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  • Writer's pictureAndrej Nedeljkovic

Is a condo or house better for investment?

Updated: Aug 24, 2023

What’s a better investment for rental property? Is it condos or is it single-family homes? So when you’re trying to decide between purchasing a condo or a single-family home for investment property, how do you decide which one is better? And I’ll be honest with you, I don’t know that there’s a single answer for every single person. There’s pros and cons to each. We have investors that love condos. That’s what they just liked to buy condos, rent out condos. We have others that love single-family homes, and that’s their niche. We have others that like duplexes. So it really depends on your individual preferences, but I want to kind of give you the pros and cons of each one.

Kind of what we see the differences is for a single family home, typically, you see a tenant that leases that home, they’re going to typically stay longer for more years. And that’s a good thing. You want a tenant to stay for many years. According to this Honolulu property management company anytime a property turns over, there’s always some cost involved in that. So we want a tenant to get in there and stay as long as possible. And we see that a little more with single-family homes than we do with condos. So that’s one pro for single-family homes. Another pro for single-family homes is that they’re in higher demand. They lease up quickly. And quite honestly, they appreciate it very well. And what I mean by that as they go up in value.

So a single-family home, there’s a lot of pros to it. The cons to a single-family home would be that there’s a yard to keep up that either you or the tenant has to do it. Our lease puts that on the tenant, but if you’re one of those types of people that are very particular, you always want the grass cut and watered and hedges trimmed perfectly every time. Most of our tenants do a very good job of doing that, but it is something that we have to watch over on the flip side. With a condo, all you’re really worried about is the interior. You don’t have to worry about exterior maintenance. You don’t have to worry about lawn care. All of that’s included in your association fee.

So that is one of the pros to a condo, is that you don’t have to worry about the exterior. A con to a condo could be that tenants do turnover a little more often, but again, you’re only worried about that inside. There’s not really anything to do on the outside. On resale, single-family houses resell very well. Condos do as well, but sometimes they can be a little harder to finance, which can sometimes make them harder to sell. And you’re kind of limited to be in uniform among other properties in that development.

And what I mean by that is, you’ve got one condo, A2 is probably going to look very similar to A4. And so if A4 is on the market for whatever price, there’s not a lot that differentiates you from that, unless you’ve done upgrades on the inside and things like that. So you get a little bit of a premium there, but you’re kind of limited. The floor plans are often almost the same or very similar, associate more uniform. So sometimes that can be a con in that you’re bound to leasing yours and selling yours at the same price that the others are.

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