My husband and I are a young couple with our first baby on the way and are ready to make our first home purchase.
We are not in a position to buy a single-family home at this time, but we do want to move forward with property, so are looking into the possibility of buying either a condo or a townhouse.
We see some differences in what each of these are, but can you please break it down into specific differences, and which is the better purchase from an investment standpoint?
We read your article and know about all of the years’ of experience you have in all different kinds of properties, so we thought you’d be the most knowledgeable about ownership on these types of properties.
What typically is best about each and what goes wrong? What would you buy?
We are nervous about making the right decision here, as we really need to make a wise choice. We’re just beginning. We know that there are never guarantees, but if we do our homework first, like asking someone with your experience, we feel that we will be able to make the best decision for ourselves.
Thank you in advance Robert, for your help. Thank you also, for continuing to write your article, many people we know and us included, all feel that we have a great resource in you because of it.
– Christal F.
Thank you for writing in and for your generous words. Doing this article is my pleasure, it’s nice to be of help.
The best was way to define the differences between condos and townhomes is this: condos are a bunch of “shoe boxes” that are stacked one on top of the other, in and around one another.
A townhome is a free-standing “shoe box,” built one beside the other. In the townhomes, you own all floors in the unit and share a common wall with your neighbor.
In a condo, there are common walls/floors throughout.
I have a very strong opinion and please know that this is my personal opinion based on facts that I’ll share with you. If I were to make such a purchase, there would be no other option than a townhome.
Hypothetically, if you are on the second, third (or higher) in a condo and you have any sort of water issue such as overflow, large spill, broken pipe, cracked tub or pipe that is not in the wall, you are directly responsible for every bit of damage that is caused. This includes all the way down and sideways, if the water travels through the walls and damages anything next to you, also. I’ve seen these tickets run into the tens of thousands of dollars, especially once mold is involved.
In a townhome, if there is damage from water, it is only your unit so you are likely to be immediately aware that something is going on and are responsible for only what you own.
Of course you have a common wall and there is a chance that there could be some damage adjacent, but this is by far, much less than in a condo situation.
Whatever you decide to purchase, I would say that the most important factor would be to look thoroughly into the management company that is managing the property.
As a buyer you can ask about the financials of the association as well. You don’t want to purchase a property where the funds are mishandled and there are no reserves (savings) for repairs, this would be a nightmare.
Look at the quality of the property, how it is kept and maintained. If you see that there are needs such as painting and big ticket items, know that the association has the right to special assess you at any time, for what can be large amounts, in order to make those repairs or have maintenance done.
I saw an instance where this very thing happened in Beverly Hills and each homeowner had to come up with $50,000.00. You are forced during these emergency conditions to come up with that money, you agree to this when signing the paperwork at the time you buy the property. On that property, out of 30 units there were three homeowners who had to sell and move out because they could not come up with the money.
When properly managed, the reserve account will continue to grow and maintenance will be done in a timely manner and things will stay under control. When there has been neglect to the property by the association, and sometimes the management, these issues can greatly hurt a family, especially a young couple just beginning.
If you have an opportunity, just like purchasing in a new neighborhood, talk to folks that live there and ask them what their experience in dealing with the management company is like.
All of this research ahead of time will, at the very least, allow you to make an educated decision on what is important to you.
I have a family member that recently purchased a townhome and it is already building equity, which will allow them to move on to a single-family home when able.
I think that you and your husband are smart to begin investing in real estate, it’s one of the best ways to invest, in my opinion. Good luck.
Robert Lamoureux has 38 years of experience as a general contractor, with separate licenses in electrical and plumbing contracting. He owns IMS Construction Inc. in Valencia. His opinions are his own, not necessarily those of The Signal. Opinions expressed in this column are not meant to replace the recommendations of a qualified contractor after that contractor has made a thorough visual inspection. Email questions to Robert at [email protected]