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Jack Robinson
  • Real Estate Agent
  • TN (tennessee)
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Invest in Cash Flowing Townhouse?

Jack Robinson
  • Real Estate Agent
  • TN (tennessee)
Posted Jun 13 2022, 08:28

Hi all, 

I'm curious to hear if anyone has, or is planning to invest in cashflowing townhouses. I found one in 3741, but am not sure if I will move forward. The deal is over a 1% rental, however I have stuck to SFH so far, and would love any insight people have on this different type of property.

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Andrew Garcia
  • Lender
  • Charlotte, NC
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Andrew Garcia
  • Lender
  • Charlotte, NC
Replied Jun 13 2022, 11:35

Hi @Jack Robinson, the two biggest issues with townhouses is the high HOA fees and the HOA themselves.

Since this property cashflows, the HOA fees is not an issue.

The HOA themselves could be an issue. Some have rules against investment properties. They could create rules against it. They can be a pain to deal with.

Generally, they also have slightly lower rents than SFHs. Other than that, it is a pretty straightforward property.

Hope this helps! Let me know if I can be of any assistance.

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Chris Svendsen
Pro Member
  • Front Royal, VA
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Chris Svendsen
Pro Member
  • Front Royal, VA
Replied Jun 13 2022, 12:21
Quote from @Jack Robinson:

Hi all, 

I'm curious to hear if anyone has, or is planning to invest in cashflowing townhouses. I found one in 3741, but am not sure if I will move forward. The deal is over a 1% rental, however I have stuck to SFH so far, and would love any insight people have on this different type of property.

I bought a townhouse last year but was older so had no HOA to worry about and rented out quick.  Like we bought it and a week later signing and handing keys over to tenant quick.  Going back on market in 2 months will see what happens.  Some tenants like townhouse as usually have a good amount of space and less property to maintain compared to single family home but depends one tenant base you looking for.
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Manny Vasquez
  • Real Estate Agent
  • Orange County
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Manny Vasquez
  • Real Estate Agent
  • Orange County
Replied Jun 13 2022, 12:36

Townhomes and condos can be as profitable as SFH. As in all things RE, you must first truly analyze the deal by doing the math to see if the numbers work out for you. The additional step you must take in Townhomes and Condos is to also look at the HOA fees and find out exactly what the HOA fee covers. You must also look at the CC&R's (Covenants, Conditions & Restrictions) to determine what rules the community abides by (and what you or your tenants must follow). Some Townhomes/Condos have very low HOA's and the CC&R's are pretty lax, others can have very expensive HOA's and highly restrictive CC&R's. Townhomes/Condo's may offer highly attractive community features (i.e. resort-like pools, very nice gyms, clubhouses, etc.) that may be very desirable to prospective owner/tenants.

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Tim Ryan
  • Investor / Mentor / Contractor
  • Arcadia, CA
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Tim Ryan
  • Investor / Mentor / Contractor
  • Arcadia, CA
Replied Jun 13 2022, 14:13
Quote from @Jack Robinson:

Hi all, 

I'm curious to hear if anyone has, or is planning to invest in cashflowing townhouses. I found one in 3741, but am not sure if I will move forward. The deal is over a 1% rental, however I have stuck to SFH so far, and would love any insight people have on this different type of property.


 All I can say to this is I have heard over the decades that in an up market, which we have been in for a long time now, condos and townhouses are the riskiest as they will fall in price first once the downturn comes (when not if). I never bought condo's or townhouses so I can't speak to this directly but this is what I've heard.

Hey Jack, I own an apartment in Chatt (used to own several) what areas are you looking at?