4 Reasons Why Investing in Condos is Better than Single-Family Homes
Investing in property is an all-around complicated process. Once you finally decide to take this step, you still have a lot of decisions to make. Assuming you’ve picked your favorite location, and are certain of square footage, or the floor plan you desire, you’ll also have to decide what kind of development you prefer: condos or single family homes.
Both these investments, just like any other type of property, carry their own pros and cons. Here at Condo Capital, we prefer investing in condos. Here’s why.
What is a condo? Condos 101
Before going any further on why we prefer condos, we like to explain what they are exactly. Despite common misconceptions, a condominium is a form of ownership, not a type of construction. High-rise buildings are probably the most common type of condos you’ve encountered, but condos can also come in forms of townhouses, duplexes, or even single detached houses.
When you buy a condo, you pay for it as you would any other apartment or a house. However, you also join a homeowners’ association (HOA), and pay monthly (or in some cases annual) fees for the upkeep of the building and its amenities. How much your fees are depends on the size of your apartment, the size and age of the building, and the amenities the building offers.
Why We Prefer Condo Investing?
When you’re looking to acquire new property without too much hassle, condos are the way to go. These properties will be simpler to invest in than single-family homes, especially if you’re new at this. This is because you’re basically buying a managed property, so a lot of the details are handled for you.
Investing in condos is a great way to get some experience in real estate investing, with fewer headaches than single-family home investments. The condo market is dynamic, will allow you to meet people, and make a positive impact in your city.
Why investing in condos beats traditional homes
Condos are often less expensive than a house. For example in Vancouver, in 2017 you could get a condo for $650K, but a house would cost you a bit more than 1.2 million, which is quite a difference.
When buying a condo, consider the amount of the management fees upfront, and it will likely still be more affordable than buying a house. This is because management fees will cover a variety of things (such as utilities or internet/cable) you’ll still have to pay for separately when you own a house. Also, when it comes to buying property in the city, condos are always going to be more affordable than detached houses. City condos will be newer than city houses, which means better upgrades with a more modern interior… for less money.
Maintenance and repair
Maintenance expenses can be unexpected and overwhelming with your traditional home, while with condo development, your monthly fees take care of any maintenance and repair issues that may come up, including problems like communal litter or damage. The fees will cover things like mowing the grass and clearing the snow, so you’ll never have to worry about those things again.
Your condo fees pay for a lot more than just maintenance and repair, so in the long run, they are more cost-effective than hiring someone to fix a leaky roof in your single-family home.
When you get a single-family home, that is everything you get. With a condo, you get to live within a community, with amenities you don’t see in a traditional home purchase. A few standard amenities include a pool, gym, and a clubhouse.
Most condo developments have underground parking garages or other forms of covered parking, and some come with tennis or volleyball courts, sauna rooms, or full spas. Some can go a little overboard, but there is something out there for everyone. Different condos will have different amenities, and you get to choose what’s important to you when choosing which kind of condo to invest in.
While it is true that these amenities are paid for by you as part of your monthly management fee, you end up paying a lot less in maintenance than you would if they were in your backyard, or in membership fees (and time) if you had to commute to them.
Location and lifestyle
Condos are generally built in downtown areas, business districts, areas around universities, and otherwise thriving parts of the city. Because of the popularity of the location they are normally built in, condos tend to attract a lot of different types of residents. If you’re getting a condo so you can rent it out, you are more likely to rent it fast to busy professionals working in the city. You’re also more likely to always have it rented, as there is a demand for downtown living.
A large part of the rental market is focused on the cities, which leaves the suburbs for the housing market. Suburb homeowners struggle with longer travelling between properties, more waiting around to show renters the property, and suburb residents have longer commutes to their city jobs and any other amenities in the city.
Math shows condos are better value
Across the US, you might find that condos and house prices are on a par for the rental market, but in Canada, and Montreal in particular, there is a large gap that makes investing in condos a no-brainer.
In Montreal, a single-family house in the suburbs would set you back around $630K, while condos of similar sizes in the city would only cost about $370K.
The average condo fees in Montreal in 2016 were $234. Again, keep in mind that these fees cover a lot of things, some of which you’d still have to pay for if you decided to go with a single family home investment, such as utilities, internet/cable, insurance policies, garden upkeep, snow removal, painting, and landscaping. It also covers property management fees, building repair and maintenance, condominium staff salaries, and any amenities that may be included.