Tuesday, January 22, 2013

Million Dollar Question: Single Family or Condo?

Almost without fail, out of town buyers, especially buyers from Canada, are interested in Sarasota and want to buy a condo as an investment.

There's myriad reasons why condos are no longer the best choice for real estate investors.  Consider the following:

1) Condo prices are increasing faster than rents;
2) Condos in the entry level price range up to $150,000 are seeing multiple offers in a very competitive field of buyers;
3) Condo association fees average $300 per month, and will only go up;
4) Many condo associations restrict owners from renting to significant segments of the population, for example, tenants with pets.

The monthly expenses for an investor are virtually the same for a condo or a single family home, by the time you account for insurance and maintenance costs for single family homes.  Despite this, single family homes, in my opinion, represent a better choice for real estate investors because:

1) Single family homes rent faster than condos;
2) Single family homes rent to a broader range of prospective tenants;
3) Single family homes have been appreciating more quickly than condos since 2010.  Median single family home prices in Sarasota rose from $132,000 in 2010 to $155,000 in 2012, based on MLS data.

Forget about maintenance issues of single family homes as a long distance investor.  You can build the cost of yard and pool maintenance into the rental agreement if your tenant doesn't want to do it themselves.  Home warranties cover the major systems of a home, and you only have to pay a small service visit fee even in the event of a major repair or replacement.

Investors, contact me to discuss the benefits of expanding your investment options to single family homes versus condos.

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