Townhomes vs House Rental

[Brett Kerry]

I'm currently looking for my first property that I plan to rent out for 8 months as a STR/MTR and live in the other 4 months. I am curious wether buying a townhouse vs a stand alone home will change the amount of revenue it will bring in. I understand a house may be more appealing but is that worth it when townhomes are usually cheaper per sq/ft

[Mark Williams]

Quote from @Brett Kerry:

I'm currently looking for my first property that I plan to rent out for 8 months as a STR/MTR and live in the other 4 months. I am curious wether buying a townhouse vs a stand alone home will change the amount of revenue it will bring in. I understand a house may be more appealing but is that worth it when townhomes are usually cheaper per sq/ft

Hi Barry, 
Great question as to whether it makes more sense to buy either a single-family residence (SFR) or a townhome in regards to this decision's impact on your potential revenue. In your referenced scenario, where you intend to rent it out for 8 months as a Short-Term Rental (STR) and reside in it for the other 4 months, several key factors come into play. When making this decision, several key factors should be taken into account. Single-family residences typically offer more space, privacy, and the potential for higher rental income, especially for STRs. Families or larger groups often prefer the amenities and autonomy of a standalone house. However, it's important to note that SFRs usually involve higher upfront costs, increased maintenance responsibilities, and more complex property management considerations. Townhouses, on the other hand, are often associated with homeowners associations (HOAs) and can be more cost-effective on a per-square-foot basis. While the rental income from townhouses may be somewhat lower, they can attract a broader tenant pool due to their smaller size and more budget-friendly rents. The presence of an HOA is a crucial factor, as a well-maintained HOA can streamline maintenance and reduce costs, while a poorly managed HOA or high monthly dues can potentially affect your revenue. To make an informed choice, you should take into account factors such as specific market conditions in your target location, your investment objectives, and your willingness to manage various responsibilities and risks. The overall financial health of the HOA, its rules and regulations, including potential restrictions related to Short-Term Rentals (STRs), as well as the monthly dues, should be thoroughly evaluated, as these factors can significantly impact the financial performance of townhouses. Additionally, it's essential to research local regulations related to STRs and MTRs, as some areas may have restrictions or requirements for these rental types. Hope this info helps.