The choice that all real estate investors are battling with: Should you go for that bright apartment with great views and a high rental income? Or should you go for that single-family rental property with the high potential for real estate appreciation? Here, we will help you in making a real estate investment decision in regards to rental townhomes and show you the best cities in the US real estate market to invest in one!
First off, let’s start with the basics
What are townhomes?
A townhouse is generally defined by a tall and narrow house that has two or three stories. Townhouses are popular in urban areas where space is rare and expensive! The beauty of townhomes comes from the tall architecture in which the owner owns the space vertically rather than horizontally over a small acreage of land.
Keep in mind that not all townhomes are condos and vice versa! With condos, the property owner owns all the space inside the walls of the property and all exterior foundations are common property for the residents and owners. With townhomes, on the other hand, the property investor will own the patch of land that the property sits on, which is the main reason why townhomes are a common choice for urban real estate investors.
Why invest in rental townhomes?
Small outside space that’s always well-kept
When investing in townhomes for rent, real estate investors are looking for the best deal that offers less maintenance and sustainable rental income. Keep in mind that rental townhomes don’t come with a huge front or backyard. With townhomes, you typically pay your homeowner’s association fees in exchange for the exterior work to be done for you! Buying a townhome as an investment is definitely different than buying it as your primary residence, but the cherry on the sundae remains to be not having to worry about exterior maintenance, blowing leaves, or painting the exterior.
Of course, each homeowner’s association will have a list of things that they’ll take care of on your behalf. So, don’t be shy about asking for full details!
Amenities nearby
When you buy a townhome, you are buying comfort, ease of access, and amenities. Townhomes come in many sizes and locations, but the one thing they all share is having many amenities nearby. These often include gyms, pools, laundry and dry-cleaning services, and even recreational rooms.
As a property investor, you want to make sure that all amenities are provided to future tenants. This can be a selling point for you when searching for tenants for your investment property.
Have you purchased a property and are not sure what happens next with your real estate investments? Read this blog post as an intro to making money in real estate: Whatever Happens After Buying Income Property?
More bang for your buck
In many cases, buying rental townhomes as investments is cheaper than buying single-family investment properties. Keep in mind that it does not indicate that you’re getting more value in buying a single-family investment property than buying a rental townhouse. Both types of investment properties can fall within close proximity to the city center and both will have property expenses. On the other hand, both have mortgage payments and require maintenance for the interior of the property.
Another important factor to keep in mind when choosing between a regular house or a townhouse is the upgrades that rental townhomes generally have over your typical single-family property.
More intimacy with neighbors
Naturally, sharing a wall or two with the neighbors is going to bring you closer. Hypothetically, sharing walls with neighbors means you know people in your area and you can spot anything suspicious that’s going on. Living in rental townhomes is a popular choice for many tenants because of this. Moreover, many older tenants are looking for rental townhomes for this very reason. You never know, your first tenants of rental townhomes could be senior citizens!
Best cities for buying rental townhomes as an investment
Buying rental townhomes as an investment strategy to get started in real estate can be a very lucrative start for a beginner real estate investor. To make things a tad easier for you, we’ve gathered and carefully selected real estate data about townhouses and the best real estate markets to get into with such a real estate property type.
Related: Less Competition Over Bay Area Real Estate: What Does This Mean for Investors?
According to Mashvisor’s investment property calculator, these are the best cities to invest in rental townhomes. With these real estate market stats, you can buy a townhouse as an investment with the full knowledge of the capabilities of the property and the real estate market it’s located in as a whole. Additionally, you can review properties and choose the best investment strategy that fits the property’s qualifications. If you look closely at the data, you will notice the versatile nature of rental townhomes and how almost all real estate market stats indicate the profitability of utilizing rental townhomes as short-term rental properties or long-term rental properties.
Note: Before you start investing in rental townhomes, make sure you’ve done your research on your local and federal regulations regarding short-term rental properties.
How to locate the best candidate properties for rental townhomes
Townhomes hold their value just as any other typical real estate property type would. Accordingly, the same factors that play a role in multi-family real estate investing and single-family income properties come into play to affect rental townhomes. For a real estate investor, whether novice or expert, rental properties are best located using a property finder search tool. Through the wide selection pool that’s available today, you can specify your investment property needs and you can easily surf available market listings. Ideally, that’s what Mashvisor’s investment property calculator does.
Click here to sign up and make use of the 7-day free trial offered by Mashvisor.
For more information regarding the use of an investment property calculator, read this blog post: What Can an Investment Property Calculator Do for You?
Final words
Finding rental townhomes for sale is not the hard part of making money with real estate. Many real estate investors start investing in townhouses for rent without knowing the package that comes along with buying such a property niche. When investing in rental townhomes in these cities, make sure to investigate your prospective investment property from all angles to ensure a happy and lucrative real estate investment.
If you have any more insights on buying rental townhomes, please share them with us in the comments section.
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