Townhomes
This will be my first property. What is everyone opinion on townhomes? I saw a Townhouse for very low price which will leave me with good equity if I purchase. Being this is not a SFR or MFR what is everyones experience with these? It is not in a warzone and can bring in roughly 4-500 dollars cash flow profit each month after mortgage + insurance.
Townhomes & condos can be great investments. But, personally, I would say stick with single family houses, especially if you are a newbie investor. If you're dealing with an ocean or lakeview property, or a property in an upper-income community and you got the bargain of a lifetime...and are doing a quick in & out rehab - that'd be different. But townhomes in many parts of the country can be a risky buy & hold investment, especially if the HOA dues are too high or if there is any remote chance of depreciation.
In Dallas/Fort Worth, Texas, where property values are relatively low compared to most parts of the country (yet we are booming economically) and we have lots of land, townhomes & condos tend to have little or no appreciation on average. In some cases they depreciate - especially in lower to moderately low income areas, or in older suburbs where the school system was once good but is becoming less desirable due to socio-economic / demographic changes. Even some of the ones in middle class or upper income areas around here go down in value - yikes.
I have bought dozens & dozens of townhomes & condos, rented them, rehabbed/sold them & even owner financed one. And I made money with all of them. But I dealt with lower-income townhomes that had moderate HOA dues, and they cashflowed well. I did not buy them for the potential appreciation (they had already depreciated by 50-75%+ since they were built new 25-30 years prior)...but solely for the cashflow. And I bought them so cheap, I knew there was little risk. They couldn't really go down any further in value since they generated good cashflow ... and in a worst case I could always just hang onto them, and not sell them, if I did not want to sell them at a loss. But in the end I sold them all for a nice profit.
If you think its a winner deal...go for it. But just be careful. I think there is a lot less risk for you in the single family home world - especially when just starting out.
I see what your saying. It is not in a high end area and I need to verify if I have to deal with HOA and what would be the fees. It is priced literally hald of the comps in the community but risk factor does come into pay. I know its rentable being within a mile of a big college.
Townhouses are my bread and butter, but I think a lot of it has to do with location. For instance, I could pick up a SFH a little further away from center for the same price as a townhouse in a prime location. With all else equal, I'll take the location (and townhouse) every single time over the SFH that's further away because the rents will be much higher, and vacancies lower, or close to nil.
If the townhouse is attractive enough, again probably due to location, it can fetch just as much demand upon resell as a SFH. Yes, I've been involved in bidding wars over a townhouse... As an extreme example, a townhouse or condo in Cupertino can be worth much more than a SFH in South San Jose...