IN THIS BLOG:
- Advice for first time investors
- Single family home vs. condo
- Risks and benefits of each type of property
A common question for first time investors involves single family homes vs. condos. “Which type of property should I buy? Which is the better investment for me?” Check out the risks and benefits associated with each type of property below:
Condos and Townhomes
- Turnover costs are generally lower in condos and townhomes due to smaller square footage than single-family homes. Condos in areas like Longmont and Firestone are excellent rental areas.
- Neighbors are close by and keeping an eye on things! Having neighbors in close proximity cuts down on the potential for marijuana grow facilities and other drug-related offenses more commonly found in single-family homes.
- Homeowners’ Associations (HOAs) can present challenges for owners of rental properties. HOAs can vote in special assessments to improve the community in some way, increasing HOA dues. These dues are often unexpected and can be tough to plan for.
- HOA boards can present other challenges, as they can be difficult to deal with. The HOA board members don't often want a lot of investors to be renting units in their community.
- Long-term appreciation. Historically, single-family homes appreciate faster than condos townhomes.
- Having been in business nearly 40 years, we can confidently say there will always be stronger demand for single-family homes. Turnover is also much less, as single-family homes are a more permanent solution and tenants don’t move as often.
- Single-family homes come with a landscaping risk that a condo or townhome doesn't have. As the owner of the property, you risk tenant damage to the property that could end up costing you money.
- Capital expenses are higher and more frequent in single-family homes than condos or townhomes. For example, at some point a single-family home will need a roof replacement or siding replacement. When this happens, the investor covers the cost. We recommend our Denver property management clients have a capital reserve account for these types of expenses.
Both can be great choices for investment properties! Create a strong strategy and identify which type of property will fit into your strategy best. Have questions? Give us a call, 303-255-1990.