Where Should You Invest In Condos?
Buying homes has become more expensive at every turn. Over the course of 2024, the median price for a home has crept up to over $400,000, according to the National Association of Realtors. As a real estate investor, you may be sweating at the number of zeroes on your purchase total once your down payment, closing costs, and property taxes are added. But don’t worry — there’s a more affordable option you may not have considered.
Condo investing can be an effective way to expand your portfolio while saving yourself quite a bit of money. According to Zoocasa (our primary resource for this article’s condo market research), the median price of a condo in the U.S. is around $300,000. Who wouldn’t want a lower down payment, monthly mortgage payment, and $100,000 off a rental property?
Are Condos a Good Investment?
Of course, a good real estate investment involves more than just an affordable price tag. There are many factors to keep in mind when evaluating different types of housing. Compared to a typical house, is a condo a good investment? Will condo ownership help you generate passive rental income? Is renting out units within a condo community generally attractive to tenants? The answers to each of these questions depend on your goals.
Investment Considerations
For one, condos are often more affordable than traditional homes, as mentioned above. This means that in addition to the lower purchase price of the property, you likely won’t be responsible for as much property maintenance (outdoor upkeep like mowing the grass, raking leaves, etc.) or for looking after amenities (like a pool, gym, or basketball court). Additionally, condos tend to be in walkable areas in close proximity to retail stores or restaurants, putting them in higher demand for tenants. Walkability is one of the greatest attractions for condo owners.
On the other hand, you’ll be required to pay HOA or condo fees, which are typically higher for condos than homes in a traditional neighborhood. In some particularly expensive cities, condo association fees can reach up to $500 to $800 more than HOAs in other areas. You can think of the HOA dues as a tradeoff for the free outdoor landscaping and tenant amenities provided by condo associations, though — and your tenant’s rent can help cover these costs!
Further, if you’re on a time crunch, a condo investment should be planned in advance. Because lenders check both you and the condo association or HOA, receiving funding for a condo can be more time-consuming than for a single-family home. If you need a speedy purchase, a condo might not be your best option.
Do Condos Appreciate?
There are many differences between an average home and a condo unit, but do condos appreciate like normal houses do?
Yes, condos do appreciate in value in addition to generating passive income. Their appreciation rate can be higher depending on walkability, community amenities, and property maintenance — they just don’t appreciate at the same rate as a single-family home might. Condos have traditionally had a lower appreciation rate than single-family homes, but keep in mind that this rate can change with a condo in a great area and a single-family home in a less-desired area. Just make sure you find a cozy condo in a top city, like in one of the cities below.
The Most Affordable Cities for Buying a Condo
The real estate market differs from state to state and city to city. It’s important to research the area you’re scouting for properties in for factors such as walkability/proximity to cities and attractions, prices of other condos in the same neighborhood or area, and desired amenities. These should all be variables in your condo purchase decisions, but overall affordability is just as big a factor. Let’s take a look at the top five most affordable U.S. cities for buying a condo.
5. Atlanta, Georgia
In fifth place is Atlanta, GA. Atlanta is a center for culture, history, and Southern hospitality, boasting many museums and the largest aquarium in America. According to the NAR’s reports from April 2024 (our source for median condo costs), the median price of a condo in Atlanta is $284,000. This means that an 8% down payment (the average rate for first-time homebuyers, which we’ll be using for all five cities) would total to $22,736. The median household income in Atlanta is $77,655, meaning that the down payment represents just 3.5 months of payments.
4. Washington, D.C.
Coming in fourth place is the U.S. Capital, Washington, D.C. Not only is it the biggest political hub of the U.S., but it’s also home to rich American history and countless museums, bringing in thousands of tourists from around the country. In D.C., the median price of a condo is high, coming in at $352,400. An 8% down payment would total to $28,192. Since the median household income of people in D.C. is high as well, at $101,722, the down payment represents only 3.3 months of income to be paid off.
3. Louisville, Kentucky
The third city on our list is Louisville, KY. It has a historic connection to horses and the Kentucky Derby and sits less than two hours away from the Mammoth Cave National Park. With a median condo price of $214,800, an 8% down payment would equal $17,184. The median household income in Louisville is $63,114. When put against the 8% down payment, the months of income total 3.3 months.
2. Albany, New York
The runner-up for the most affordable city to buy a condo is Albany, NY, holding the title of the oldest city in the state as well as the state’s capital. It’s a major hub for banking and international trade in upstate New York. In Albany, the median condo price is $260,000. An 8% down payment for a median-priced condo would be $20,800. The median household income in Albany is $77,049, so the down payment could be paid off with 3.2 months of income.
1. San Antonio, Texas
The number one most affordable city for buying a condo in 2024 is San Antonio, TX. San Antonio holds the site of the Alamo, the famous battleground for Texas’ independence from the Spanish, as well as the 15-mile-long River Walk along the San Antonio River. The median price of a condo in San Antonio is $167,000 (the lowest on this list!), making for an 8% down payment of $13,360. The median household income in this city is $59,593, which means the down payment on a condo could be paid off in as little as 2.7 months.
Conclusion
If you’re looking to scale your real estate business, consider diversifying your portfolio by investing in condos, especially in one of the above five cities. Understanding the benefits of condos and cities where you can find the best deals will aid you in making smarter, more informed decisions when investing in new properties.
