Town house VS Multifamily

[Sachin Maskey]

Hi All,

I am new to real estate investment and wanted to start with 3-4 units multifamily and have been looking for multifamily around providence , RI since few weeks and seems like there is only few properties less than 30 yrs old and most of them are 100 yrs old . I do see some Town house which has been built recently within 10 yrs . I wanted to know if Town house investment is a good idea for investing in real estate for other benefits like appreciation / tax / depreciation etc . What are pros and cons on Town house investment ??

I would appreciate your feedback 

Thank you

[Anthony Thompson]

@Sachin Maskey I'm generally leery of condominiums and town houses because of the condominium associations. Most of them are made up of people with a lot of time on their hands but no real experience with property / real estate.

So you end up with decisions made by committee and popularity. As a professional businessperson it can be extremely frustrating to deal with, and you'll ultimately be responsible for whatever fees/assessments they approve.

I know several local property managers who worked with condominium associations early on, to increase their units under management, and later regretted it because the condominium associations were so aggravating to deal with. As far as I know they've all "fired" those clients and left them to the few management companies willing to deal with them (for a hefty premium).

There are more recent buildings in Rhode Island that aren't condominiums so if that's really your thing then you should still be able to find something. If you're using a real estate agent for example, you can have them make that one of the search criteria in the MLS.

If you do feel you have to go with condominiums, then yes town houses are better than apartment-style units simply because they look more like single families. They're nicer to live in and rent out, and easier to resell. But I think I'd personally only do that if it was a personal residence choice and it was because I was priced out of the market for regular buildings, or perhaps if I was older and didn't want to deal with some of the property maintenance issues.

Usually we see more interest around condos and town houses close to a market top when regular single and multi family buildings get too expensive. In that case, especially for apartment-style units, they become one of the few remaining affordable options for people that are set on "owning". But for me, that's actually a sign that the market in general is getting toppy and reaching its affordability limits. Rather than making me want to look into condos, it makes me want to sell some things and pull back and re-evaluate where we are in the market cycle.

If you're looking for more recent stuff, you may find it helpful to just focus on post-1978 buildings. They won't be as "new" (low maintenance) as things built within the last 10 years, but you'll still avoid any lead paint issues/inspections, and there will be a lot more of them to look at. And they're still much better than some of the literally 100-year old buildings we have here in RI :)