Townhouses V/s SFH

[Harpreet Walia]

This could be a repetitive question but as a first time buy and hold investor, I had to ask this again. Should we buy townhouses over SFH, especially in North Carlone RTP area.

I could see lot more options for Townhouses than SFH. But does it make sense to invest in townhouses? I am trying to understand if this has worked for people with buy/hold for now and re-sell later.

Any inputs will be appreciated

[Thomas Franklin]

@Harpreet WaliaThe majority, of Townhouses, are governed by Homeowner Associations (HOAs). If the directors, of the HOA, do not enforce the Bylaws as well as the Rules and Regulations, the Common Areas become delapidated. If there is not consistent enforcement and money spent on maintenance and capital improvements, values will depreciate. A HOA must maintain healthy Capital Reserves. There are monthly HOA Fees that must be paid and HOAs occasionally to will pass Soecial Assessments thar are passed on to each Townhouse Owner, to cover special expenditures that the HOA Board of Directors may not have anticipated, or because the HOA Board of Directors are incompetent and do not operate the HOA as a company.

Many Townhouse Owners have the mindset that "This is my house and I can do what I want." They do not understand that when one buys, in a HOA, there are rules that must be followed. Many do not understand that what they do or do not do effects property values. Another consideration is most HOAs will not allow a ratio of rentals to total units to exceed 10%. Why you ask?

It is all about protecting property valuation. If the HOA does not maintain the Common Areas, improve the Common Areas, do not enforce the Rules and Regulations, have a rental to ownership ratio of greater than 10%, individual Townhouse values will feel like a roller coaster ride.

When banks consider giving mortgages to a Townhouse, in a HOA, the bank will look at two HOA aspects, for mortgage consideration: the rental to ownership ratio and the Capital Reserves.

All the above are facts. I have lived, in a HOA, for 22 years. I have been my HOA President, for seven years. I hope you find value, in the above information and you apply it, to guide your decision.