Condos look like the easy way into renting. They cost less than a house in the same area, somebody else mows the grass, and the roof is not your problem. Two of those three are true, and the third one has a monthly price.
What does a condo change about a rental’s numbers?
Three lines move, and they move in different directions.
Insurance usually falls. The association carries a policy on the building itself, so the owner’s policy covers the inside of the unit and the liability rather than the structure. This example budgets $700 a year against the $1,400 the single-family example in these posts uses. Both are assumptions, and both are worth replacing with a real quote for the address.
Some maintenance moves off your list. The roof, the siding, the parking lot and the landscaping are the association’s work, paid for out of everyone’s dues.
Then the dues arrive, every month, whether or not the unit is rented. They are a fixed cost on a variable income, which is why they decide more than anything else on the list.
One $250,000 condo at $250 a month in dues
Take a condo at $250,000 renting for $2,750 a month, bought with 20% down on a thirty-year loan at 7%. Property taxes are $3,000 a year and insurance is $700. Set aside 5% of rent for vacancy, 5% for maintenance and 5% for big replacements inside the unit, and pay a manager 8%.
| Each month | |
|---|---|
| Rent | $2,750 |
| Empty months, repairs and big repairs (15% of rent) | −$412 |
| Property management (8%) | −$220 |
| Property taxes | −$250 |
| Insurance ($700 a year) | −$58 |
| HOA dues | −$250 |
| Mortgage | −$1,331 |
| Cash flow each month | +$229 |
These are example figures, not a forecast for any market.
The same unit with no dues at all would clear $479. The $250 of dues costs $250 of cash flow, straight across, because nothing else in the table moves when the dues change.
What do higher dues do to the answer?
They end it. Here is the same condo at four levels of dues, with the value each one supports at a 7% cap rate, which is what a buyer pricing it on income would pay.
| Cash flow | Return on cash | Value at a 7% cap rate | |
|---|---|---|---|
| No dues | $479 | 10.0% | $310,143 |
| $250 a month | $229 | 4.8% | $267,286 |
| $350 a month | $129 | 2.7% | $250,143 |
| $450 a month | $29 | 0.6% | $233,000 |
Every $100 of monthly dues is $1,200 a year of net operating income, and at a 7% cap rate that is $17,143 of value. So dues are not only a cost while you hold the unit, they are a discount the next buyer will apply when you sell. A unit with $450 of dues has to be cheaper than one with $250 to make the same sense, by about $34,000 on these figures.
This is the same arithmetic as a target cap rate turning a rent into an offer, run backwards.
Will dues stay where they are?
Plan on them rising. Dues fund the association’s running costs and its reserve for big repairs, and both move with building costs and insurance. Ask for the last three years of budgets and look at what the dues did, not what the seller says they will do.
The number worth more attention is the reserve. An association that has not set enough aside has to raise dues or levy a special assessment, a one-time charge to each owner for a specific repair. A new roof split between twenty owners is a bill you cannot refuse and cannot pass to the tenant.
Fannie Mae’s project standards, dated August 5, 2026, require the lender to confirm the project itself is eligible before the loan is delivered, and the guide names the project risks it is looking for, including limits on a unit owner’s ability to control decisions for the project or to occupy the unit. In one of the narrower rules, a project where fewer than 90% of units have sold can still be treated as established if the developer held units back to rent, provided those held-back units are no more than 20% of the building and there are no active or pending special assessments in the project.
The point for a buyer is that the loan depends on the building passing review as well as on you passing it. A pending assessment or a project with too few sold units can stop a conventional loan on a unit that otherwise looks fine.
Can the HOA stop you renting it out?
It can, and this is the question to settle first, before the inspection and before the loan. Associations commonly cap the share of units that may be rented, require a minimum lease length, charge a fee to register a tenant, or make a new owner wait a year before letting the unit at all. Those rules sit in the declaration and the bylaws, not in the listing.
Get the governing documents and read the leasing section. If the rental cap is already met, the unit is not a rental this year whatever the numbers say.
What vacancy and rent should the example use?
The 5% vacancy above is the example’s assumption. As a check against it, the Census Bureau’s Housing Vacancies and Homeownership survey put the national rental vacancy rate at 7.3% in the second quarter of 2026. The vacancy rate post runs one rental at three different rates, and the spread is larger than most people expect.
A $2,750 rent on a $250,000 condo is also an assumption, and a strong one. Check it against what units in the same building actually leased for, which the association or the manager often knows better than the listing sites do.
So is a condo a good rental?
It is a good rental when the dues are low against the rent, the leasing rules allow a tenant, and the reserve study says the building has money set aside. Those three answers come from documents, not from a calculator.
Then run the numbers twice: once at today’s dues, and once with the dues 20% higher. If the second one still pays, the unit can take a bad year from the association. For the rest of the lines to confirm, see the seven places a rental analysis goes wrong and where $2,750 of rent actually goes.