Explore the pros and cons of investing in condominiums as rental properties, weighing factors like purchasing price, HOA fees, and market competition.

Are Condos Good Rental Properties? Exploring the Pros and Cons

Condos are appealing due to higher occupancy rates, less maintenance, and lower purchase costs compared to houses.

HOA fees and restrictions can complicate rental operations for condos and affect their profitability.

Investors need to carefully evaluate location, HOA rules, and costs to assess whether condos align with their long-term investment goals.

There’s no doubt about it: short-term rental (STR) properties can be amazing investments. While single-family homes may seem like the obvious choice for many property owners, the fact is that condominiums offer advantages you can’t find anywhere else. 

Condos are increasingly popular options for people looking to grow their portfolio and earn rental income. Most cost less than houses nearby, and many offer managed amenities like pools, fitness centers, and secure parking. Their smaller floor plans make cleaning and maintenance easier. On top of that, short-term rental condos across the country see annual occupancy rates of 57.4% (compared to 53.2% for houses). 

While these considerations don’t tell the whole story, they are a great starting point for deciding which route to take with your STR property investment. 

So, are condos good rental properties? Let’s look at some pros and cons. 

AirDNA’s powerful yet easy-to-use tools make hosting and investing a breeze. This means having every insight you need, all in one place, always up-to-date.

According to the traditional definition, condominiums (condos) are individual units owned by residents, all of whom share common areas and amenities that are maintained by a homeowners association (HOA) or condo association. 

Unlike traditional single-family homes, condos let residents enjoy the perks of homeownership without the hassle of exterior upkeep and landscaping. Condo owners participate in community decisions, giving them a say in matters such as budgeting, rule enforcement, and capital improvements—all of which can affect property values and overall quality of life in the condo community.

This shared ownership comes at a cost, however. Condo owners typically pay monthly fees (known as condo association fees or HOA fees) to cover needs like:

Amenities like swimming pools or fitness centers

These fees are important considerations for investors looking to purchase a condo as a rental property. 

In the context of short-term rentals, condos and apartments are lumped into the same category. We use the terms interchangeably to mean a multi-family dwelling unit. 

The main distinction between condos and apartments outside of the STR industry is based on ownership. Apartments are often rented, rather than owned, by an individual. However, Airbnb has no way of knowing whether the host is actually the owner of the space or a long-term tenant doing rental arbitrage. For that reason, there is no distinct condo option on the booking platform. Condos fall under the umbrella of apartments as a property type.

Our data mirrors Airbnb’s property types. For the analysis in this article, we also narrowed it down to markets that had 500 condo listings or more in the last year. 

 Gain insights into the revenue and occupancy trends in your market.

Pros of Buying a Condo as a Vacation Rental Property

Exploring the advantages of condo investments for vacation rentals sheds light on the potential benefits and opportunities they offer to property investors. Benefits of condo investing may include:

Condos in the US outperform houses by at least 5% on average in terms of short-term rental occupancy (57.4% versus 53.2%) . Their floor plans also work well for smaller and medium-sized groups, tapping into a large market of potential renters.

Since exterior upkeep, landscaping, and common area maintenance are managed by the HOA, condo owners can kick back and enjoy a well-maintained property without having to do the work themselves.

Condo complexes typically have security measures such as gated entrances, surveillance cameras, and on-site security personnel. 

Common areas and social events organized by the HOA can create a welcoming atmosphere for residents and vacationers.

Condos can be a cost-effective option for investment property owners because they typically cost less to purchase than single-family homes or townhomes. This makes them more accessible to investors with limited capital.

Looking at average yield, or the annual revenue potential divided by home prices, can give investors a better idea of how profitable purchasing a condo or apartment is in a given market. High average yield essentially points to markets where the cost of entry (i.e. purchasing price) is low relative to its income-earning potential. 

Outside of purchasing price and income potential, HOAs can offer distinct financial benefits. While HOA fees may seem expensive at first glance, they can cost-effectively spread out the cost of maintenance and landscaping that would otherwise be expensive for any single-family owner to cover.

 In addition, HOAs facilitate amenities, like pools or fitness centers, that might be otherwise impractical or prohibitively expensive for an individual homeowner to afford. Monthly HOA fees provide a stable, predictable expense schedule for covering these costs. 

Condo ownership comes with lower insurance premiums than with single-family homes, as the HOA's master insurance policy usually covers the building’s exterior and common areas. 

Many HOA fees are also tax deductible, helping to reduce each owner's overall tax liability.

One huge perk of owning a condo is the access to luxury amenities typically reserved for large, expensive houses. Many condo communities offer:

Security features such as gated entrances, surveillance cameras, and security guards

Additional services such as a concierge, package delivery, on-site maintenance, and housekeeping

Having these amenities available to travelers will seriously boost your investment property’s appeal and help draw in vacationers, leading to more rental demand and revenue.

Cons of Buying a Condo as a Vacation Rental Property 

Considering the drawbacks is crucial when evaluating whether condos are good rental properties. Drawbacks may include:

All condos come with HOA fees and restrictions that can affect your short-term rental property’s success if you’re not prepared for them.

HOA fees are usually based on factors like:

In addition, condo owners are sometimes asked to help fund repairs, renovations, or capital improvement projects. While these projects can benefit your property, they can come unexpectedly or at inopportune times, disrupting cash flow and hurting profitability. 

Your ability to rent to travelers can also be impacted by community restrictions set by the HOA, possibly affecting:

The number of rental units allowed in the building

Condo associations can also restrict how residents use common areas, parking spaces, and recreational facilities. All of this could affect your ability to provide a great guest experience. 

At the end of the day, it is the HOA—not the property owner—who gets final say in decisions about how the condo operates as a rental. This can be a distinct disadvantage compared to owning a single-family home. 

HOAs sometimes require approval to change or modify a condo. Requesting to renovate, upgrade, or add onto a unit can be time-consuming and involve further fees and documentation. 

Even the tenants you book can be subject to HOA approval. Some HOAs require vetting processes like:

Resale of a condo must also be approved by the HOA, which can slow the process and add to the already high cost of moving. 

Overall, owning a condo as a rental property is much less flexible than owning a single-family house. 

Multiple rental units in a condo building might compete for short-term renters, leading to downward pressure on rates and occupancy levels. This dynamic is more prevalent in oversaturated markets or during an economic downturn. 

HOA disputes are fairly common. People can butt heads over management decisions, budget allocations, or rule enforcement, leading to tension among residents and possibly impacting the appeal of the property and the guest experience.

 Plan your STR strategy based on real booking activity and trends—plus, see how things change year over year.

Factors to Consider Before Investing in a Condo as a Rental Property 

Location: Condos located in high-demand areas will attract tenants, generate more rental income, and offset competition from neighboring short-term rental properties. It’s no surprise that income earning potential for condos is highest in Mountain/Lake and Coastal locations given their relatively high seasonality and popularity as vacation destinations.

HOA rules: Make sure that the complex’s rules about rental policies, leasing restrictions, pet policies, noise regulations, and maintenance responsibilities align with your investment goals and rental strategy.

Rental demand and market trends: Tools like AirDNA can give you a look at rental trends, occupancy rates, average rental prices, and competition from other rental properties so you know what kind of income to expect. 

Overall costs: Purchase price, mortgage payment, property taxes, condo fees, insurance costs, investment loan service, and potential rental income should all factor into your cash flow and return on investment (ROI) calculations. 

Long-term investment goals: Ask whether you plan to keep the property as a short-term rental investment, use it as a vacation home for personal use, or eventually sell it for a profit. Does a condo fit into those plans?

Thorough due diligence and planning help to mitigate risks in real estate investing and set a strong foundation for the property to be profitable.

Let's take a look at short-term rental markets where condos are performing well. We ranked STR markets based on their average yield, which takes into account both revenue potential and purchasing price, as well as revenue potential alone. We encourage investors who are seriously considering a condo purchase to evaluate each prospective property form a variety of standpoints to get a holistic understanding of potential performance.

Wisconsin Dells, the Ozark Mountains in Arkansas, and St Louis lead in average yield for condo markets. In Wisconsin Dells, Wisconsin, for instance, condos are priced approximately $27,000 cheaper on average than houses ($213,079 versus $239,953). The difference in annual revenue potential between the two property types, however, is less than $2,000. As a result, the average yield for a condo in Wisconsin Dells is nearly 4% higher than it is for Airbnb homes because condos as a property type are cheaper to buy.

If you look at annual revenue potential alone, the list of top 10 markets for condos shifts. Keep in mind, though, that considering this metric in isolation has its shortcomings. 

For one, annual revenue potential is based on how much a listing would have made if it were available for the previous 365 days or when the listing first came online, whichever was more recent. In short, we add up the revenue a listing earned on available days in the last year and use modeling to infer what it could’ve expected to earn on the other, unavailable nights. In reality, though, short-term rental properties are rarely available every single day of the year.

Perhaps unsurprisingly, Mountain/Lake and Coastal destinations dominate the top 10 condo markets for annual revenue potential. Earning potential for a condo or apartment in Aspen/Snowmass, Colorado, is more than triple the average annual revenue potential for condos nationally ($125,872 versus $37,421).

That being said, the cost of condos in these markets is steep—in Aspen/Snowmass, you’re looking at a price tag upwards of 2 million dollars. The average yield for condos in this market is a modest 5.4%, more than 2 percent lower than the 7.9% average average yield for condos nationally. Compared to the average yield for short-term house rentals, though, condos offer a better return on investment in Aspen/Snowmass, Telluride, Colorado, and Park City, Utah.

Understand the investment potential of any address in the world. 

Curious if condos are good rental properties? Discover the benefits and drawbacks of investing in condos as short-term rentals.

Key Takeaways:
Condos are appealing due to higher occupancy rates, less maintenance, and lower purchase costs compared to houses.
HOA fees and restrictions can complicate rental operations for condos and affect their profitability.
Investors need to carefully evaluate location, HOA rules, and costs to assess whether condos align with their long-term investment goals.

There’s no doubt about it: short-term rental (STR) properties can be amazing investments. While single-family homes may seem like the obvious choice for many property owners, the fact is that condominiums offer advantages you can’t find anywhere else. 

Condos are increasingly popular options for people looking to grow their portfolio and earn rental income. Most cost less than houses nearby, and many offer managed amenities like pools, fitness centers, and secure parking. Their smaller floor plans make cleaning and maintenance easier. On top of that, short-term rental condos across the country see annual occupancy rates of 57.4% (compared to 53.2% for houses). 

While these considerations don’t tell the whole story, they are a great starting point for deciding which route to take with your STR property investment. 

So, are condos good rental properties? Let’s look at some pros and cons. 

Smart investments happen here.

AirDNA’s powerful yet easy-to-use tools make hosting and investing a breeze. This means having every insight you need, all in one place, always up-to-date.

Start exploring for free
Understanding Condos 

According to the traditional definition, condominiums (condos) are individual units owned by residents, all of whom share common areas and amenities that are maintained by a homeowners association (HOA) or condo association. 

Unlike traditional single-family homes, condos let residents enjoy the perks of homeownership without the hassle of exterior upkeep and landscaping. Condo owners participate in community decisions, giving them a say in matters such as budgeting, rule enforcement, and capital improvements—all of which can affect property values and overall quality of life in the condo community.

This shared ownership comes at a cost, however. Condo owners typically pay monthly fees (known as condo association fees or HOA fees) to cover needs like:

Maintenance of common areas
Amenities like swimming pools or fitness centers
Landscaping
Building insurance
Snow removal

These fees are important considerations for investors looking to purchase a condo as a rental property. 

Compare Airbnb markets

Defining Condos for This Analysis

In the context of short-term rentals, condos and apartments are lumped into the same category. We use the terms interchangeably to mean a multi-family dwelling unit. 

The main distinction between condos and apartments outside of the STR industry is based on ownership. Apartments are often rented, rather than owned, by an individual. However, Airbnb has no way of knowing whether the host is actually the owner of the space or a long-term tenant doing rental arbitrage. For that reason, there is no distinct condo option on the booking platform. Condos fall under the umbrella of apartments as a property type.

Our data mirrors Airbnb’s property types. For the analysis in this article, we also narrowed it down to markets that had 500 condo listings or more in the last year. 

Research Airbnb markets

 Gain insights into the revenue and occupancy trends in your market.

Start for free
Pros of Buying a Condo as a Vacation Rental Property

Exploring the advantages of condo investments for vacation rentals sheds light on the potential benefits and opportunities they offer to property investors. Benefits of condo investing may include:

Higher occupancy rates

Condos in the US outperform houses by at least 5% on average in terms of short-term rental occupancy (57.4% versus 53.2%) . Their floor plans also work well for smaller and medium-sized groups, tapping into a large market of potential renters.

Lower Maintenance

Since exterior upkeep, landscaping, and common area maintenance are managed by the HOA, condo owners can kick back and enjoy a well-maintained property without having to do the work themselves.

Security and Safety

Condo complexes typically have security measures such as gated entrances, surveillance cameras, and on-site security personnel. 

Community Atmosphere

Common areas and social events organized by the HOA can create a welcoming atmosphere for residents and vacationers.

Cost-Effectiveness

Condos can be a cost-effective option for investment property owners because they typically cost less to purchase than single-family homes or townhomes. This makes them more accessible to investors with limited capital.

Looking at average yield, or the annual revenue potential divided by home prices, can give investors a better idea of how profitable purchasing a condo or apartment is in a given market. High average yield essentially points to markets where the cost of entry (i.e. purchasing price) is low relative to its income-earning potential. 

Hottest Airbnb Markets
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Wisconsin Dells, the Ozark Mountains in Arkansas, and St Louis lead in average yield for condo markets. In Wisconsin Dells, Wisconsin, for instance, condos are priced approximately $27,000 cheaper on average than houses ($213,079 versus $239,953). The difference in annual revenue potential between the two property types, however, is less than $2,000. As a result, the average yield for a condo in Wisconsin Dells is nearly 4% higher than it is for Airbnb homes because condos as a property type are cheaper to buy.

If you look at annual revenue potential alone, the list of top 10 markets for condos shifts. Keep in mind, though, that considering this metric in isolation has its shortcomings. 

For one, annual revenue potential is based on how much a listing would have made if it were available for the previous 365 days or when the listing first came online, whichever was more recent. In short, we add up the revenue a listing earned on available days in the last year and use modeling to infer what it could’ve expected to earn on the other, unavailable nights. In reality, though, short-term rental properties are rarely available every single day of the year.

Perhaps unsurprisingly, Mountain/Lake and Coastal destinations dominate the top 10 condo markets for annual revenue potential. Earning potential for a condo or apartment in Aspen/Snowmass, Colorado, is more than triple the average annual revenue potential for condos nationally ($125,872 versus $37,421).

That being said, the cost of condos in these markets is steep—in Aspen/Snowmass, you’re looking at a price tag upwards of 2 million dollars. The average yield for condos in this market is a modest 5.4%, more than 2 percent lower than the 7.9% average average yield for condos nationally. Compared to the average yield for short-term house rentals, though, condos offer a better return on investment in Aspen/Snowmass, Telluride, Colorado, and Park City, Utah.

Outside of purchasing price and income potential, HOAs can offer distinct financial benefits. While HOA fees may seem expensive at first glance, they can cost-effectively spread out the cost of maintenance and landscaping that would otherwise be expensive for any single-family owner to cover.

 In addition, HOAs facilitate amenities, like pools or fitness centers, that might be otherwise impractical or prohibitively expensive for an individual homeowner to afford. Monthly HOA fees provide a stable, predictable expense schedule for covering these costs. 

Condo ownership comes with lower insurance premiums than with single-family homes, as the HOA's master insurance policy usually covers the building’s exterior and common areas. 

Many HOA fees are also tax deductible, helping to reduce each owner's overall tax liability.

Calculate potential earnings

Understand the investment potential of any address in the world. 

See your STR revenue potential
Access to Amenities

One huge perk of owning a condo is the access to luxury amenities typically reserved for large, expensive houses. Many condo communities offer:

Swimming pools
Fitness centers
Clubhouses and community rooms
Landscaped grounds
Security features such as gated entrances, surveillance cameras, and security guards
Parking facilities on site
Additional services such as a concierge, package delivery, on-site maintenance, and housekeeping

Having these amenities available to travelers will seriously boost your investment property’s appeal and help draw in vacationers, leading to more rental demand and revenue.

Learn about short-term rental data

Cons of Buying a Condo as a Vacation Rental Property 

Considering the drawbacks is crucial when evaluating whether condos are good rental properties. Drawbacks may include:

Condo Fees and Restrictions 

All condos come with HOA fees and restrictions that can affect your short-term rental property’s success if you’re not prepared for them.

HOA fees are usually based on factors like:

Condo size 
Amenities offered by the condo complex
Location of the property

In addition, condo owners are sometimes asked to help fund repairs, renovations, or capital improvement projects. While these projects can benefit your property, they can come unexpectedly or at inopportune times, disrupting cash flow and hurting profitability. 

Your ability to rent to travelers can also be impacted by community restrictions set by the HOA, possibly affecting:

The number of rental units allowed in the building
Duration of lease terms
Frequency of short-term rentals
Number of occupants per unit 
Subleasing arrangements
Noise levels
Pet policies

Condo associations can also restrict how residents use common areas, parking spaces, and recreational facilities. All of this could affect your ability to provide a great guest experience. 

Keep an eye on your STR competition

Limited Control Over Property

At the end of the day, it is the HOA—not the property owner—who gets final say in decisions about how the condo operates as a rental. This can be a distinct disadvantage compared to owning a single-family home. 

HOAs sometimes require approval to change or modify a condo. Requesting to renovate, upgrade, or add onto a unit can be time-consuming and involve further fees and documentation. 

Even the tenants you book can be subject to HOA approval. Some HOAs require vetting processes like:

Background checks
Credit checks
Income verification
References

Resale of a condo must also be approved by the HOA, which can slow the process and add to the already high cost of moving. 

Overall, owning a condo as a rental property is much less flexible than owning a single-family house. 

Competition With Other Condo Units

Multiple rental units in a condo building might compete for short-term renters, leading to downward pressure on rates and occupancy levels. This dynamic is more prevalent in oversaturated markets or during an economic downturn. 

HOA Governance Issues

HOA disputes are fairly common. People can butt heads over management decisions, budget allocations, or rule enforcement, leading to tension among residents and possibly impacting the appeal of the property and the guest experience.

Ditch the guesswork

 Plan your STR strategy based on real booking activity and trends—plus, see how things change year over year.

Get started
Factors to Consider Before Investing in a Condo as a Rental Property 
Location: Condos located in high-demand areas will attract tenants, generate more rental income, and offset competition from neighboring short-term rental properties. It’s no surprise that income earning potential for condos is highest in Mountain/Lake and Coastal locations given their relatively high seasonality and popularity as vacation destinations.
HOA rules: Make sure that the complex’s rules about rental policies, leasing restrictions, pet policies, noise regulations, and maintenance responsibilities align with your investment goals and rental strategy.
Rental demand and market trends: Tools like AirDNA can give you a look at rental trends, occupancy rates, average rental prices, and competition from other rental properties so you know what kind of income to expect. 
Overall costs: Purchase price, mortgage payment, property taxes, condo fees, insurance costs, investment loan service, and potential rental income should all factor into your cash flow and return on investment (ROI) calculations. 
Long-term investment goals: Ask whether you plan to keep the property as a short-term rental investment, use it as a vacation home for personal use, or eventually sell it for a profit. Does a condo fit into those plans?

Thorough due diligence and planning help to mitigate risks in real estate investing and set a strong foundation for the property to be profitable.

Are Condos Good Rental Properties? Exploring the Pros and Cons

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