a lot of time and effort. You have to promote the property online, respond to inquiries, show the property, handle the details of the lease, run a credit check, speak with references, and more. This is exactly why you want to shoot for a situation where your tenants will stick around for a year or more, so you aren’t constantly doing this type of work.
In terms of tenant turnover, single family homes usually win. For many condo rentals, tenants will often change out every other year. Conversely, renters in single family homes will often stay in one place for three to five years.
As a landlord, there is always going to be some type of maintenance involved with your property. However, a house will require more work from you. This includes maintaining exterior details such as the landscaping, painting, and roofing. If your rental property is a condo, these details are typically handled by the community HOA.
HOA Fees and Regulations
Having a HOA comes with perks and pitfalls. We just mentioned that the community HOA will handle most of the exterior details for many condos. However, this comes with a cost. HOA fees can be expensive, which can eat into your profit or increase the amount you charge for rent. Additionally, HOAs have rules. While this may create certain restrictions for your tenants, a HOA also works to keep communities clean and orderly.
So, what’s the best decision? The honest answer is – whatever works for you. There are pros and cons to both houses and condos. Do your research, and base your decision on what makes sense for your expectations and the area.