There are a lot of people who are wondering which is the better real estate investment, a condo or a single family home. We can help you decide between the two. As the premier San Jose property managementfirm, we can offer unbiased advices to help you make the right decision.
Many people are worried about investing in condominiums because of the issues with homeowners associations. But we also remind investors that single family homes also have several issues. Here are some of the things you need to consider when choosing between a condo and a single family home.
Return of Investment
When investing in real estate, it is important to consider the cash on cash investment returns. We often see single family homes having lower rental rates per square foot than condominium unit. When sales occur though we see single family homes selling at higher percentage increases than condominiums. Having a property management San Jose firm can help you get a fair deal on a single family home that can give cash on cash returns of three to five percent. A condominium often yields return of four to seven percent. In this aspect, we see that the condominium wins but keep in mind that each property is unique, and their returns will be different once the home is sold.
Turnover Rate of Tenant
Each time a tenant leaves, the property owner must find a new one to rent the property. This takes much work that includes advertising, replying to calls (up to 400 calls per listing) and emails (could be 10 emails a day), showing the property, drafting a lease, doing a credit check, and a lot more. This job is easier if Property Force a property management San Jose firm is employed to do the job. We make sure that minor issues are fixed, such as cleaning carpets and repainting. Property owners want to ensure their property is marketed to the largest audience providing the greatest pool of applicants to ensure a quality renter is placed. Single family homes usually have longer tenancies than condo units. In this aspect, single family homes win but having a long term tenant is not always the best way to increase your ROI.
Home Owners Associations
Home owners associations and the fees they collect are some of the complaints people have with condominiums. There are HOAs that are well-managed while there are others that are terrible in every aspect. There are HOAs with strict rules, and if the tenant breaks them, the owner has to deal with the fallout. The rules are made in order to keep the neighborhood free of conflicts. A property owner can’t escape from the HOAs, whether they invest in a condo or a single family home.
Property Value
As part of our job as a property management San Jose firm we watch sales rates and rental rates throughout a number of communities in the Bay Area. To truly get a handle on buying investment real estate one must understand each community, the development direction of that community, laws that impact investment properties in that community and the like. Watching the commercial market is also a good way to forecast future rental trends. Check out this article discussing a $6million dollar investment in a large San Jose commercial building. A nearby savvy investment property owner may take the opportunity to upgrade their property in preparation for clients with a desire for increased amenities. Our understanding of all these moving pieces helps our clients ensure their investment dollars are wisely placed. It turns out It doesn’t matter whether it is a condo or a single family home as their can always be some unique circumstances like the launch of a new building or new neighborhood to sway the bell. Check out this video regarding a slight slippage in rental rates on apartments in San Jose.
These are the things that a potential real estate investor must consider when choosing between a condo and a single family home. As a top property management SF firm, we believe that either one can be a good investment. Ensure you do your research on the property before making the purchase or give us a call today to experience Property Force, Inc.
