Choosing Between Condo and House for a Tyler Rental Property

Choosing Between Condo and House for a Tyler Rental PropertyTyler, Texas is a great place to invest in a rental property. With all the growth in the area and the strong rental market, buying real estate here and now is a smart choice. If you're trying to choose between a house and a condo for your investment property, we can help. As with any decision, there are pros and cons to either option, but we think considering these factors will help you narrow your search to the property that suits your goals. 

Financial Considerations

Because you're looking for not a personal home, but for a property that can become a stream of income, the financial considerations are perhaps the most important. 

Initial Investment

The upfront costs for purchasing a house typically exceed those for a condo. Houses generally come with higher price tags due to their larger size and the land they occupy. While you need to talk with your lender to confirm, financing a house is usually going to require a larger down payment and lead to higher monthly mortgage payments, just because of the price of the property. Conversely, condos are often more affordable, potentially requiring a smaller initial investment and lower monthly payments.

HOA Fees

Again, there are always exceptions to this, but most of the time you're going to be paying a higher HOA fee with a condo than you are with a house. Virtually all condo communities, and some single family home communities, come with mandatory HOA fees to cover the maintenance of common areas, amenities, and sometimes utilities and insurance.

These fees can vary significantly but represent a recurring expense that you need to factor into the rental yield calculations. 

Maintenance

Figuring out your potential profit is not as simple as rental revenue minus monthly mortgage. The general upkeep and seasonal maintenance of the property can make up a significant portion of your expenses, too. 

Maintenance expenses for houses are generally higher. As a landlord, you are responsible for the upkeep of the entire property, including the roof, landscaping, and any structural issues. Condos relieve some of this burden since exterior maintenance and common area repairs are typically managed by the HOA. However, this does not eliminate maintenance costs entirely; you are still responsible for the interior and certain aspects of the property.

Property Management

Managing a rental property can be a hands-on experience. Houses may require more effort due to their larger size and the need to maintain the exterior and yard. Condos might be easier to manage thanks to the HOA taking care of many aspects of maintenance. However, dealing with HOAs can also present challenges, such as navigating rules and regulations that can impact how you manage your rental.

The details of the level of property management you'll need to be prepared for are property specific. What matters most is to consider all of these things before you buy. We can help you get all the details regarding HOA guidelines, home inspection reports, and other information that can help you anticipate the responsibility you're taking on. 

Location

The location of your rental property matters as much as any other factor. You may find that as you're doing research to find the locations with the best rental market conditions, it narrows down the choice between house and condo for you. This can be because of the options available in your budget in that location, or just the type of properties that are available there in general. 

Proximity to schools, parks, shopping centers, and employment hubs will make a property more attractive to potential renters. Houses in residential neighborhoods might offer a quieter, more family-friendly environment, whereas condos in more urban or developed areas might attract those seeking convenience and lifestyle amenities. Consider your ideal tenant and where they would want to live to help you narrow your focus.

Appreciation

The appreciating value of your rental property matters, even if you don't plan to sell for a long time. The equity you are building can be leveraged to improve the property (and increase its rental rate) or to help you work toward other goals. And besides all of that, the smarter investment is one that is appreciating steadily. 

The great news is, with growth like we are seeing in Tyler, you can expect good appreciation rates from both houses and condos here. Historically, single-family homes tend to appreciate more consistently over time compared to condos. This can be a significant factor if your investment strategy includes long-term appreciation. However, this is not a hard and fast rule and can vary based on market conditions. In Tyler, for instance, areas undergoing revitalization or those with planned infrastructure improvements can see significant value increases for both houses and condos.

The bottom line? Like Kenny Raymond with The Raymond International Group says, "Buying an investment property now is one of the best choices you can make. Try to avoid getting so caught up in the right strategy that you delay investing. You'll learn as you go, and your future self will thank you for taking the leap."

Ready to find your investment property? Contact us any time to learn more about homes for sale in Tyler

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