Real estate is always a good addition to your investment portfolio. Even during extraordinary times like this, when demands are changing, and new ones are emerging, real estate is still a worthy investment. But if you cannot afford a single-detached family home and you’re not excited about the prospect of owning a condominium unit, the next best thing is to invest in a townhouse.
A townhome was popularized during the 19th century in Europe. Most aristocrats have country homes that are vast and expansive. The townhouse is what they own in cities like London. The property takes up very little space but can be as high as three stories. It’s practical then, and it’s still practical now. Today, you can find townhomes in densely populated cities, though, in Metro Manila, condominium buildings are more popular than townhouses. It is in subdivisions situated in provinces that you will most likely encounter a townhome.
Townhomes vs. Condominium Units
There is one glaring difference between these two. A townhome owns the front yard and backyard. It also owns the land where it sits. For a condo, you will only own the unit’s interior, while the homeowner’s association (HOA) will own the communal areas and the back and front lawns if they exist. You also have to rent the parking space. A townhome will have at least one parking garage.
The Felicia model house is a classic example of a townhome. It sits on 50 square meters of land, but it maximizes that space by building a two-story house. The townhouse has three bedrooms, a one-car garage, a kitchen, a living room, and two bathrooms.
Major Reasons to Invest in a Townhouse
Affordability, maintenance, and location are the three reasons for buying a townhome. Townhomes are more affordable than single-detached family homes. Since you are technically sharing a wall with your neighbors, the cost of constructing a townhouse is lower compared to a family home with its own lawn. But compared to condominium units, it’s more practical to invest in a townhome since you own both the land where it sits and the building itself.
It’s less hassle to maintain. Family homes are more expensive because of the bigger space, but townhomes are usually a third of the size of a detached home. You can easily clean it in an hour. Most importantly, townhouses are located in prime locations. You can find them in areas close to the cities, so that’s why these are attractive to tenants and young families.
How to Earn from a Townhouse
If you are already living in a family home but want to invest in a real estate property, a townhome is your best choice. It has a good return on investment (ROI) record. Banks impose a lower interest rate on townhouses, so this means you can pay off the loan in a shorter period compared to the loan you took for your family home. You might be able to finish the loan in less than 10 years.
The good thing about townhomes is they’re located along major traffic routes. Families like renting a townhome because they are near good schools, malls, office buildings, and government offices. It is easier to find a tenant who can technically help you pay off the loans. Whether you plan to use the townhome for yourself or your family, it’s a good real estate investment because you can rent it out or sell it in the future.
Does It Boost Your Portfolio?
Townhomes are a huge boost to your investment portfolio. It is technically a house and lot. It may not have the same space as your single-detached family home, but you still own the land where the townhouse sits. If you need to liquidate it, you can sell it easily since it is cheaper than family homes. Younger families tend to look for townhomes to rent or buy because this is a good first investment. Although it doesn’t appreciate in value as fast as other real estate properties do, townhouses have a steady record of being valued above the market price.
Townhomes are practical choices for an investment. You need not live there if it is not your thing or if you have a large family that does not fit in a townhouse. It’s a great investment because it is flexible. You can do many things with it—make it your city or provincial dwelling, turn it into a home office, rent it out long-term, or sell it in the future. It can pay for its own mortgage.