With the large number of properties that are still available at reduced prices these days, townhomes and condominiums represent excellent purchasing options: they often offer low-maintenance living and community facilities that would usually be unavailable in single-family homes.
When considering purchasing a townhome, keep in mind that there can be substantial differences in how the communities are structured and run from day to day.
First, with a townhome, you own your unit and the land underneath it, whereas with a condo, you own the unit, but the land on which it sits is part of a master parcel. With the former, you provide your own property insurance, and in the latter case, you will contribute to a blanket insurance policy.
Association dues for townhomes are typically lower than for condos, as few services such as painting and roof replacement are provided in townhome communities.
Whichever type you choose, always make sure that both you and your attorney review the financials and the bylaws of any development for which you intend to place an offer. This will give you an insight into how the property is being managed, the financial stability of the association, and what you might expect in terms of future association rate increases.
From a financing perspective, townhomes may be slightly easier to obtain. Here’s why:
The Federal Housing Administration (FHA) offers so-called approved condo developments, which have gone through a review process in which FHA assesses financials, bylaws, etc. Even after a development is approved, FHA will only lend on a certain percentage of units, and only so many of the units can be let as rentals. All of this helps minimize the Association’s risk should a development take a downturn.