Let’s cut to the chase: Yes, condos are a fine investment. You just don’t want to get a junky one that’s poorly managed. Don’t get us wrong: Buying a condo is still one of the most expensive purchases you could ever make. But a condo is typically tens of thousands of dollars cheaper than a single-family house.

What should I look for when buying an investment condo?

Fixed expenses that you’ll need to consider include:

  • Property taxes.
  • Homeowner’s insurance.
  • Property management expenses (if applicable)
  • HOA fees (if applicable)
  • General upkeep costs (cleaning, landscaping, etc.)

Is purchase of property an expense?

The IRS counts business real estate purchases as capital investments, meaning that you must capitalize them. In this case, the IRS will not tax you for the entire sale price of the property — it will tax you for the gross profit only. The amount you paid for it is a deductible expense.

How does buying an investment property affect your taxes?

This means you’ll pay capital gains taxes at your regular income tax rate for properties you’ve owned for less than a year. On the flip side, properties you sell that you’ve owned for more than a year should be taxed as long-term capital gains, which are currently set at 0, 15 or 20 percent depending on your income.

Can a hard money lender finance a condo?

You can resort to hard money lenders. However, these lenders may impose a down payment of 50 percent or more, as well as higher interest rates. Therefore, it is necessary to get your condo investment approved and mortgage application started before initiating a deal.

Do you need a mortgage to build a condo?

Yes. For the most part, condo builders will require a mortgage pre-approval from you for your contract to be in good standing. This is a safety measure put in place to help curb speculative investment from over-leveraged parties and to ensure that the purchasers can afford to close on the property when the time comes, rather than to default.

Is it a good investment to buy a condo?

If over 50% of the occupants are owners, the condo is probably a good investment. Since renters don’t really have skin in the game, they often don’t care as much about the property and shared common spaces as owners do.

What’s the difference between a condo and a home loan?

That’s because condominium mortgages are considered somewhat riskier loans than are mortgages for single-family homes. On a conventional mortgage backed by Fannie Mae, the rate on a condo will usually run about one-eighth to one-quarter of a percent (0.125-0.250 percentage points) higher than what you’d pay on…