Many real estate investors around the world think about buying luxury condominiums. A condo is normally less expensive than the common single family home. The investment is accessible even for those without a large investment budget or for those with real estate investing experience. The problem is that luxury condos often have bad reputations. That is because of the various misconceptions that appeared throughout the years.
If you want to see if luxury condominiums are a great investment idea, here are some things to consider, based on the experience of The Luxury Team.
Condominium Investment Failure – Why Does It Happen?
There are different cases in which the condo investment turns out to be a really bad one. This normally tends to happen because of not properly understanding all the costs associated with the purchase. If you are new to the landlording concept, you will mainly remain focused on charged rate. Other costs are not of interest to you.
Besides the mortgage costs that you most likely have to deal with, it is important to also consider insurance, mortgage insurance and property taxes. At the same time, you have to think about repairs and maintenance. Additional costs can appear through advertising, legal fees and other unexpected expenses such as when a problematic tenant has to be evicted. Even property management company expenses can arise. The idea is that most failure happens because of not understanding extra costs over buying the condo.
In real estate, location is by far the most important factor you have to take into account when you buy anything. We are faced with some areas that are in a really high demand while others are not actually considered. Try to find a luxury condo in an area that will be in demand. If you do that, you have a much higher possibility that you are going to find a buyer or someone to rent. If not, you can end up with the luxury condo being in your portfolio and only consuming money for a long time.
How much money you pay for repairs is something that is really important when the condo is bought already built. Obviously, this is not a problem if you buy a brand new condo. If the condo was pre-built, you need to be sure you are going to factor in maintenance and repair costs when you place your bid. A failure to do this means that you overpay or you are not going to be able to actually make the repairs for the property.
On the whole, luxury condos are a very smart investment option but you should be sure that your purchase is a correct one. This means looking at all the options available and all the factors that are going to have an impact on the outcome of the purchase you made. Research is mandatory at all times.