How does this property sound to you for investment?

2bedroom condo selling for $260k. No additional work needed. Expected rent is around 1,800. HOA plus taxes around 900 a month.

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When did it become normal for HOA fees (incl. taxes) to equal 50% of expected rent?!

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Yeah. Cap rate ends up to being around 4%, a bit low but was thinking more from appreciation. HOA includes electricity too and there is gym in building.

What Consultant 1 said. ☝️ I have 2 properties.
-$79,900 people purchase, rent is $750, but will increase to $800 next year.
-$100K purchase, rent is $1,250.

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So far so good. They were vetted very well before signing.

Good rule of thumb is that rent should be 1% of the total cost of the property. Therefore if this isn’t generating $2600 of rental income per month, it may not be worth it. YMMV

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SFHs. Quality tenants, yes - some credit issues from their past, but they take care of the property. Have been late once or twice but we work it out. Same tenant for 4 years in the $1200 one and the guy is a repair tech so he never calls us 😂

More info needed... my gut is no. Condos typically don’t seem like good long term cashflow rentals to me. You’d probably be cashflow negative on something like this, unless you’re putting some $ down.

Gonna guess that this is not a “growing” city (based on price), which would make me question appreciation.

This is Philly close to city center.

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So you’re pulling in $900 on $260k asset? Did you include insurance, or is that covered by HOA?

Seems rough. I generally allocate 30% of rent to taxes / HO / insurance. So for this case even $1200 of $260k feels like a no to me

All very good points. Thanks everyone.

For those with rental properties, do you usually look for single family houses or condos? I think houses generally get higher cap rates but are older and require more maintenance vs condos have building supers that will fix things for free as part of HOA. If you have house rental, do you fix issues yourself, hire professional help, or have management company to take care of everything including collecting rent?

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