Own Your Owns are a form of real estate ownership that pre-dates the condominium form of ownership. They are usually 2 or 3 stories, typically in 8-12 unit buildings, tucked between newer and sometimes taller buildings. Own Your Owns were mostly built in the 1950’s. Many people find these types of units appealing because of their mid-century characteristics, with older tiled bathrooms, hardwood floors, and more intimate settings. I find them appealing because of their price. They are less expensive than condos and a lot easier to manage. I’m on my 6th one. They’re all on the HOMOWNERSHIP Facebook page.
The challenge with buying OYO’s is the financing. Usually they sell for cash. Not all lenders write OYO loans, and the ones that do, usually want you to have 20% down, and be an owner occupier. That means you can potentially borrow up to 80% of the value property, termed “Loan to Value” (LTV).
The same is true when you sell it. You will need to find someone who can meet those financing needs. That may not be so easy to do, but don’t let that stop you. Provided you price it reasonably and leave some equity on the table for the next guy, it will sell. Don’t be greedy. Be measured.
One major reason why they are less expensive than condos is – parking. Usually there isn’t enough, if any at all. For that reason, they cost less than a condo on the same street. If you don’t mind that the building only has street parking, you can pick up a nice OYO for a fraction of the cost of a neighboring condo. Some people, some perspective tenants, may not need or care about parking. It is the unit that they’re going to call home, that interests them the most. That’s the part you control. Whether there is parking or not is out of your control. Your job is to provide a nice,comfortable and clean unit to rent. Such a place will earn you a good tenant.
If your OYO building, “Goes Condo,” is converted to condominiums, the value of the unit dramatically increases, and the owner/investor/you make a significant profit. That’s great, but that potential isn’t the only reason to invest in an OYO. There is the income potential and return that makes it immediately profitable. There also the satisfaction of knowing that your money is secured by a physical, “brick and mortar” investment. It’s why people invest in real estate.
Purchasing an Own Your Own to live in would be comparable to purchasing a nice mobile home to live in, if you just want a place to own, one that you hold Title to. At the very least, it would accomplish the goal of owning. I’m thinking more in terms of an OYO as an investment to earn you an income.
Even though it costs less than a condo, often the rental income can be nearly the same, therefore the return on your investment can be as good, if not better. I’ve made as much as 12% on my monthly CAP (capitalization) rate and 67% ROI (return on investment) when I sold the place.
In an OYO building, you’re usually not dealing with HOA politics and power, just people who want a low key property with a good return. As OYOs are smaller buildings with less amenities, the monthly fees are less. They pay for the property management company to maintain the books and keep up the place.
Remember, Own your Owns aren’t frilly and fabulous. There are no pools, tennis courts, hot tubs, gyms, saunas, yoga or Pilates studios, but you’re not there for that. Own Your Owns are protected, prolonged, profitable investment properties that will earn you significant interest on your money. You’ll have to find somewhere else to be frilly and fabulous…as if that’s ever a problem.