I just found the perfect condo to buy and rent ... It should be a smart place to put my money
I’ve struck a deal to buy the perfect one-bedroom condo.
I don’t think I’ll have any trouble finding a tenant for my second investment property.
As you may recall from a previous post, I was looking for a condominium in the Minneapolis area that I can rent and build equity in.
I started by checking out some of the bigger complexes. They were all very pleasant, with pools, workout rooms, guest suites and other shared amenities.
They also shared a problem.
Every one of them was a box, just like all the other boxes in the place, except for paint jobs and number of bedrooms. In that situation, a landlord is mostly competing on price.
That's not what I wanted.
A friend had a similar issue when she and her husband sold their home in a large subdivision. The subdivision's builders had selected four home styles and put each on the same-size lot, so every house was a lot like many of its neighbors.
The homes were all upscale and roomy, but there was nothing distinctive about any of them. They had nothing that would make a buyer say, "I want the one with the cool woodwork," or, "I'll pay more for the one with the gorgeous yard."
Buyers just chose the model they wanted, then bought the cheapest version of that on offer.
There were lots of cheap versions on offer, too. Some of the subdivisions' homes were foreclosures, and banks wanted less for the same kind of house my friend was selling.
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My friend finally sold the house, but it took two years. During that time, a job in another state slipped through her fingers.
I wanted a condo with some personality, one that would make a tenant want to live there and make a potential future buyer want to write a check.
So I moved on to condos in historic buildings.
There are a fair number of these in the Twin Cities, where railway and lumber barons of the early 20th century built mansions. Some mansions are still single-family homes, but many have been subdivided into condos.
The first place I liked was a townhome. It had some personality as well as a charming central courtyard, great curb appeal, two bedrooms and its own basement.
That's all good. In general, two-bedroom condos rent for more than one-bedroom condos, and everyone likes coming home to a visually appealing place.
But there were four significant drawbacks.
The interior needed a fair bit of work before it could be leased. I wanted to buy something that was already in good shape or close to it.
It was also a foreclosure, so buying it from the bank meant there would be layers of bureaucracy to sort through before I could take possession.
This townhome was in a neighborhood that's mostly other townhomes and apartment buildings. Renters who want to live in that area have plenty of other choices, so I'd still be competing, at least in part, on price.
And finally, I didn’t think it would appreciate as quickly as a townhome in a neighborhood full of single-family homes.
Condo values usually rise more slowly than those of single-family homes. But condos in a neighborhood dominated by owner-occupied houses can ride on those homes' coattails, appreciating faster than flats in more renter-oriented neighborhoods.
The next stop revealed the place I'm under contract to buy.
The association includes 10 condos in two buildings, which were constructed in 1915. Most of the neighborhood is filled with high-end, single-family homes.
I saw a one-bedroom condo with huge, south-facing windows in both the living room and bedroom. The bedroom has the same huge windows facing west as well.
To the south, the windows look out over a park owned by the neighborhood association that's the perfect space for a walk, a tai chi practice or just resting the eyes.
The living room has a working fireplace. Even though few people end up using them frequently, fireplaces are picturesque and therefore in demand.
All the rooms are cheerful and functional, with fresh paint and attractively unusual tile in the bath and what look like original cabinets in the kitchen. Laundry and parking come with the deal.
The sellers were asking $105,000 but accepted my first offer of $95,200.
We'll need to fix a radiator and a bit of the floor beneath it, add smoke and carbon monoxide detectors, and install new outlets in the bathroom. I can live with that. Very few homes are absolutely perfect.
I was sold.