If you were going to buy real estate as an investment property, would you buy a house or a condo?

Here’s the deal: I’m looking to spend about $75K max on real estate, so that puts me squarely in the range of condo or major foreclosure deal.

Condo pros & cons

The number one pro for a condo in the Phoenix area, of course, is that I might even be able to afford two of them. If I went the condo route, I could rent them out and generate a monthly income from them. That income (less expenses) would then be considered earnings for my self-directed real estate IRA, so that’s a big plus there.

Cons would be: Monthly HOA fees and possible assessments – especially if I bought in a complex with a lot of foreclosures. Resale to non-investors could be an issue too, since typically the condo complexes here have a huge percentage of renters, which makes them ineligible for some kinds of loans. And of course, I’d have to keep it rented to good renters who pay on time.

House pros and cons

I see needing to find a house that’s a bargain as a pro, especially if it’s one that just needs curb appeal and some cosmetic repairs (paint, flooring, maybe appliances). Taking something that isn’t move-in ready and freshening it up really appeals to me. The other huge pro is that I could avoid an HOA if I buy a pre-80s home.

Cons are that I’m not sure I’d want to rent out a house, so this would be more of a flip situation. Except that since it’d be in my IRA, I wouldn’t be able to do any of the work myself. I really enjoy working on houses, so that’s a downside.

Other considerations

The other things I need to consider all relate to it being in my IRA. Because of that, I’ve got to remain below the $5500 IRA contribution limit each year. (Less for 2013 in my case, since I’ve already contributed some money to my Roth.) That means that any major repairs or assessments beyond that amount will need to come from cash reserves in the IRA. I’ve got to he a reasonably good predictor of possible annual expenses. Taxes and insurance are a given, but other things could be up on the air.

Decisions, decisions

So I’m pretty conflicted on all of this. If HOAs and their fees weren’t involved, a condo (or two) would be the easy choice. If it weren’t in my IRA, a flip where I do a bunch of work myself would be the winner. But in my actual situation? I don’t know. Maybe it will come down to what’s even on the market in the area. I guess time will tell.

Meanwhile, here’s your chance to chime in. What would you do, if you were me? Is there anything I’m overlooking?