Quote:
Originally Posted by 78701
You can't make money renting out a condo. After depreciation/mortgage interest, property taxes, and HOA dues, the return is negative. The only play here is the price appreciation.
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In all my years in real estate in Austin, if you want to make cash flow renting...you have to one of the things below.
1. put at least 50% down
2. add value to the property by adding an extra bedroom (convert part of a garage, dining room into a bedroom) or complete a cheap cosmetic renovation
3. location (this is not what you think) to make cash flow, you buy in an up and coming area (tough thing to call- East Austin was "up and coming" since '87..and it didn't skyrocket till '09)....fix it up and rent it.
I've rarely seen a condo cash flow positive for less than 50% down. But I've had clients who love to pay cash for new condos and rent them...it's just the way they like to be landlords.
If you want a property cheap that rents well with 10% dn, you need to look in cities like San Antonio and College Station. Even then, I would not expect to cash flow much.
Condos downtown are a vanity or necessity play. You want to say you own an Austonian, or you need to put your 1031 exchange money someplace. Unless you bought at or near the bottom of the market (2008-2013), condos downtown do not appreciate that much, if at all in the short term. It is typically much cheaper to rent a 2 bedroom condo than to purchase it even with 20% dn. So why do it? Vanity (they just want to own, not rent) or 1031 exchange (a place to park some money)
All that said, I plan to move into one the day my daughter ships off to college, it will be a vanity play on my part.