Are townhouses worth buying?

5 Replies

I think this depends on your lifestyle and family. Do you have a family with little kids and would like to avoid stairs? Then I would avoid townhomes as they are typically 2-3 stories. If you have a pet and don't necessarily want to have to take them for a walk each time they need to use the bathroom, then you'd want a property with a yard. Be sure to evaluate your lifestyle and priorities, but townhomes are great. 

@Mark Dutton IMO townhouses are definitely high on the preferred list, as are apartments with easy direct access and no restrictive hallways. If you can eliminate the elevator, cramped hallway, and tiny apartment you are ahead of the game as a LL. People are fleeing inner city high rises and want more space, with outdoor areas and preferably in the suburbs. Workers are increasingly being offered the opportunity to work from home and attending meetings as required. Companies large and small are doing the same.

Townhouses can be a great investment. They attract long term renters majority of the time. Keep an eye out for fees though, a lot of townhouses have expenses HOA or upkeep. Work these numbers out and see if it makes sense for you.

For rent or as a primary?

I own a townhouse as my primary. I bought it because I wanted a quick commute to my job (obviously got laid off due to COVID so that decision didn't age well) and I live in a very expensive city in South Florida where townhomes are 20% cheaper than SFHs. So for the latter point, that is obviously a plus for investing. 

However the major downside is HOAs. An HOA is like having a landlord on a house you own, except they're way more useless than any landlord I've ever had. They literally do nothing productive (okay I guess they sign the checks to the landscapers), yet feel entitled to send warning letters about the dumbest things. More importantly from an investing perspective, HOAs are cash flow killers. My HOA costs $300/month, which somehow is only average for my area. HOAs also often have covenants to prevent you from renting the house or at least prevent you from doing it for the first 12-24 months.

So this is all stuff you need to consider. I'd say it's practical as a primary for a few years, but the HOAs will often make them cumbersome if buying them strictly as a rental.