Condos usually give a better return than SFRs, even with $200+ HOA fees. And don’t forget what you get for those fees (new roof when needed, no need to pay a gardener $40/month, etc.). HOA and all other maintenance is deductable, as is depreciation of the structure itself. Condos are obviously more risky than SFRs, but not nearly as bad as most people think.
Some people also think that 1-bedroom condos are a bad investment – far from it. You can pick up a 1-bdrm apartment conversion in a college town for $70-80k that will give the same cash flow as a $200k SFR. Your tenants won’t stay as long as they would in a bigger place, but you’ll have no shortage of them.
Factor in HUGE maintenance costs just to be safe. The people who do this for a living claim 40% of rent over the very long term (decades), less for newer construction, and less for a condo, as some of the largest items are paid by the HOA. Don’t be one of those cheapskates who pays for apartment grade carpet every 5-10 years – some of the more expensive improvements (hardwood, granite) will literally last for 100+ years.
