What is a Condo?
A condominium (condo) is a form of property ownership where individuals own their specific unit within a larger building or complex, while common areas (hallways, elevators, pools, grounds) are shared and maintained by a condo association. Condo ownership includes the interior space of the unit and a proportional share of the common elements.
Condo ownership structure
When you buy a condo, you receive a deed to your specific unit. You also become a member of the condo association, which governs the common areas through a board of directors. Monthly HOA fees cover building maintenance, insurance, common area upkeep, reserves, and sometimes utilities. Fees vary widely from $150/month in simple complexes to $1,000+/month in luxury buildings.
Investing in condos
Pros: Lower entry price than single-family homes, exterior maintenance handled by HOA, amenities (pool, gym, security) attract tenants, less personal maintenance responsibility.
Cons: HOA fees reduce cash flow, HOA rules may restrict rentals or investor ownership, special assessments can be costly and unexpected, shared walls mean neighbor issues, harder to add value through renovation, condo-specific financing rules (some buildings are not FHA-approved).
Financing condos
Conventional loans are available for condos but the building must meet certain criteria: investor ownership percentage limits, litigation status, reserve fund adequacy, and insurance coverage. FHA condo approval is separate and more restrictive. If the building is not approved, buyers may need non-warrantable condo financing at higher rates.
Wholesaling condos
Condos can be wholesaled but check for right-of-first-refusal clauses, rental restrictions, and association approval requirements. Some condo associations must approve all new buyers, which adds time and uncertainty to the closing process.