BUYING A TOWNHOUSE AS AN IVESTMENT

Dated: 01/11/2020

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Is Buying a Townhouse a Good Investment? – The Pros

  • Cost: Investing in townhouses to use as rental property is definitely a great idea when you look at the costs. The prices of row houses in most areas around the United States are substantially lower than that of a single family home. If you have a limited budget, then investing in townhomes is a good option.
  • Rental Property Management: The complex property manager takes care of every unit in a townhouse complex. This is perfect for you as a real estate investor because you never have to worry about rental property management at all.
  • Maintenance: Since you pay monthly maintenance fees, the association responsible for the complex will take care of any maintenance needed on the rental property. You will still be responsible for some maintenance, however, but the association will take care of a great deal.
  • Great Location: Is buying a townhouse a good investment when looking at location? The simple answer is yes! Townhouse complexes are often located in great areas near amenities, transportation, and schools. This is a huge plus when you are marketing the property as a rental.
  • Townhouses Are Often Modernized: While you may have to cut some corners in terms of age of the home when buying a single family property to find an affordable option, the same is not true for a townhouse. You can often find townhomes with very modern designs and features that are attractive to potential tenants for a great price.
  • Rental Income: Townhouses have the potential to bring in great rental income. They are popular among families who want affordable housing that comes with space around the home for their kids. You can make a good return on investment with the steady rental income from a townhouse investment.

s Buying a Townhouse a Good Investment? – The Cons

  • Maintenance Fees: While having someone else take care of maintenance is a huge plus, paying maintenance fees is definitely not a pleasant experience. Fees are sometimes steep and often increase, sometimes dramatically, without much notice.
  • Real Estate Investment Loans: When it comes to financing a townhouse investment, it may be more difficult than you think. Banks are a lot more hesitant to give investors real estate investment loans when investing in townhomes, even new ones.
  • Appreciation Fail: Unfortunately, making money in real estate is not all about rental income. A huge part of the equation will be the investment property’s resale value. Keep that in mind when looking at townhomes as they are notorious for how difficult it is to raise their value. Unlike detached single family homes, townhouses may not appreciate in value very much or even at all. This could harm your return on investment potential when you sell the property.
  • Limited Use: Since your townhome is part of a complex, you must abide by the rules. This means not being able to rent out your property in all the ways you want. You may be investing in townhomes to rent out on Airbnb. However, this might not be possible depending on the complex you buy in.
  • When it comes to making money in real estate, it is all about doing enough research. The advice above is only the beginning for you when buying an investment property. It is now your turn to find out more about investing in townhouses for rental. Start by searching for “townhomes for rent near me”, “how to find an investment property”, and “rental property calculator” online. These searches will help you in different ways when learning how to find investment property.

    The first will give you an idea of the market and the demand for townhouse rentals in the area. The second will help you reach sites like Mashvisor that offer heatmaps and property listings. Finally, the last will probably send you to Mashvisor as well. Our rental property calculator is the final step in determining if any property makes for a good investment. This investment property analysis tool allows you to estimate potential profit margins. It will provide you with things like expense estimates, rental income, cash flow, and ROI.

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Mindy Bloom

My name is Mindy Bloom and I am a native Floridian. I have been practicing real estate since 1991. I specialize in residential real estate. I work with buyers, sellers, and investors. I also handl....

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