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Residential Rental Property: Condo or Single-family Home

“I want to invest in a residential rental property. Should I rent a condo or a single-family home?”

For first-time real estate investors, it’s easy to get overwhelmed by the high-impact decisions that accompany real estate investments. And, like most responses to higher risk questions, the answer is often, “Well, it depends.”

When it comes to real estate, there are multiple market factors to consider prior to purchasing a rental property — location, market trends, health of the home, investment goals, investment risk. We encourage you to schedule a free consultation for more personalized guidance. In the meantime, here are a few general benefits of residential condo and single-family home rental properties for you to consider.

 

first-time real estate investing condo VS home

Residential Single-Family Home Rental (SFH)

  • No Association Fees: In general, condos come with monthly or annual membership fees and special assessments. Both are subject to increases, thus increasing your cost to rent.
  • No Restrictions on Use: Condo rules may restrict, or set guidelines, on how you use your property. This can make it difficult, or prohibitive, for you to rent your condo. Homes for sale, not within a community, do not have to abide by the strict rules of an HOA, thus making it easier to rent.
  • Appreciation Potential: In general, the recurring costs associated with a condo can negate much of the financial gain of appreciation. SFH’s have the potential to experience greater appreciation over time, given that the market factors mentioned above are in your favor.

Residential Condo Rental

  • Undervalued Units: Properties for sale lower than the assessment value can present an opportunity for a first-time real estate investor to obtain an affordable, lower maintenance asset that will appreciate more quickly.
  • Cheaper to Acquire: As a new investor, you may be searching for a more affordable purchase. In general, condos are cheaper than SFH’s. However, you will be responsible for the HOA fees and regulations. Tenant-screening is also important because you are responsible for ensuring that your tenants also abide by the rules.
  • Less Maintenance: Traditionally, the benefits of the HOA fees include not having to mow the grass or maintain the exterior of the building. With a SFH, the burden of home maintenance is generally shared between renter and homeowner.

Within the Naples Area in April 2019, we saw:

  • 11% YOY drop in overall inventory
  • Condo sales were up 20% YOY
  • SFH sales were up 4% YOY
  • Median close price was $340,000, down 6%

Approximately 26% of those living in Collier County are renting — roughly 97,000 people.
How many of the 97,000 will be your future tenants?

 

Contact us today to learn more about getting started in the Collier County Real Estate investor community.

 

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Resources:
https://datausa.io/profile/geo/collier-county-fl/#housing
https://www.nabor.com/marketstats

Posted by: Gulf Coast Management Group on June 20, 2019
Posted in: Uncategorized