Single Family vs. Townhomes

[Esther S]

Would you purchase townhomes with their home association fees and rental restrictions? Or would you stick solely to single family residences? I'm asking because townhomes are cheaper than single families.

[Don Konipol]

First of all it depends whether you are talking about as a personal residence or as an investment property? If personal residence, you may want to live in an in-town area where SFR are not readily available or land too expensive. As an investment it depends on whether you are holding or flipping.

I invest in class A high rise condos - less than 5 years old. Iam currently able to purchase such in downtown/midtown Phoenix, Tempe town lake, and downtown Scottsdale for $150-$200 per square foot - and rent them out for $1.50 - $2.00 per square foot per month. While this results in about a 6-7 cap, I'm purchasing for prox 1/2 the cost to build, with a product in limited supply and increasing demand by both empty nesters and young urban types. I'm counting on inflation protection, increasing rents, and above average appreciation. In 10 years I'll tell you if I am right!