The SFH vs Townhome Dilemma

[Cameron Goodall]

Hello BP Community!

As a new investor in the Charlotte area, I've taken some time to pin point the markets/areas I'd like to buy in. The thing is, it's rare to find a SFH in my target markets that fit my buy box because of either high prices or condition being a bit too distressed for what I'm comfortable taking on as a first purchase and having no experience in rehabbing a home. Town homes are abundant here and often offer more sqft. and modern updates at a cheaper price. I know there are inherent differences between these assets and SFH such as mandatory HOA, shared wall(s), no/small yards, but from an investment perspective, are they truly that different?

My Strategy:

- Buy with primary goal of renting in the future

- Live-in flip for the first 1-2 years to build equity and increase potential rental price 

Exit Options:

- Refinance and rent the property, using equity and savings to buy again, move in, and repeat

- Pull equity that built due to small renovations done over 1-2 years and purchase another property w/ intent to rent, staying in this first one

- Sell/1031 (thanks to forced appreciation from reno)

Will this work regardless of the asset being a townhome or SFH, or am I missing something? Are townhomes less likely to appreciate or more difficult to fill with a tenant? Can you not force as much equity/appreciation in a townhome because of the market value of neighboring townhomes?

Any advice or even critique on my strategy is welcome as I’m definitely still learning a ton every day.  I’m hoping to execute within the next six months as my timeline to avoid the ol analysis paralysis hang up. 
Thank you for reading this through if you have! 

[John Otradovec]

I have been a lender and investor for 20yrs. In my opinion, it doesnt matter if SFR, Duplex, Triplex, TownHome, etc.. do the numbers work? do you like the area? can you value add? etc etc.. the type is irrelevant if numbers are good imo. Also, start there and then in couple years do SFR.. just evaluate each deal and go from there. I have tons of clients how kill it with townhomes!