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Investment Condo

We specialize in condo financing.

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Condo Financing

RK Mortgage Group is a leader in condo financing. Condominiums offer a lot of convenience and flexibility. They also have different mortgage requirements than a traditional home. That's why we offer very exclusive product options for condos, whether they meet Fannie Mae’s guidelines or not. Benefit from our experience in getting you the best Condo financing at a lower rate.

Some investment condo's will qualify under our No Income Verification Program.

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Upload loan documents and e-sign mortgage forms online.

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Are you considering a condo investment but aren’t sure if purchasing a condominium or a single-family home is a better option? Many investors shy away from a condo investment because of issues with homeowner associations or even a general lack of experience. Here are several tips to help you make an informed decision about investing in a condo. 

What is a good condo investment?

Deciding if purchasing a condo is a good idea depends on your goals. Are you considering becoming a landlord and renting out the condo? Do you want to purchase a condo to fix it up and flip it for a profit? Maybe you’re considering a condo as a second home for family vacations. 

All of these are excellent reasons for buying a condo or even a single-family home. If you’re investing in real estate for a return, it’s a good idea to evaluate the deal you’re getting based on the property’s cash-on-cash return. 

What is Cash-on-Cash Return?

In real restate investing cash-on-cash return is simply the ratio of pre-tax cash flow from the property to the total amount that you’re investing expressed as a percentage. Single family homes often have a lower cash-on-cash return than a condo does. 

This makes sense if you’re planning on renting out your condo or even if you’re considering investing in a condo hotel. Condo hotels are recommended for more experienced investors due to the unpredictable nature of running a hospitality business. Condo hotels are often found in high rise buildings and are operated as hotels or vacation rentals.

Getting back to cash-on-cash returns, remember that a condo typically has a higher ratio value than a single-family home. Calculate your annual pre-tax cash flow based on 12 months of rent and be sure to include income from things like non-refundable deposits, paid parking or pet rent. 

Cash flow is only part of the equation and you will need to determine your down payment for the condo, your closing costs as well as the cost of any improvements or repairs you’ll make for renting the condo. Divide your annual cash flow by the amount you’ll be investing and multiply by 100 to get the percentage. 

Which is better, single family homes or condominiums?

There are a number of factors to consider when deciding if a condo is better than a single-family home including where the unit is located, number of bedroom, units, studio, apartment, levels, floor types, and the kitchen; however, from an investment standpoint a good single family home investment might have a cash-on-cash return of 3 to 5 percent. Condominiums typically offer cash-on-cash returns of 4 to 7 percent.

What about ongoing maintenance and repairs?

Investing in a condo is not exempt from maintenance and repairs, just like your single-family home. As the property owner, you will be responsible for all repairs as well as complying with any association rules. This includes structural repairs, roof leaks, plumbing, appliances, and landscaping. When something breaks, you’re responsible for the repairs. You can hire a property management company to hand repairs and maintenance for you; however, this will increase your expenditures and reduce your cash-on-cash return for the property.

If you can handle tenant turnover and dealing with association rules condo investing might be right for you. 

How should you finance your condominium investment?

There are a number of options available to you when it comes to condo financing. There are first time home buyer condo loans, condo association loans and even bad credit condo loans depending on your financial situation. Conventional mortgage loans can be an option for investment properties like a condo; however, you may find qualifying to be more difficult than it was for your owner-occupied home. 

If you’re in the fix-and-flip business and need short-term financing hard money loans can a powerful way to purchase and flip a condo. 

Investing in single-family homes or a condominium can be a challenging and rewarding experience for investors of all levels. Doing your homework can help you avoid costly mistakes and get you on the path to achieving your financial goals.

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