Advice on buying a townhouse?Submitted by Michael Nystrom on Tue, 03/18/2014 - 12:39
Dear Daily Paul,
I have a friend who is in the market to buy a townhouse. He is a first time home buyer, and is understandably a little uneasy about making the plunge. Any advice / experiences / cautions that you can give would be helpful.
As Robert Kiyosaki points out in Rich Dad Poor Dad, you shouldn't think of the home you live in as an 'investment.' It is a consumption item, that will increase your expenses in terms of taxes, maintenance, repairs, upgrades, etc. Beyond this does anyone have any experience specifically with townhouses?
I don't know exactly how a townhouse differs from a condo, but when we bought a condo, our lawyer advised that "it is like going into business with every other owner in the complex."
And how! Again, I can't speak for a townhouse, but I think there are some similarities. With a condo, there are shared responsibilities for common areas - hallways, laundry room, parking lot, grounds, etc. Someone has to manage landscaping, snow removal, roof repair, etc. So you want to make sure that your fellow owners are responsible people. With a condo, you have a monthly condo fee, which you want to minimize. There can also be special assessments to fix major common area issues - like repaving a parking lot ($20,000) or putting on a new roof.
How you use your property is governed by rules of the condo association. In some cases, you're not allowed to rent out your own unit, for example. This is a double edged swords, as high owner occupancy makes for a better environment. On the other hand, if you have to move - to take a job in another state, or if you just want to move up - you're not able to rent out your unit (which makes one wonder if you actually 'own' it at al).
These are a few observations off the top of my head. If anyone has others, I'd be most appreciative of your input.