Different Types of Residential Properties You Need To Know
Looking for a new home or investment property? Check out the different types of residential properties and their investment potential here.
Buying a home is a long-term investment. If you plan to live in big metropolitan areas, chances are you’ll see different types of residential properties. With myriad building styles currently available in the housing market, it’s important to find the right home that best suits your lifestyle preferences and investment goals.
For those new to the housing market, here are the most common residential properties you need to know before making your first purchase—whether you’re a novice property investor or a first-time homebuyer.
1. Single-family homes
Single-family homes (SFHs) are houses built on a single lot. There are two types of SFH: attached and detached. Detached homes sit alone with no shared walls. This type of home usually has a driveway and garage space. On the other hand, attached homes share a wall or two with neighboring buildings. Some attached homes also have a garage.
Pros: Single-family homes offer more space and privacy than other residential properties. These homes usually have front and back yards, which is great for growing families with multiple pets and children. Another benefit of buying an SFH is flexibility. It allows you to design and choose the features of your home. SFHs also have a reliable resell value, which can be profitable to investors who like to buy and flip houses.
Cons: Single-family homes require more maintenance and repair than other homes. Unlike condominiums and townhomes, the homeowner shouldered the maintenance and repair costs, such as yard maintenance, plumbing, and roofing. For first-time homebuyers, single detached family homes can also be more expensive because of the bigger square footage compared to condominiums and townhouses.
2. Multi-family homes
A multi-family home is another type of residence that contains two or more housing units. They are usually designed as rowhouses connected by common sidewalls or buildings with multiple floors. Several multi-family homes range from a duplex and four-plex to semi-detached homes, condominiums, and townhouses. Some multi-family homes have their own entrance, while others share a common entryway with other housing units.
Pros: For huge multi-generational families, buying a multi-family home allows all members to live in the same building yet in separate housing units. A multi-family home is also a great rental investment as you can live in one unit and rent out the others to earn extra monthly income.
Cons: Unlike SFHs, multi-family homes have smaller square footage and less privacy. You will have to pay high homeowners association (HOA) fees in some multi-family homes like condos and townhouses. You may also have minimal opportunities to remodel the exterior of your home. If you own a multi-family home and are planning to lease the other units, you will be responsible for maintaining the upkeep of the entire property, which can be costly.
A condominium development (a.k.a condos) is a type of multi-family property. Condos are single housing units that share a wall or two with other similar units in a multi-story building. These developments can be classified as high-rise, mid-rise, and low-rise buildings, depending on how many floors a condominium building has. This housing category also extends to apartments, which contain similar units in one residential building. (Apartments are rented, while condos can be owned.)
Condos typically come with homeowners’ associations (HOAs), which residents pay monthly or yearly to cover the use and maintenance of amenities and facilities. A type of vertical property, condos are prevalent in urban, high-density areas because of the strict zoning regulations.
Pros: Living in a condo is becoming more popular among city dwellers and millennial homebuyers amidst rising home prices. Condos offer lifestyle convenience because of the multiple amenities these developments offer, such as pools, fitness facilities, entertainment, and recreation—-features you don’t usually experience in a traditional single-family home.
Most condos also have 24/7 security personnel and multiple CCTVs installed on the property, adding several layers to your security. Furthermore, living in a condo has minimal responsibilities on the homeowner’s part since HOA fees cover the maintenance and upkeep of the entire building. Condos are also an excellent rental investment as young professionals look for convenient, affordable homes in big cities.
Cons: Condos have smaller square footage than SFHs, which can be inconvenient for growing families. Moreover, HOAs often limit homeowners from remodeling their units. Some condo buildings also have several restrictions, such as no pets allowed. Since HOAs require uniformity and safety, homeowners must comply with the rules even when replacing doors and windows. The lack of privacy can also be another issue since you share living space with others.
Townhouses (a.k.a townhomes) are multi-floor properties that share walls with adjacent homes on one or both sides but have their own entrance. These properties can operate like a condominium or traditional houses. In some townhouses, buyers only own the home’s interior, while the building and the land it sits on are owned and maintained by the HOA. In other developments, residents own the unit’s interior and exterior—including the roof and land—and are responsible for maintaining their properties.
Pros: Townhomes are less expensive than traditional homes and are a great alternative to SFHs. Like condos, townhomes have HOA fees that already cover the maintenance and upkeep, as well as the security of the property. Townhomes have a high resale value for property investors, especially when the development is appropriately managed and maintained.
Cons: Like in condos, townhome owners may experience high HOA fees and less privacy. HOA may also restrict homeowners from remodeling the exterior of their homes.
You can choose from different types of residential properties on the market. Whatever you decide to purchase or rent, it’s important to find a home that best suits your lifestyle preferences and home goals. If you’re looking for an investment property, knowing the pros and cons of each type of housing unit can help improve the long-term profitability of your investment portfolio.
To recap, here are the common types of residential properties you can buy or rent:
- Single-family homes
- Multi-family homes
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