4 Myths About Condo Investing | PCNMoney

Condo Investment Realities:?Over the course of many years the idea of condo investing has spread from aggressive real estate agents into the general population. The idea of having a piece of property that is slowly paying itself down while still providing a profit is too attractive to ignore for many investors. There are those who claim that it is a foolproof investment that cannot go wrong because everything is so clear. There are others who provide advice to completely avoid the entire condominium investment market. Like many other areas of investment and finance the truth is actually somewhere in the middle. There are a few myths about condominium investing that are just not always true.

Pre-Purchasing Properties Is Always A Wise Investment

A trend that has developed is for real estate investors to purchase condominiums from property management companies before the building or even the entire complex has been constructed. This is done because the property price is lower before construction occurs and before the building can be accurately assessed for value. The logic behind this is that in the one to five years it will take to complete the property the value of real estate will increase. There are a few problems with this. One is that the initial purchase price might be inflated by the construction company and is not guaranteed to be lower than the final market value of the house.

Another Reason Why Pre-Purchasing Can Be Detrimental

There are a growing number of condominium complexes that are unable to sell enough properties fast enough even with pre-purchased sales. This causes a host of problems that can result in the pre-purchased condo never being built and the money never returning. Worse yet, the condominium might be built inside of an empty complex with only a handful of buildings that is then sold to another management firm that decides to demolish the area. In either case, the investor can lose a large amount of money.

Property Management Companies Can Handle Tenants

One thing that lures investors to condominiums is that there is a large amount of talk surrounding ways to simply throw some money at the location every month to solve problems. Tenants can be an issue in the condominium. Even stable people who have passed extensive background checks can cause trouble. Loss of a job, a change in life or a desire to suddenly move can all interrupt the income stream. Additionally, the use of a property management company or a handyman that is paid separately can quickly reduce profits dramatically. Dealing with tenants is never as simple as hiring someone else to take care of the condominium.

Do Not Purchase Properties That Are Too Far Away

There has always been an idea that real estate purchases should be made only in neighborhoods that the buyer is familiar with and lives near. This is largely not as true with the advent of the Internet since everything from crime statistics to average rental prices in an area can be found easily online. A condo should still be seen in person before a purchase, however. Investing in a condominium that is located somewhere else in the country means that the property will not be subject to the same housing market fluctuations as the area where the owner lives. This diversification can help to protect the owner?s investment in an uncertain future.

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This article was written on behalf http://www.mytorontorealty.com, offering top real estate services in the Greater Toronto Area. ?Check out the latest listings on some of the my beautiful Toronto condos.

Source: http://www.pcnmoney.com/2012/08/4-myths-about-condo-investing.html

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