by Charles Merrifield

Created on: September 04, 2009

Investing in a condominium can be a wonderful investment opportunity for the right person with the right goals at the right time. Why so many qualifications to the response, you might ask? The answer lies in the fact that any investment has potential risk and potential reward, and it is up to each individual to determine the financial vehicle that will carry their capital into the future. Are you a person that tolerates risk well? How much money are you planning to place in this opportunity? What is your exit strategy and time line? Once these questions are answered there will be a lot of people standing on the sidelines who are not comfortable investing in a condo. However, there will be a certain number of people for whom investing in a condo is an amazing way to increase their net worth and further secure their future financial security.

Are you a person that tolerates risk well? Realizing your ability to tolerate risk is the first step in determining if a condo investment makes sense. The last two years have been a horrifying experience for real estate investors and more people now than ever before will be willing to tell you that any real estate investment is a terrible idea. However, considering that prices of real estate have sunk so far in the last two years, it is an interesting point in time to explore the idea that the market wont support lower home prices. It is true that many people have gone from positive net worth to negative net worth in a flash. All of these factors combined means that you have to know yourself, and know if you are willing to take a chance in the condo market.

How much money are you planning to place in this opportunity? Higher end condos may be entirely different investment opportunities than lower end condos depending on each unique market. Your capital on hand or the availability of financing will give you a better idea if a condo investment is right for you. Real estate agents will frequently tell their clients that each neighborhood is different, and in this case they can be trusted. Knowing your limits is a great place to start towards finding a profitable opportunity.

What is your exit strategy and time line? Five years ago, the condo market and real estate market in general was saturated with people flipping homes, which means that they would buy them just to make minor improvements and put them back on the market immediately for a profit. It is doubtful that the United States will see those types of investments in the near future for a variety of reasons. In the short term, people looking to acquire a condo as an investment must realize that it will be a long term commitment to see equity gains. If you have the stomach to wait for a long period of time for your investment to bear fruit, then right now might be a good time to seek out a condo. However, if you are looking for short term gains then the condo market is sure to disappoint.

Can a condo be a good investment opportunity? Absolutely! However, not everyone is right for this type of approach to securing a solid financial foundation. You need to have sufficient capital, have high tolerance for risk with your investments, and understand that this is not the same get rich quick scheme of the early part of the decade. If you meet these guidelines, make sure that you take your time with research and overall due diligence. In the long run, a condo investment can result in positive cash flow and an increased net worth for the right investor.

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