4 Things to Consider before Investing in a Townhouse
Purchasing a townhouse can have many benefits, but it is important to learn a bit more about their unique properties before diving in.
Here are 4 vital things to consider when investing in a townhouse.
HOA Fees
Since certain common areas are shared, funds are usually pooled together in order to take care of routine maintenance and some utilities.
When determining what to buy, you can compare the prices of the fee each month versus other associations.
Sometimes a great deal is found and other times owners are being taken advantage of. It is also worth noting that HOA fees tend to rise over time.
Of course, there is some time saved by having someone else manage the landlord duties.
Strata Titling
A strata title is applied to properties such as apartments and townhouses because there are common areas shared between multiple owners.
The strata title shows that the property is under the jurisdiction of an owner’s corporation. Unlike a regular home, you have to factor in the rest of the owners when making certain decisions such as remodeling.
It is key to learn as much as you can about the corporation before you enter an agreement with them.
Appreciation
Townhouses often appreciate slower than single family homes. Depending on your investment strategy, this can be no trouble at all or a massive deal breaker.
While it is important to invest in something that appreciates, there are other facets of the equation that make more sense to focus on.
Speak to real estate and financial professionals before making any solid decisions.
Financing
It can sometimes be more difficult to get funding for townhouses versus single family homes. Lenders have trouble assessing the value of row houses as there are more things to consider.
This can lead to slightly more expensive mortgages than if investing in single units. Luckily, there are some lenders who specialize in this and have far more experience working with townhouses and condos.
Vetting several lenders until you find the right one is a fantastic practice.
As you can see, there are a few extra things to think about when deciding to buy a townhouse. Like all property types, they can be an excellent source of income if you go about it the right way.
Remember to inspect the strata titling, run the numbers on the HOA fees, factor in the appreciation, and select an experienced lender to increase your chances of success. When all of those boxes are checked, townhouses can be an excellent revenue stream.
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Category: Investing
