We oftentimes work with buyers considering the differences between condos, townhomes, and single family homes. Sometimes the decision is very simple for particular buyers, as one of these fits a specific need better than the other option. It is helpful to look at some of the defining characteristics of each of these in order to determine the best fit.
In general, condominium owners own property in common. While the owner owns the actual building unit, the property under and around the land is owned in common. Many owners prefer to own a condo when they want specific amenities or desire to live in a more urban area. For example, in Durango, the Rivergate condos face the river, offering a spectacular view. Other options, like living in Downtown Durango, are typically a great fit for condos, as they offer this urban lifestyle. Condos are also typically more affordable than townhomes or single family homes. They are also great as investment properties, and oftentimes tend to be used as rentals.
In a townhome, a person typically owns the land under the property, although there may be some common property shared in a complex. Townhomes are similar to condos; they both have the “lock and leave” mentality. For homeowners who desire to travel often or for long amounts of time, these are a great fit.
Single family homes offer the most freedom in terms of how to utilize a property. There is typically more owned land in a single family home (although some townhomes are detached and function like single family homes, they were just developed as townhomes). With the freedom oftentimes comes more responsibility, most notably in the upkeep and maintenance of the home and yard.
Typically, townhomes and single family homes are the easiest to finance; sometimes it is more difficult to finance condos on 30 year financing. For affordability, this consideration may make a difference.
Homeowner Association Fees (HOAs) are a key factor in considering the type of purchase to make. HOAs vary per property, but typically the HOA will enforce certain Covenants, Conditions, and Restrictions (CCRs), and homeowners will pay a fee for specific upkeep and maintenance. The provisions, requirements, and fees vary. It is crucial to ask some educated questions prior to any purchase made.
See our previous blog entry for some valuable questions:
- Is there an active HOA and if so, what are the dues and how often are the dues billed?
- Who manages the HOA and accounts for the dues? How is this leadership chosen?
- What do the dues cover?
- What kind of insurance does the HOA cover, if any? What kind of insurance does an owner need to provide?
- What do the Covenants say about restrictions on use of the property? As examples: What are the pet policies? And, if you are buying as an investor, what do the covenants say about short or long term rental of the property?
- Is money budgeted by the HOA each year for maintenance reserves?
- Are there any ongoing, unsolved problems with the grounds, buildings, or common areas?
- Are there any special assessments that might occur in the next year or two?
- How old is the project?
- What is the percentage of owner occupancy and does this pose any problems regarding obtaining financing?
- When was the last time the building was painted?
- When was the last time the parking lot was sealcoated?
- When was the last time the roof was replaced?
- When was the last time the decks were replaced? How often are they stained?
- Do the sidewalks and parking areas need to be replaced?
- Are there any on-going structural problems with the buildings?
- Are there sufficient funds in the HOA reserves to do all of the above according to a maintenance
- How frequently are HOA meetings held? Are there any pending disputes or active lawsuits involving the HOA?
We hope this explanation helps if you are considering a purchase, and may aid in determining the best fit for your needs.