Have some spare money, should we buy a condo to offer as rent?
July 31, 2012 12:12 PM Subscribe
Married, and have some savings. Does it make sense buying a condo just for giving it out as rental? Caveat - I may have to sell it off in about 3-4 years though so I'm wondering whether it'll all be worth it.
posted by bbyboi to home & garden (12 answers total) 4 users marked this as a favorite
We're recently married and are renting from a private condo owner in a very good home-owners condominium community. We love the location and the amenities offered by the housing association and were thinking whether it makes sense to buy a condo just for rental purposes.
We currently pay a rent for a similar condo at about 1% of the approximate price of the condo. (say 1000$ if the condo price is $100k). We have enough savings to outright purchase the condo in the next two years if we wanted to. The prices have been pretty stable for condos in this community and we've seen a 5% total increase between prices of say 2008 and now - so buying the condo doesn't make sense just for appreciation purposes. A 15 year mortagage would come to about 70-80% of the price we expect to make via rent each month so that should take care of the mortgage money.
I work nearby but my wife is looking for jobs; depending on where she gets it - we may end up moving to up to 30-45 minutes away from this location so she can travel light and I'll commute by public transportation to my workplace so we're not keen on making this our home and would prefer renting for ourselves and becoming landlords for the condo we're thinking of buying.
We're considering leaving the U.S. in 4-5 years so we won't be buying a home or condo as our primary home.
So we're wondering whether getting into being a landlord, buying this condo, dealing with tenants will be worth all the hassle or not. We're responsible people but have read quite a few terror tenant stories on ask me :)
So theoretically if all works out well: Say we buy this place paying a 10-20% downpayment. The rent should take care of the mortgage costs so we don't expect major changes to our current lifestyle except for the occasional maintenance, and hopefully the annual tenant lease signup/renewal. In 4-5 years, we should have paid off about 40% of the mortgage cost just with the the rent we earn so we should make an approx 30% profit when we sell this in about 5 years?
Also - how much is the normal home owner's association fees? We've heard the fees are higher here than in other places but don't quite know how to compare.
What's the typical home owner's insurance cost?
Are there companies who can take care of managing renting the place etc for a fee, say for when we leave the country but don't sell the condo.
Are there tax consequences we're not considering?
Thanks so much!