If I were to buy a condominium, would I be allowed to rent it out to another family? What's the policy usually?

phatj

Golden Member
Mar 21, 2003
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I'm thinking about buying a condominium in a couple years for the purpose of renting it out to a couple (The one I'm currently looking at is really nice and costs $99,000). Collecting rent for about 8-10 years and then selling the condo... I'll have a nice amount of money then when I'm out of college.

Since I am purchasing the condo, would I be able to rent it out to another couple? How does this type of thing typically work? Thanks.
 

Saulbadguy

Diamond Member
Jan 27, 2003
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Depends on the kind of loan you get ,and whether the home owners association allows renting or not. I live in a condo, and my loan states that I must live here for at least a year. The HOA allows renters. Keep in mind on top of the mortgage, you have to pay HOA fees..mine run $146 a month, includes exterior maintance, water, basic cable, snow removal, lawn care/landscaping..etc.
 

phatj

Golden Member
Mar 21, 2003
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Well here was my idea... Get a loan to buy the condo. So I'm paying $525 on the mortgage, say another $140 for HOA fees... so I'm dishin out $665/month.

I rent the place out for ~$800/mo... over 10 years, lets say the place is occupied at LEAST 85% of the time.

$86,000 rent collected over 10 years, and then if I choose, I could sell the apartment... so say it's sold for $90,000. That's $176,000 collected. What else would I have to figure in to get a more accurate picture of the investment all together?
 

thedarkwolf

Diamond Member
Oct 13, 1999
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Taxes, insurance, repairs, putting up with the renters

That $145 worth of rent your making a month after paying the mortgage going to start dwindling when you figure in all the other crap.
 

Cyberian

Diamond Member
Jun 17, 2000
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Originally posted by: phatj
Well here was my idea... Get a loan to buy the condo. So I'm paying $525 on the mortgage, say another $140 for HOA fees... so I'm dishin out $665/month.

I rent the place out for ~$800/mo... over 10 years, lets say the place is occupied at LEAST 85% of the time.

$86,000 rent collected over 10 years, and then if I choose, I could sell the apartment... so say it's sold for $90,000. That's $176,000 collected. What else would I have to figure in to get a more accurate picture of the investment all together?
Where will you live all this time?

 

dirtboy

Diamond Member
Oct 9, 1999
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Originally posted by: phatj
So I'm paying $525 on the mortgage

How do you figure that? $99,000 @ 2.5% with taxes and insurance is $523/mo. There's no way you're going to get that. Not to mention that rates for non owner occupied typically run about two points higher than the market. So, if the market today is at 6%, you're looking at 8%.

$99,000 @ 8% with taxes and PMI is $858/mo. Now let's say you can put 20% down to get out of PMI.

$79,200 @ 8% with taxes is $663/mo.

Please share how you came up with your numbers.
 

Sluggo

Lifer
Jun 12, 2000
15,488
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A $90,000 loan @ 6% for 15 years would have a P&I of about $760

After 10 years you would still owe about $33,500 on the loan. And you would have paid about $38,000 in interest.

You figure insurance and taxes are going to be $150 a month, and just for grins say the maintenance fee is $150 a month.

Now you are at $1060 a month out of pocket.
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A $90,000 loan @ 6% for 30 years would have a P&I of about $ 540

After 10 years you would still owe about $73,500 on the loan. And you would have paid around $48,000 in interest

You figure insurance and taxes are going to be $150 a month, and just for grins say the maintenance fee is $150 a month.

This way you outgoing per month is $860


Sounds like a slim deal either way, unless you can pull really high rents in your area. Also consider how you make the payments the months it isnt rented.

 

Sluggo

Lifer
Jun 12, 2000
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Originally posted by: dirtboy
Originally posted by: phatj
So I'm paying $525 on the mortgage

How do you figure that? $99,000 @ 2.5% with taxes and insurance is $523/mo. There's no way you're going to get that. Not to mention that rates for non owner occupied typically run about two points higher than the market. So, if the market today is at 6%, you're looking at 8%.

$99,000 @ 8% with taxes and PMI is $858/mo. Now let's say you can put 20% down to get out of PMI.

$79,200 @ 8% with taxes is $663/mo.

Please share how you came up with your numbers.


OOps I forgot to add in the $80 a month for PMI
:eek:
 

TwinkleToes77

Diamond Member
Jul 13, 2002
5,086
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i know the condo we live in we pay $480 a month mortgage and $300 month condo fees. ppl who rent (posted all the time in the mail room) pay upwards of $1100 to rent the same place. So you could always find out how much people rent them for in your area.. if its an apt building normally they have a posting of any they want to rent. Thats a good basis.