How to Invest in a Condo

If you've made a decision to invest in rental property, consider buying a condominium. Condos are desirable rentals in a number of settings and for a number of reasons, from the vacation condo in the mountains or at the beach, to the city condo with access to jobs and culture. Condos are popular with students, singles and retirees.

Instructions

Difficulty: Moderately Challenging

1. Learn the real estate market in your rental area. Look online to see the prices of the condos. Know the area's demographics. Visit the area and observe the neighborhood and the tenants.
2. Know how much the condos in your area have sold for. Check for prices posted online. Most states are disclosure states meaning that sales prices are public record. Visit the website of the county appraiser. Check to see what similar condos have sold for in the area.
   
3. Find out what sort of rent the condos are getting. You can ask a real estate agent.
4. Look at the demand in the area. You want enough renters out there to easily be able to rent out your condo.
5. Carefully select the building that you want to buy your condo in. Choose a well-run Homeowners Association.
6. Decide how much money you want to spend.
7. Find out what it takes to be a landlord. Look into state and municipal laws.

Tips & Warnings

• Diversify your real estate holdings. You do not want to be dependent on the economics in one location.
• Take advantage of the tax benefits of buying a condo such as deductions for property taxes and loan interest and depreciation on rental properties. Remember that you must report all income from your rental property in order to claim tax advantages.
• Be careful of adjustable rate mortgages because of the risk. Interest is charge on unpaid interest.