What kind of home would you like to purchase? Besides “location,” this is one of the most important decisions a prospective buyer will make. Some of the main classifications for home types are single-family homes, condos, or townhomes. Each of them have distinct differences, and come with their own sets of advantages and disadvantages.
Condo ownership allows an individual to own all of their own living space and a portion of shared public spaces. Condos can be an individual unit within a larger building; or, condos can be a detached building structure within a community also. Typically the exterior and property are owned in common. The advantage of ownership is often times a lower homeowners insurance policy because of the shared liability. Maintenance-free living is one of the most notable perks, and that covers landscaping, snow removal, exterior upkeep, and more. Additionally, condo ownership lessens some of the expenses needed for other higher-ticket items within the structure. You might receive the benefit of neighborhood amenities and/or lower utility bills. Finally, purchasing a condo instead a single-family home could enable you to live in a desirable area that you might not typically be able to afford.
The most notable disadvantage of owning a condo typically relates to Home Owner’s Association Fees (HOA). Most of the advantages noted above are shared expenses by all owners within a community. The HOA is the body that governs the budget. Those fees can be expensive; and, you may be hit with a special assessment if community repairs are needed but there are not enough funds in their reserve to cover them all. The same HOA may also have covenants and restrictions regarding parking, exterior appearance, and landscaping. Some owners may find those rules too restrictive. Others may not appreciate that the “common,” areas are in fact “common,” and open to all residents.
Townhomes are very similar to condos, but typically have the unique advantage of owning land. Many townhomes give the owners a small portion of property that can be fenced in to allow for private outdoor space. Although the backyard may remain private, it’s also possible to have the community maintain the landscaping. Townhomes can provide some of the same square footage of a single family home but at a substantially discounted purchase price. Like condos, townhomes will reap the benefit of lower utility bills due to shared walls preventing heat loss.
Possibly the largest disadvantage to a townhome is the lack of privacy. Shared walls, shared common areas, perhaps shared parking, and more can be undesirable. HOA rules, regulations, and fees are also something to keep in mind. From an investment standpoint, townhomes are likely to appreciate at a slower rate than a single-family home. When it comes time to sell, it may prove more difficult to compete against similar listings since there will be less variables to differentiate your home to others.
The most common type of home is a single-family home. Single-family homes usually offer more privacy, more property, and more control on renovations. There is typically more space on the inside of a single-family home as well as in the outdoor space. There is more living space, storage space, and yard space. This extra space better accommodates growing families with children and/or pets. It also allows for more privacy between you and your neighbors. Although single-family homes tend to cost more, they’re likely to appreciate in value at a higher return than condos or townhomes.
The disadvantage of owning a single-family home (outside of the higher cost bracket) is the lack of amenities. Typically, the homeowner is responsible for ALL maintenance inside and outside of the home. Home repairs can be costly. Not only that, ongoing maintenance requires funds for service providers (roofers, plumbers, electricians, landscapers) or the tools (for DIYers) need to maintain properly. Even though maintenance and renovation will likely increase the value of the home, both require time and money. Additionally, single-family homes may be subject to similar HOA fees and regulations, depending on the neighborhood/location.
Different types of homes offer their own unique advantages and shortcomings. Review these pros and cons and evaluate them against your own preferences to make the best informed decision. One type of property may be more appealing to you than to others. One property type may best serve your needs for the next 5-7 years. No matter which you choose, home ownership is a great investment, and one that warrants careful consideration. If this is your first home, be sure to check out “Buying Your First Home.“