We buy houses in Boca Raton. Often dubbed as the Beverly Hills of Florida Boca Raton is a beautiful south Florida city lush with breathtaking beaches, museums, and jazz clubs to say the least. Currently, its real estate market remains a strong buyers’ market and the dazzling upmarket area is projected to grow over the next financial year, making it a prime spot for potential investment. In this post, we hope to share some researched perspective on the advantages and disadvantages of investing in the Boca Raton Condominium market. If you are thinking “I need to sell my house Boca Raton for cash at a fair rate”, continue reading to find out how Your Trusted Home Buyer can help you today.
Are Condos Good investments?
In the current market climate, yes condos are perfectly good investments and have been generating great returns for real estate investors. In May 2019, a study conducted by the National Association of Realtors found that the U.S. median sales price of a condo was $257,100 and comparatively, the median sales price of a single-family home was $280,200, making condos a significantly cheaper investment.
A concern many have before investing in condos is the appreciation rate. Yes, a condo will not appreciate as fast as a home does, but the growth rates are still extremely healthy. A home generally appreciates faster than a condo given two main reasons: Land and Location. The value of the land below the home usually skyrockets its value and developing or well-established neighborhoods boost the demand. On average, in 2017-18, condos appreciated by 3% while single-family homes appreciated by 5%. This rate can be significantly bolstered by investing in condominiums in prime locations, and often they can rival or even outperform single-family homes in appreciation rates.
Measuring the viability of the Investment – Mathematical breakdown
Consider this example to test the viability of investing in the Boca Raton condominium market.
As of November 2020, after a staggering 15.4 % increase the median sales price for condos in South Flordia is $225,000. Boca Raton rental market trends indicate that the average rent per month is approximately $2,040. Therefore, revenue from rent would be $24,480 per year. Without considering taxes and other expenses this would generate a return of 10.8% year on year. (24,480/225,000)
Let us now factor in additional expenses under a ‘worst-case scenario’ assessment style
The estimated annual property tax in Boca Raton is around $1350. Using 2017 data, Florida’s average annual insurance premium for condominiums is approximately $940. Furthermore, let’s also assume the following expenses:
- you need $200 a year for maintenance and repair,
- the home is vacant for a month (no rental income)
- Once every five years, you face a major expense (legal/repairs) of $4000. (or $800 per year)
The total of these expenses and taxes would be $5330 per year or $445 per month.
Therefore, your annual net rental revenue would be $19,150 (24,480- 5330), and hence your net year-on-year return rate for the investment would be 8.51% (19,150/225,00). This is an attractive rate of return, and this analysis has not considered its appreciation value.
- Lower maintenance than single-family homes
- Condo association fees are significantly lower than HOA fees
Looking to sell an investment property?
If you are looking to sell investment property fast to finance an investment in the Boca Raton condominium market, Your Trusted Home Buyer is your number one choice. We are a local group of real estate investors who can make an all-cash offer on your home at a fair price to you and help you close the transaction in as little as one week. We buy homes in all conditions and you do not have to lift a finger when it comes to repairs or closing costs; we are here to help! Contact us here, to learn how we can help you.