Purchasing an apartment as rental property (Houston, West: apartments, condos, townhomes)

[lifeexplorer]

I have been thinking about buying an apartment in a mid-high rise building and renting it out.

What's your experience about it? Is this a good idea? Where would be a good location?

My criteria are:
< $230,000
2 bedroom
>1.5 bathroom
2 parking spots
1990 or newer
<$600 maintenance fee

(If you are realtor, please feel free to contact me.)

[City Love]

I've worked with investors in the past. Very few investors target condo's because of the maintenance fees. Maintenance fees tend to often go up at a pace faster than rents. It's possible, but I think it's easier to invest in a house or townhome as opposed to condo's(apartments.)

Are you looking at condo's because of the lower maintenance required than in stand alone homes or townhomes? Will you be an in town investor or out of town?

[lifeexplorer]

I am by no means an investor. :-) Would a house be easier to rent out?

I am looking for apartment in high rises because I like concrete more than sheetrock and wood. :-)

[City Love]

Originally Posted by lifeexplorer

I am by no means an investor. :-) Would a house be easier to rent out?

I am looking for apartment in high rises because I like concrete more than sheetrock and wood. :-)

I'm responding to some of your questions in your message.

Condo's can be easy to rent too, but that's not always the full story.

You also need to factor in potential appreciation, future resell value, rising maintenance fees, property maintenance now and in the future, etc.

When you compare Houston to other cities, it's a little different here with condo's in terms of appreciation. They don't always naturally appreciate because of so many different factors. Yes, you can have condo's that appreciate, but it's been my experience that most condo's don't appreciate at the level an investor needs. In a home, you own the land that also appreciates. In a condo, you own a percentage of the development. The overall appreciation of the development depends on many factors that a condo owner has little control over.

If you have too many investors that purchase in a development, then the development could drop off the HUD approved list for FHA financing. If this happens, then you can have a drop in values because you exclude a large portion of buyers. You as a buyer have very little control over this because you can't prevent other investors from buying in the development.

In regards to maintenance and tenant damages. You do save some maintenance costs with a condos, but you are also paying a maintenance fee that covers some of these issues. So the costs are still there, but you're just paying on it every month. If there are big problems with the development, then all owners could be hit with a large one time assessment to cover the expenses.

Almost all damage done to a property is interior damage. This will hardly vary in a condo or a home. The important things to consider is buying in an area that will lower your risk of having those bad tenants. Then you have to do proper screening to further lower the risk of having a bad tenant. It's never a perfect science, and hardly ever easy. But if done right, it's an alternative to other investment methods.

[lifeexplorer]

Thank you for the information. Any suggestion on location? I am currently watching the Galleria area but I am open to other places as long as they make sense.

[City Love]

You would probably want to stay anywhere West of downtown, all the way to the Beltway. South of I-10 and north of 59. Areas around the medical center and museum districts would also be good to consider.