Make Money with Condominiums and Townhouses
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Gary W. Eldred, in his Make Money With Condominiums and Townhouses, differs from those get-rich-quick types who imply that all it takes to be a landlord-tycoon is creative financing and chutzpah.
Real estate can be rewarding, but you have to do your homework. Lots of it. This is where Eldred - a Realtor who has taught at Stanford University and the University of Illinois and co-wrote the thorough Investing in Real Estate with Andrew McLean - comes in.
How do you choose the right condo or town house? The due diligence you have to exercise is considerable. When you are negotiating to buy a unit, the seller has to show you legal and financial documents about the homeowner's association. Read them closely. A homeowner's association that is in financial trouble is more likely to levy special assessments on homeowners to cover deficits or pay for maintenance or repairs.
Other questions: Does the association carry enough insurance? Is it suing or being sued? (Guess who'll pay the legal bills.) Know that sellers and Realtors must disclose any serious defects of a property that they are aware of.
Does a condo development have too many renters? That could harm property values. How do you evaluate unit location, density, size (measurement errors happen frequently), livability, security, parking, amenities and so forth? If your eyes glaze over at all the detail Eldred provides, you may not be cut out to be a real estate investor.
Why invest in condos and town houses? Because in many areas, single-family homes have become too expensive relative to the rental income they can bring.
Eldred gives a good overview of what you need to know before you plunge into the exciting (but perilous) world. Read Make Money With Condominiums in conjunction with his earlier book, Investing in Real Estate, for more insight into how to find bargains and obtain financing from less-known channels. (USA TODAY, October 20, 2003)