Townhouse or Condo – What Works For You?

​The main difference between a townhouse and a condo is ownership rights.  But do not forget to consider the level of upkeep and maintenance you are willing to commit to, a major concerning factor.  

Townhouse or Condo – What Works For You?
By Pierre Mouchette | The Synchronicity Investor

Today, deciding between a townhouse or condominium can be a familiar thought and a most significant purchase decision.  For most people, as with any significant investment, the decision should be made by weighing lifestyle and budget.  The level of upkeep and maintenance you are willing to commit to should also be a concerning factor.
To help make this decision, make sure that you know the difference between the two different types of structures.

• A townhouse is a single-family home that frequently consists of two or more stories.  Compared to a condo, a townhouse more closely resembles a detached family home.  This could mean having a front and back yard, a garage, and a fair amount of yard space.  However, some townhouses can share a wall (common wall) with one or more units similar in size and features.
• A condo, or a condominium, is an individually owned unit within a community of similar units.  These communities often resemble apartment buildings, except the inhabitants are owners rather than renters.  The owners' association will typically have fixed fees to pay for shared facilities and amenities within the community.  Examples of these facilities and amenities are gyms, pools, tennis courts, and so on.

 
Pros and Cons of Townhouses and Condominiums
When it comes to this investment, there are several factors to consider before making a final decision, since both come with their share of advantages and disadvantages that include:

• Ownership
• Homeowners Associations
• Overall Cost
• Resale Value
• Ownership Of A Townhouse Vs. Condo

The main difference between the two types of housing is their ownership rights.  When you own a condo, you share common areas with the other owners in your community.  The grounds and facilities are just two examples.  Owning a townhome is more like owning a single-family home due to its structure and the property it sits on.  

 
Townhouse & Condo HOAs
You cannot begin to compare townhouse vs. condo advantages before discussing HOAs.  HOAs, or Homeowners Associations, are a group of board members elected by the residents.  Each unit owner has to pay HOA fees that go into a pooled budget.  The HOA then makes decisions on how that budget is used for the maintenance and upkeep of the community.
If you are looking at a potential condo or townhouse investment, you will have to decide whether having the added cost of HOA fees and your mortgage and insurance payments fits your budget and is worth it to you.  
 
Purchase Price Of A Townhouse vs. A Condo
Even with the cost of HOA fees, the price tag on a condo or townhouse is generally more affordable than a detached, single-family home.  On average, a condominium tends to be cheaper than a townhome because you are not investing in your property's land.  When buying a townhome, you are typically purchasing the land that the property sits on as well.  Location, property taxes, insurance, and inspections are other expenses to keep in mind.  
 
Townhouse Vs. Condo Resale Value
Although it is impossible to predict the future market value of any home, some factors can be controlled to improve the odds of getting excellent resale value for your investment.  First, a well-managed HOA will be a good indicator that the general upkeep of your community will be well-maintained.  Thus, it will help attract potential buyers when you are ready to sell.  Second, you can look at the appreciation rates of a townhouse vs. condo in the designated area.  
Note:  historically, condos have had a slower appreciation rate when compared to a townhouse or detached property.
 
Condos, Townhouses, and Detached Homes
If you are debating between purchasing a condo vs. a townhouse, is it because you are assuming you cannot afford a detached home?  Condos and townhouses have a cheaper price tag than single-family detached homes, but it does not mean you should automatically take them out of the equation.  For one, HOA fees alone could make up the difference in affordability.  Without the added HOA fees, the mortgage for a detached home could be cheaper.
Detached homes can vary significantly in size (the house itself and the land it sits on.)  This type of ownership could be the right call for homebuyers who do not want to live in a closely-inhabited community, even if they do not find amenities or facilities beneficial.  In addition, detached homeowners can maintain and make improvements to their homes without having to abide by the rules of a homeowner association.