Recently, investing in townhouses has become a hot topic for investors. Townhouses have the advantages of good location, reasonable layout, and strong liquidity compared to apartments. However, compared with single-family houses, townhouses also have problems such as shared walls, limited remodeling rights, and stricter HOA management. Therefore, for real estate investors, especially beginners, you need to fully consider the pros and cons of townhouse investment before making a decision.
townhouse investment has the advantage of better location than apartments
Most townhouses are located in popular neighborhoods close to the city center, surrounded by complete supporting facilities. While apartments may be slightly closer to the urban center, the supporting facilities around townhouses are more abundant. Townhouses combine the convenience of apartments and the comfort of single-family homes. For investors and owner-occupiers, townhouses in prime locations can ensure higher rent levels and potential appreciation.
the layout of townhouses is more reasonable than apartments
The floor plan of apartments is often limited by structural constraints, while the floor plan of townhouses is more flexible. Townhouses generally have 2-3 bedrooms, providing ample living space for families. The rooms are reasonably laid out, with clear functional divisions. Some townhouses also have small yards, which is rare for apartments. Reasonable layout and functionality help attract tenants and increase rental income.
townhouse investment has higher liquidity than single-family homes
Since townhouses are strata title properties, the transaction process is simpler than houses with land titles. There is less paperwork needed for townhouse purchases and sales. Investors can cash out more conveniently. Townhouses are also more affordable than standalone homes, so they attract a larger buyer pool, further improving liquidity. Quick turnover can offset other shortcomings of townhouses to some extent.
shared walls limit remodeling of townhouses
Unlike detached single-family homes, townhouses share common walls with neighboring units. This puts major constraints on remodeling works. Investors cannot freely knock down walls or make structural changes. Cosmetic upgrades like flooring and paint are acceptable, but substantial renovations are very difficult. Lack of customization reduces townhouses’ appreciation potential compared to houses.
stricter HOA rules limit townhouse investors’ control
Townhouses are governed by homeowners associations (HOAs), which maintain community facilities and enforce regulations. HOA rules are usually stricter than average neighborhoods. Investors cannot rent out townhouses without HOA approval. There are also limitations on using townhouses for short-term rentals or other special purposes. Townhouse owners have less freedom than homeowners in managing their properties.
In summary, townhouse investment provides a middle ground between apartments and single-family homes in terms of location, functionality, liquidity, remodeling potential and owner control. Investors should objectively evaluate their own needs and weigh the pros and cons. For long-term holds, standalone homes may be better, while for quicker flips, townhouses offer more flexibility. Conduct thorough due diligence before deciding on townhouse investments.