ADPI_019: Condo Investing For Military

Aug 23, 2018

Episode Transcription:

Hey hey what's going on guys Mike foster here welcome to the active duty passive income podcast. Tonight’s going to be an evening special. Sorry it took me a little bit to get this episode out to you guys. I have been traveling all day. But I'm going to be up in Boston this weekend for a wedding and I'm really excited to catch up with some family all right. I just got back from deployment and I'll be able to talk to them and you know see how people are doing. But today's podcast is going to be about a conversation I had this week with an uber driver.

He was interested in you know me telling him about some real estate that I've been doing and he had some questions and he was interested in investing in a condo and I know that condos can be a very appealing thing for military to buy. You know especially if you get a nicer area and I've got some opinions on it maybe you know it's worth sharing. But there are definitely some things that you want to take into account before you invest in a condo and this episode is for you if you've been thinking about it.

So enjoy. Hey freedom fighters welcome to the active duty passive income podcast. The only place where military members, veterans and their families learn how to build wealth through real estate investing. I'm your host Mike Foster and I'm here to show you how to stop wasting your benefits. Now get off your ass, step up to the firing line and make ready for today's lesson. Shooter stand by. Hey hey hey all right all right welcome to the activity passive income podcast. Thank you so much for listening guys, really appreciate you taking your time.

Today is going to be a little bit about condos and my opinion on some things that you want to take into account before you go and invest. But first let's talk about why condos right. Condos are very appealing to military, especially young military that are trying to get started out. Why? Because they're cheaper and they're usually in really nice you know well-kept neighborhoods usually. Right now especially if you have a good condominium or condo you know complex and you can get a part of one at a fairly cheap price. I know here in Hampton Roads there are a bunch of really good condominium communities out there and they take you know pretty good care of them for the most part.

There are always you know onsite twosome says you got to watch out for. But if you keep your ear to the ground and you drive around you'll definitely see a bunch of really good homes. I know out in you know San Diego on the west coast there are definitely a bunch more for sure, a really awesome communities there. But again you know these communities or the way condos work is that you buy into it and you pay a certain monthly fee for your condo association to take care of everything that's pretty much outside your four walls. So your grass if you have it right.

Usually that's kept by the condo association. if you have a community pool or if you have let's say like, let's say if you're on a beach or something right in New York, your condo has that and then they'll keep the sand, they'll keep it kempt. Parking right, it's usually regulated by the condo association. Even so much as insurance right. So if you're on the water your condo association will have or maintain insurance on the outside right.

Everything that's outside of your home and you'll only have to pay insurance on the inside, which is nice usually right. There may be some exceptions to that and maybe if you're listening and you know of one, yeah that might be it. But usually right the condo association or the owner of the condo Plax will have that master insurance policy and again right these fees that you pay monthly for the maintenance you know can be pretty high and that's something you know that you definitely want to consider before you go and you buy a condo you know.

Because then obviously this show right is geared towards the investing mindset. So we're not just saying you want to buy condo and live in it forever right. Eventually your goal is to you know you know buy a property that you'll rent out when you leave. Those condo association fees can be pretty high and almost will always mess up with your numbers okay. So keep that in mind. But one thing that I do like about condos is that you know when they do take care of your property, you know they do a pretty good job and they're very thorough right and there's so much that you don't have to worry about when you buy into an association like this.

But you know at the same token right, you do have to worry about dealing with your condo association if they are a little bit you know difficult to deal with right. Because I mean let's just say for instance you have a condo that's separate from the others in the unit right and you want to paint your condo for whatever reason right. well you need permission to do that right or utilize if you want to do anything that's outside of the purview of the agreement that you signed when you buy into the condo association, you have to get you know you have the permission to do that and those permissions sometimes can be pretty pretty hefty and this concept definitely applies to those who buy into like a homeowner's association too, it's the same deal. So you got to be careful and make sure you know what you're signing up for before you sign up.

Another reason why people you know like condos is that you know they're relatively easier to maintain right. I mean they're newer usually and not always right. But they can be right or most of them now nowadays are newer. So they're updated, they're refurbished a lot and the easy maintenance right is relatively appealing. You know maybe you might have to change you know some filters, maybe appliances you know every once in a while or you might run into like a water heater that needs to be your place right. But on the most part that's it.

You know as far as like doing a full rehab that's usually done for you. When you find a condominium and you might find another investor who's flipped a condo that is rehabbed or something like that. But right I mean that's typically what you find. So the easy maintenance right. The less responsibility and the lower price point.

That’s usually what draws people to condos and the ability you know to have that kind of ready-made done-for-you type home it's easier to find in a condominium or a condo complex. So again like that's very appealing and while that is appealing, yes even if you find something that isn't as turnkey right that you build up yourself that can also be appealing. But at the same time you need to make sure that you know the numbers will work out for you in the long run, that your association is easier to work with and that you know your taxes right also are not too high.

Sometimes taxes and condominiums can also be a little bit hefty. So you need to be able to make sure that you're really getting into those numbers and understanding everything that's going to come out. Because when you go on the other side now you have to calculate right your tax, you have to calculate your insurance, and you have to calculate what you're going to be paying for on this homeowners association. But then you also have to calculate your property management. now these are a lot of expenses right and you know you have to be able to make sure that those numbers are all going to work for you all right and then of course you also want to put aside a little bit for maintenance and repairs, right those unexpected.

So make sure that all those numbers are going to subtract to a positive number and also make sure that your condo association, those fees right that they're charging you each month are not going up each year higher than your rent is. Does that make sense? because let's say if they charge you $100 a month in condo association fees for the one year and then they bump it up to $200 a month, but your rent only went up maybe another like $25 or so, that's going to be a problem.

Okay if that continues to go up on you that's going to be a problem and you need to be able to identify that early and get out of that investment before it becomes an investment okay. Now granted if you use your VA loan you're still buying this condo with zero money down. So out the gate it's a good deal if you know you have a little bit of equity in it too, that's even better. But you know if you're finding this place just for you to live and you’re BAH or your housing allowance is covering the amount of mortgage, you know that's great, that's all fine and if you house hack it that makes it even better. Okay so just another reason that house hacking can really help you out.

I mean if you have a really really low mortgage payment on your condo and those association fees, your property management, your tax, your insurance right everything that you're taking out all adds up and it doesn't add up to that much and you can make it work. Hey by all means good to go. Okay so in that case then investing in a condo may be the smarter thing for you to do. But you need to be able to make sure that you know you throw in whatever factor that you need to solve for you know accounting for these expenses. Because it is going to get costly over time if those association fees keep coming up. Okay now again I mentioned earlier you want to make sure that you've also got a very helpful association.

Okay what you don't want is to have an association that maybe doesn't charge you that much, but they also don't do anything for the outside of your property. Because again you can't really get involved in the outside of your condo. Maybe if you have a good relationship with the owner of the association or whatever and they don't really care what you do, okay that might be an exception. But typically right for you to go up there and for you to do your own maintenance, your own work on the outside of that home; that'll get you some kind of flak from the condo association and sometimes right sometimes, you can get fined for that and that's not good.

Because that also takes away from your numbers right and you know it just doesn't give you a good feeling. Now again another reason why I am not a huge fan of condo associations. because I'm a little more creative and I love to you know do things on my own, I don't really wanted to have my condo association tell me that I can't take care of this issue that has been persisting for months and I've written to them and asked them to do it or I've called them and asked them to do it and they keep giving me the cold shoulder or the stiff arm or the yeah sure we'll take care of it sir absolutely, no problem and then months later I'm still dealing with it right. So you know I mean like obviously is just you know an extreme or an isolated incident.

What I'm saying is that you know even that on top of the association fees, sometimes it makes you feel like okay what I am really paying for you know. even if they are doing things you know sometimes doesn't really seem like the $400 a month you're putting into that, condo association is really you know doing all that much. So again you have to be able to look at it from the perspective of is this going to work for me okay and for you it might work out right so again this investing is not one-size-fits-all?

It’s very very you know multidimensional. Okay so make sure it works for you and make sure that that you know your numbers are good too, because the numbers are really the most important thing here okay. So if you've been looking at a condo or if you're on the fence about one, make sure that you know get a second opinion you know.

Definitely don't look at them just by yourself if you're having that issue and if you're absolutely sure, you're willing to present this is the house for you hey great! Go ahead and go ahead and do it and like I mentioned before to house hacking is a great way to cut down that mortgage expense.

So if you are new to house hacking, you have no idea what I'm talking about; luckily for you I did a podcast about it just before this. So make sure you go take a look at that. also lucky for you we put together a whole course on house hacking which you can see in the show notes right and you can also check out our eBook all right on a little bit about house hacking as well and go ahead and you can get some good information from those sources, all of it 100% free right. So you know go check it out and I get yourself familiar.

Because house hacking is a wonderful strategy and I absolutely excuse me I absolutely recommend it to anyone. All right so that's yeah that's going to be pretty much the nice short and sweet lesson on condos and buying them. Make sure that if you are buying them with your VA loan right, they're under an approved condo association. Your condo association actually has to be approved and it's a lot easier than you think to get them approved if they're not. Your lender will be the ones that I'll tell you whether they are not.

So you can go through them and the process is, I'm not going to say it's fairly simple. Because I've only heard of one instance it happening and it was a simple process. I haven't you know done a lot of comparison on it to really you know give a just opinion on it. but I will say that you know for my buddy that did you have to go through that process, he was able to get it taken care of in about a week's time; it wasn't that big of a deal. So anyway I hope you guys go out there and go explore some options.

Check out Zillow, see if there are some condos in the area right that'll make sense for you. Go check them out. Actually go talk to the seller, talk to the condo Association representatives yourself. usually they either have like a website or they have like an email or a point of contact that you can just going and talk to, a number that you can call and get familiar with the area right how well they do maintenance, how often they do maintenance, how often they checkup. You know if they have letters that they send out and what facilities that they offer right.

Because a lot of condos offer different things and sometimes different services too. So that's also something good you want to check out. Okay so yeah a lot of stuff when it comes to condos and they give me a lot of fun. They can also be a lot of pain. So you can like I said you got to make sure you find a good one. Okay anyway I'm rambling so I'm going to go ahead and sign off, nice and short sweet lesson tonight. Thank you so much for listening. I really appreciate your time. Make sure you go and check us out all right. Hit us up on our Facebook, hit us up on our Instagram. if you are ready to take our course and you want a little bit of help in the investing realm, we have a full course designed for you. We have a mentorship club called start the spark, you want to go check that out and we will walk you through the process. If you have any questions at all you can always hit us up on our Facebook group or Instagram, we will certainly get back to you and yeah we'd love to hear from you guys okay. Check it all out.

Also I have to put this out. We are redoing our eBook okay. It is going to be huge, I cannot wait for it where we've since grown our team since the first time we put it out, everyone's coming in with their personal stories. You’re going to hear from a special person as well I'm not going to give it away yet. But it is awesome, it's going to be a great book. I am definitely looking forward to it and you're going to be hearing a lot more about its release coming up very soon. Make sure you go out and get a copy when it first releases okay. We’re going to release it for $0.99.

It’s going to be for a very very small window okay. So make sure you get it then and then at that point after that it's going to be going up with some price I don't know yet, we'll put that information out of course. But make sure that you get it out when it first comes up and we are hosting a little like little special right for our individuals who want to be ambassadors for our eBooks. So if you're interested in being ambassador for us and helping us spread that word, hit us up on our Facebook all right and we want to hear from you. So we get you tuned into that special deal okay. It’s going to be great, okay anyway I'm going off thank you so much for listening. Mike out.


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