Townhouses or townhomes are often-times an attractive investment option for investors, as they combine some of the better attributes of condo living with some positive attributes of single family homes.
Here are some of the positives to this type of rental property:
- Townhomes are more attractive to prospective tenants than condos. They have more of the “feel” of a home – individual front entrance, often an attached garage, etc.
- Tenants like the feeling of a home with no one above or below them.
- There is less risk in the event of a broken pipe, that you will have to deal with damage to a neighboring unit.
- There is less likelihood your neighbors or the HOA will complain about your tenants (noise being the major complaint you would be avoiding, possibly.)
- You don’t have to worry about some of the issues that face single family homes – being targeted by the HOA for weeds, exterior paint, etc.
- All else being equal, they rent for more than condos.
- All else being equal, they rent faster than condos.
Here are some of the possible negatives to townhome / townhouse ownership:
- You still have to contend with the HOA – dues can fluctuate, and HOA’s can always add a special assessment for common area items such as a roof, pool maintenance, etc. This makes your ROI a little less predictable.
- They are less appealing to prospective tenants in many cases than single family homes.
- There is a large supply usually on the market, so rental prices may not climb as an investor would like.
- They tend to have slightly higher turnover than single family homes, but we have found townhomes to have considerably more long-term tenants than condos, on average.
- You are essentially competing with single family homes with this type of rental, so yours has to be in better condition and priced competitively to attract those same tenants.
- We’ve seen some townhomes – even brand new construction – be constructed poorly, with more maintenance concerns than we often find with single family homes (even older homes.) It seems builders tend to “throw up” townhome communities with more focus on speed than quality in some cases.
Overall, townhouses can represent an excellent investment.
Where the townhome is located, the condition, the architecture, the parking situation, the amenities – these can all factor into how successful the townhome ultimately is for a buy-and-hold investor.
Contact one of our sales professionals today to find out which townhomes might represent a great investment.