{"id":15589,"date":"2011-05-11T09:00:13","date_gmt":"2011-05-11T16:00:13","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=15589"},"modified":"2011-05-11T09:59:38","modified_gmt":"2011-05-11T16:59:38","slug":"reader-question-investing-in-a-rental-condo","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2011\/05\/11\/reader-question-investing-in-a-rental-condo\/","title":{"rendered":"Reader Question: Investing in a Rental Condo"},"content":{"rendered":"

I received the following question from a reader via email, and thought it would make an interesting discussion topic:<\/p>\n

I’m a long time Seattle resident who moved to Asia due to work assignment in 2007. Separately from the money we are saving to buy a home to live in when we return, we have a fund that we would like to use to purchase a downtown condo, as we’ve noticed that downtown\/Belltown condo prices have come down quite a bit in my opinion.<\/p>\n

This would be a cash purchase and we are thinking about renting it out. Our budget for the condo is approximately $250,000 and from my amateur investigating skills through various websites, I believe I can rent it out for approximately $1,100 – $1,300\/month. With HOD and tax, we believe we can still have a little bit of profit that would exceed bank interest from CDs.<\/p>\n

This purchase is for a long term, meaning 10+ years. Since I’m not a real estate pro nor would I even call myself an amateur as I don’t have any experience being a landlord, we made a preliminary arrangement with my trusted friend to manage the property with a nominal fee until we return to Seattle (he has experience in property management). We are not in any hurry and we are willing to wait for a right condo at a right price. So here are the questions.<\/p>\n

    \n
  1. From your opinion do you believe the condo prices will further decline in coming months? As I understand it that there are many more short sales and foreclosures that would affect real estate market in Seattle.<\/li>\n
  2. What are the risks that I may have missed?<\/li>\n
  3. If you and other members are in my situation, would you considerdoing this? If not, why not? If not now, when?<\/li>\n<\/ol>\n

    We’ve been struggling with this for a while now and we would greatly appreciate Seattle Bubble’s opinion. Thank you for reading this email and hope to hear from you soon.<\/p><\/blockquote>\n

    Personally, if I had $250k to invest, I probably would choose a SFH in a suburb over a Seattle condo, based mostly on my aversion to HOA dues, and assessments. I’m also not sure how realistic it is that a $250k condo will be able to rent for $1,100+ a month.<\/p>\n

    That being said, if you have done the research, the numbers make sense, and you’re comfortable with the risk, it doesn’t seem like a terrible idea. To more specifically answer the numbered questions:<\/p>\n

      \n
    1. It does seem likely to me that condo prices still have a ways to fall. Hard to say just how much since I don’t spend a lot of time researching that specific market. You’re right to be concerned about foreclosures, and especially so a the lower end like that.<\/li>\n
    2. The biggest risk in your plan in my opinion is that a year or two in, you get hit with a big special assessment that eats all of your returns.<\/li>\n
    3. As I mentioned above, if I were in your situation I would probably go for a SFH instead of a condo.<\/li>\n<\/ol>\n

      If you’re seriously considering becoming a landlord, here are a couple<\/a> recent posts<\/a> on the excellent personal finance blog Get Rich Slowly<\/a> that I recommend you read.<\/p>\n

      What advice would you give to this reader?<\/p>\n","protected":false},"excerpt":{"rendered":"

      I received the following question from a reader via email, and thought it would make an interesting discussion topic: I’m a long time Seattle resident who moved to Asia due to work assignment in 2007. 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