Income properties make an excellent long-term investment option. But when it comes down to a condo vs. apartment—which one has a better return on investment and which one is right for you?
Many real estate investors ask this very question, as there are essential differences between the two. If you're unsure, we've put together this comparison guide just for you.
Learn the differences and see which real estate opportunity is the better option.
Appreciation
When it comes to a condo vs. apartment in the Northern Virginia real estate market, which one has more appreciation potential?
In general, condos appreciate quite well over time. However, there are a few factors you should consider first. For one, you should check the owner-occupancy rate.
You want to look into properties with a higher owner rate. If more than half of the occupants own their condos, it's usually a good residential investment.
You also want to learn about the condo HOA to ensure it's well managed. Find out about maintenance reserves and take a good look at the property. Is it in good shape, and would you feel comfortable living there with your family?
If the condo meets these conditions, tenants will likely feel the same.
Apartments can also increase in value, particularly if you plan on remodeling or renovating. When remodeling rental properties, you can ask for higher rental rates and recoup the costs.
You can force appreciation by buying badly managed apartments with rental rates below the market, remodeling them, and improving management. Once the building is in better shape and you're running it efficiently, tenants will happily pay more to live on the property.
Costs and Fees
One factor to keep in mind with apartments is that you have a higher tenant turnover rate. This can impact your maintenance costs, and you'll have to think about the condition of the building and repair costs.
If you plan on remodeling an older building, you'll have to consider the expenses and budget accordingly until you can start to recoup the investment. Apartments also have a higher cost upfront to buy.
Condos come with association fees, which can eat into your income. You also have to ensure that you follow all rules and regulations set forth by the condo association. If you do plan to rent condos, make sure the association allows it.
Location
In addition, you should consider the location. Understand the market and the neighborhood. Is this property in a prime location?
Learn about the market, search for properties you can purchase for under market value and regain a higher investment, and talk to a real estate agent. Real estate agents can help you determine the best options for your budget and goals.
Condo vs. Apartment: Which Is Right for You?
Condos are cheaper to purchase, but you also have to consider HOA fees. However, they provide a good investment and appreciate well over time. Apartments tend to have a higher tenant turnover, but you can force appreciation.
If you're planning to invest in real estate, which property is the winner in the battle between a condo vs. apartment? Each has its pros and cons, so make sure to investigate the area and the market and talk to a real estate agent if you need more guidance.
Once you have your property, you need the right property management group to make the most of your investment. Get a free rental analysis and see how we can help you manage your Northern Virginia condo or apartment.
