Are you looking for a real estate investment? In your search, two potential options would deliver promising returns for your investment: condos and apartments. These are two completely different types of properties and investments. You have to weigh the pro’s and con’s for each to determine the right type of investment.
But some real estate investment experts claim that condos have a slight edge over apartments. Before you proceed to search for a listing of condos, make sure you know why this investment is a smarter choice than apartments.
Differences Between Condos and Apartments
Before you make that big investment, you must first know about your options. As mentioned earlier, there are two common types of real estate investments available these days: condos and apartments. These are two different properties without varying return potential for your investment.
The Condo Unit
A condo unit is either owner-occupied or rented out to a tenant. The unit is part of a large residential building with access to shared amenities such as pools, gyms, courts, spas, and more.
Aside from the monthly amortization on the condo unit, you will also be paying for the homeowner’s association dues that are used for the upkeep of amenities and other facilities.
On the other hand, an apartment is a type of multi-property investment. Depending on the size of the apartment, it can have as little as three units or as much as twenty units available for rent.
Accordingly, the cost of acquiring the apartment building will also vary but it is typically much more expensive than the cost of acquiring a condo unit. Unlike in condo units, apartment building occupants typically do not have access to amenities.
Condo vs Apartment
On the surface, the cost of ownership for condo units could be more expensive. There is a certain luxurious appeal that comes with condo living, especially since they are located in the city or business areas.
But in reality, condos are easier to acquire since you only have to pay up to 20% down payment for the unit. The rest of the package price is paid for every month.
As for apartment buildings, they are generally more expensive. This is true especially ones that are located near the city or in other strategic locations.
There are certain pros and cons to each type of investment. But experts agree that condos are best suited for entry-level or first-time investors.
It is also recommended for anyone in search of a steady stream of monthly income. Apartments are better suited for those who are serious investors looking for long-term returns.
Why Condos Make Better Investments
The following are some of the top reasons why you need to consider investing in a condo unit:
Buying a condo is a budget-friendly and beginner-friendly investment. Since the condition of the unit is brand new, it is going to make it more attractive for potential renters. You won’t have to worry about the cost of repairs.
Fees for Added Value
While one of the reasons why investors think twice about buying a condo for investment, the fees provide added convenience. You no longer have to hire property managers for the maintenance and upkeep of the property. It is a worry- and hassle-free investment.
The rate of urbanization is increasing. Thus, the demand for condo units is only going to increase with the coming years. With growing urbanization, condos for rent are going to increase in demand (provided you choose one with a great location).
The renter community is becoming more open to the idea of living in small spaces. This is especially true with the younger generations, or so-called millennial.
You can leverage the amenities offered by condo units to attract potential renters of your property. The access to a gym, spa, pool, and other amenities would appeal to the renters. The ability to access these amenities would mean savings for them, too.
The security in condominiums is tighter so your potential renters feel more secure living in this type of property. You can use this as a selling point when promoting your investment to potential renters.
The level of appreciation in the value of condominium units happens at a more rapid rate than other types of investment properties (including house and lot units).
It is a wise investment for you financially speaking because your investment is protected by the condominium corporation’s rules and regulations.
This is a liquid form of investment because the resale value of condo units is higher (as compared to apartments). This will give you a good exit strategy if you need to sell your investment.
Aside from that, condo units are easily transferable. This would make it easier to transfer ownership if you can find a buyer.
Cost of Investment
It is cheaper to invest in a condo unit as compared to multi-unit investments such as apartment buildings. The barrier to entry is lower and is, therefore, a more accessible investment, even for beginners.
The condo developments are strategically located as the developers have researched finding the best locations. You can leverage that to offer a property that would be situated in a great location. The cost of buying apartments in a great location would also be considerably higher.
A condo unit can also be rented for business use. Anyone looking for privacy and a quiet place to do their work or writing will also value the privacy offered by condo units.
There are no restrictions as to the type of clients you can rent the unit. This is true as long as you abide by the rules and regulations of the condo association.
Are you ready to get started on making that real estate investment?
Now that you have decided that condos are more promising for your real estate investment, the next step is to find the best areas to invest in and find suitable tenants. Location is always a crucial part of your decision on where to invest in a condo unit.
This can have a huge impact on improving your bottom line and start earning a steady stream of income. Whether you are an entry-level investor or experienced one looking to boost your portfolio, a condo unit will surely get it done.