Condominiums can be a great way to invest in real estate. They offer low maintenance living, are easy to rent and do a good job of holding their value. There are pros and cons to purchasing a condo but smart investors and first time buyers are wise to consider this investment.

For starters, condominiums tend to be less expensive than single-family homes so they offer more opportunity for investors. The other benefit of condominiums is that the maintenance of exteriors, landscaping and common space is the responsibility of the property management company. While this service comes with a monthly fee this is a regular, fixed cost that covers homeowner expenses like mowing, garbage and snow removal. This factor also makes condominiums easier to rent out.

Considerations

When you buy a condo, you don’t own the property or even the exterior. You own everything from the finished walls in. This restricts the extent of home improvements you can do to the property. For instance, you cannot alter the exterior so your windows and space is fixed. There are usually restrictions as to the amount of landscaping or gardening you can add. If you are a do-it-yourselfer, a condo limits your ability to renovate or expand.

As a real estate investment condos can be a safe choice if you do your homework. Because condos are a community of owners that have common interests, it’s important to get to know the neighborhood before you buy. Ask other owners about the complex:

• Are most residents renters or owners?
• How is the property management company?
• Any complaints or pending lawsuits?
• How well are common areas maintained?
• How timely is snow removed, grass and landscaping done?
• How is the quality of the construction? Any problems with plumbing or sound?
• Ask if any special assessments are planned, for example new roofs?

Usually complexes that have a higher owner occupied ratio are better maintained because the owners reside on site. Absentee owners tend to favor less improvements because they don’t live in the property. Even lenders pay attention to this factor and often require a minimum percentage of owner-occupied units.

Within complexes, property values vary mostly with location and interior condition. End units tend to have higher value because they offer quieter, more private spaces and are rarer. Units that are in high traffic areas or near amenities like pools tend to be noisier and less private. They are less appealing to both renters and buyers should you decide to sell.

As you search for a condominium, note the association fees for various complexes you visit. What is included? Are their amenities such as pools or tennis courts?

When you are ready to make an offer get the latest financial statement from the homeowner’s association – the representative body for the complex. The homeowner’s association (HOA) should have reserves that reflect wise management of the common funds and financial health. Also read the bylaws to see what restrictions exist like number of pets allowed.

If the complex is new find out how many units are sold, how they are selling (quickly or sitting on the market) and what construction is planned.

Overall, condominiums tend to ride market fluctuations better than single family homes. As housing prices continue to rise, lower end condos are becoming more appealing to buyers who are priced out of the single-family home market. They also appreciate in value as less expensive properties become more and more scarce.

Is a condominium right for you? That depends on your lifestyle or your investment property expectations. These low-maintenance, less costly opportunities to own real estate can be an excellent choice for first-time buyers or investors looking for self-sufficient property.