Often considered an alternative to home ownerships, a condominium is a form of property where you own one unit in a development plus a share of all common areas. You can find condominiums in cities as well as suburban areas. Condominiums are often considered a first home alternative for young families and upwardly mobile young adults.
Condominiums usually don’t appreciate at the same rate or the levels as detached single family homes. If you want to make a profit on your investment, carefully scrutinize the condo market in your area, the quality of the condo governing board and overall activity in your local real estate market. Don’t assume that you will make a generous profit off your condo because single family homes sales are on the increase.
The governing board can often make a difference between a professional and a horrible condo experience. If you need to a strong degree of control over the outside environment such as pool areas, parking, color of the building etc., then a condominium might not be a good fit for you, or your family.
Also, beware of communities in transition. If a community is on the decline, you can often find a lot of condo openings but you can end up losing big when you try to unload the property later on. Do your own market research and don’t rely solely on your broker to figure out if the rate of appreciation would be conducive to condo ownership in your area.
Also, watch out for oversupply. If developers get ahead of themselves and flood the market with empty condo units, it can take a long time for you to recover your investment.
However, if you live in densely packed, affluent urban area like parts of New York City, Miami or Los Angeles, a condo can yield almost the same rates of return as the average single family home.
Do some research, get professional advice and weigh your long term goals carefully if you are thinking about purchasing a condo.