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Residential Property Types
There are multiple residential property types that are available with a typical residential mortgage loan.
When setting your buying criteria, you'll need to consider the pros and cons of each residential property type.
This article explains the various types of property, including Single Family Homes, Condos, Townhouses and small Multi-Family.
A Single Family Residence (SFR) or Single family home (SFH) is a stand alone, detached house situated on a lot. They are built on the lot with no shared walls.
Single-family homes offer more privacy and space than other types of homes. Usually, a single family home comes with private front and/or back yards. When people imagine home ownership, they are generally imagining a private, single family home. Because you do not share the walls or the lot with anyone else, you can make any modifications to the home without bothering anyone.
Single families generally have a higher, more reliable resale value than condos and townhomes.
Of course, these benefits come with a cost-- literally. As owner, you are responsible for the entire house and lot. The maintenance, time and money costs are the higher than condos or townhomes. Major items such as roof, siding, plumbing, electrical, windows are your responsibility. Continual upkeep includes landscaping, cleaning gutters/roof yearly, and up keeping the interior and exterior of the house itself.
What to Watch Out For
When you purchase a single family residence, you will want to get a full property inspection. The inspector will tell you what items on the house are in good working condition, what items will need work in the near future, and what items, if any, pose a serious issues presently. Common issues are appliances, plumbing, roof, foundation, HVAC and fireplace/chimney.
It will be up to you to decide if the benefits outweigh the costs and potential risks. It really comes down to your lifestyle choice and long term goals.
Condominiums (condos for short) are buildings or a complex of buildings containing a number of individually owned units, typically similar to an apartment unit. Condos share a wall or two with other units and generally come with homeowners’ associations (HOAs), which require the residents to pay monthly or yearly dues.
Condos are popular in urban, high-density areas, where you can secure a more convenient location for a similar price to a single family that is a further away from the urban core. There is less responsibility on owners to maintain and upkeep the common areas and major items.
For example, if the roof needs replacing, owners share the costs with each other, rather than paying for the entire roof individually. Some buildings offer additional amenities such as gyms, lounge areas, business suites, pools, etc that you may not be able to afford or justify in a single family residence.
The Homeowner’s Association (HOA) is often professionally managed and sets the uniformity, rules & regulations based on votes from the owners. The rules and regulations can limit or define the extent of remodeling you can do to your own unit, type of pets allowed, and whether or not renting out your unit is permitted.
Privacy can be an issue as you do share multiple walls, depending on the configurations of the unit you purchase.
What to Watch Out For
When you purchase a condo, you’ll have a review period to go through HOA documents, rules, regulations, and meeting minutes so you fully understand what your obligations will be going forward. You’ll want to know the pet policies, rental policies, and if there are any upcoming ‘Special Assessments’ A special assessment is when the HOA determines a major upgrade is needed, such as roof, exterior painting, or re-paving the parking lot and they charge each owner a monthly amount over and above their normal HOA fee for a period of time, to cover the additional cost of the major item.
If you plan to rent out your property after living it for some time, a condo can be a good option as they are usually easier to rent out than single family residences & have less maintenance required by the owner. You will just want to double check this is permissible with the HOA before you purchase.
Additionally, you will want a proper inspection as with a single family.
A Townhouse is a tall, narrow, traditional row house, generally having three or more floors. They share 1 or 2 walls on either side, often offer a small yard and/or a rooftop deck. They typically offer more square footage than a condo, but slightly smaller than a single family home. They can be viewed as the happy medium between condos and single family homes.
Townhomes are more private than a condo, but less than a single family home. The communities are often smaller, maybe 6 to 14 units in the complex. Maintenance is easier and less expensive than a single family; Some complexes have HOAs, others do not.
Maintenance costs are shared among owners and responsibilities are divided with a service agreement if no HOA is present. Townhomes are typically more affordable than a single-family home.
What to Watch Out For
With townhome, you will get a proper inspection as with a single family & an HOA review time as with condos.
A residential multi-family is 2, 3 or 4 units contained within one building. These are referred to respectively as duplex, triplex, and quadplex.
These buildings are an opportunity to purchase investment real estate as an owner occupant, securing a lower interest rate and often a lower down payment. These properties come in a many different configurations, such as side by side units, multiple floor units, or row house style. The difference between multi-family and condo is that you as the owner will own the entire building, not just the unit you live in.
Multi-family homes are ideal for those looking for an investment property; many decide to live in one unit, and rent out the others for income. This makes you a landlord, so you are essentially purchasing a part time job that is highly regulated by local and state governments.
You will be responsible for all maintenance and repairs of the building, bookkeeping, fair housing and leasing the units. While this may seem like a lot of work, the tax benefits can be worth the effort and the building itself becomes an asset that will likely increase in value over time.
What to Watch Out For
With a multi-family purchase, not only are you purchasing your home, you are also purchasing a longer term investment. You will get a proper inspection as with a single family as well as do an analysis of the local rental market to ensure you will be able to rent out your other units.
You real estate broker can help you with this analysis as well.
Off Market Specialist. Specialties: Buyer's Agent, Listing Agent, Relocation, Commercial R.E. I'm a real estate consultant who's made a career of an excellent track record of outstanding results an....
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