Are you looking for ways to invest your idle funds and gain promising returns?

Nowadays young couples are more interested to diversify their income and create the lifestyle of their dream. Well, investing in property should be given the first though as it gives a secured financial future. It has minimum risk and ensures a promising return for your investment. In your search, you will come across two potential properties such as condos and apartments that will deliver promising returns. Both have their own pros and cons. Some may prefer investing in a condo while others may feel that the apartment is the best option.

Firstly let’s clear our concepts about a condo and an apartment.

  • An Apartment is a self-owned housing unit and a type of multi-property investment. A single apartment cannot be owned. One person owns the entire building and then rent out single units. 
  • A condo which is a shorter form for a condominium is a private residence within a larger building or community. It can be a single unit in a high rise or a multi-storey townhouse. Individuals own each condo.

Now that we know the difference between the two let us help you figure out whether you want to own a condo or you are better off with an apartment building. 

  • Initial investment:

The acquisition of an apartment building requires a large cash outlay. You require a sizeable amount for covering the down payment, closing costs, reserves and capital expenditure. 

Now if your budget is not too high than the condo is the best option. The condo is typically less expensive than an apartment. You become a condo owner by just paying the purchase price and a monthly condo fee. So initially you require less out of pocket cash. However, make sure that the monthly rent you charge from the tenant recovers the monthly condo fee. 

  • Favorable and Steady returns:

Investing in an apartment generates a larger cash flow. You receive rent from not only a single unit but from entire units in the apartment building. Thus the amount of cash generated is far higher than you may receive as a condo owner. 

Another advantage of investing in an apartment is a steady cash flow. Even if one of the units in the apartment is temporarily vacant or undergoing repairs, you have continuous cash flow from other units. 

Condo on the other hand if vacant generates no cash income.  

Note: Cash flow is the money left over after deducting all expenses and mortgage payments.

  • Maintenance Issues and Expenses:

Right from maintaining the exterior façade to interior related break downs including appliances is the responsibility of an apartment owner. This increases overall expenses and reduces income.

As a condo owner, you are not responsible for maintaining the building’s exterior structure. You have to worry only about maintaining the appliance and system within the unit. The condominium association is responsible for expenses and upkeep of the building and community. Each Condo owner pays a monthly maintenance fee, which is distributed to pay the necessary expenses. Moreover, the monthly maintenance fee is usually covered in the monthly rent charged from the tenant. Thus you save money on repairs and amenities in the complex.

  • Time-consuming and stressful:

Running an apartment building with many units requires lot of time and effort. The owner is involved in a number of activities such as marketing, showing units to prospective tenants, screening potential tenant’s credit histories and criminal records and arranging move-in dates. Also, there are maintenance and rent collection issues to deal with. All this is time-consuming and stressful.

But the good news is that you can hire property management companies to handle the entire process. Well, you have to pay quite a good sum for their services, increasing your expenses. But nevertheless, this expense is well worth the money, as if frees up your time.

On the other hand, if you are looking for peaceful returns with less hard work then investing in a condo is the best. Managing a condo is less stressful and time-consuming. Maintenance issues are also limited. And you need not require services of property management companies. Thus you save on money too.

  • Tax benefits:

Investing in an apartment is the strongest asset for earning more income and minimizing tax obligation. An apartment owner can write off advertising, management fees, maintenance expenses, property tax and mortgage interest and reduce the taxable income. Also, you can defer capital gains and recapture taxes when you sell the property and invest its proceeds in buying another one. Depreciating the value of building and accelerating the depreciation schedule through cost segregation analysis also helps in greater tax saving.

Condo owner does not enjoy tax benefits. Also, you cannot write off monthly maintenance fees.

  • Stringent Rules:

Apartment owners do not have to abide by any rules and regulation since they own the whole unit they get the right to make their own rules.

A condo is regulated by the condominium association. HOAs have an overwhelming list of rules that owners have to abide. Many times the condominium association lays a rental cap limiting the number of condos that can be rented out. And at some places even selling of condos is not permitted. Thus you cannot earn on your investment. Also, condo association might restrict the installation of certain appliances, restrict the number of occupants and pets or limit the number of visitors. All these restrictions discourage tenants to rent a condo.

  • Liquid investment: 

Apartments are not easily sellable. It usually takes months to get a qualified buyer agreeing to purchase terms and finalizing the sales deal-making apartment’s non-liquid assets.

Selling a condo is much easier and its resale value is higher as compared to apartments. Besides ownership of a condo unit is also easily transferable.

Conclusion: 

Are you ready for real estate investment?

Now that you are in the best position to decide which investment is best for you start your search for on-line listing or consider working with a real estate agent to help you figure out the best real estate investment options.

If you are looking for investing in Commercial Real Estate Corpus Christi feel free to contact Cobb, Lundquist & Atnip, Inc., your best guide for real estate investment.