Why You Should Never Buy a Townhouse

Purchasing a home in 2023 can feel like an unattainable goal as the prices for homes continue to skyrocket and honest homebuying programs cease to exist. Due to these problems, many are opting for shelling out thousands for an apartment, renting condos, or buying a townhome instead, but is there hope for aspiring homeowners? Yes.

WHAT IS A CONDO?
A condominium is usually a single unit within a large building, typically a high rise. There is a common entrance and sometimes a shared garage. These homes are usually one level as with traditional apartments. Most condo communities tend to have a clubhouse, gym, or even special services like a concierge or dry cleaning.

WHAT IS A TOWNHOUSE?
A townhouse is an individual structure with multiple levels built side by side, sharing exterior walls with neighbors. A townhouse community can give homeowners a hybrid experience of living on their own while having some perks of a community membership.

ATTAINABLE HOMEOWNERSHIP
Owning a single-family or multi-family home extends further than just you, especially when you’re a parent. Norma Mendez, a short-order cook from The Bronx, NY shared that at the tender age of one her mother and grandmother participated in homeownership programs similar to The HomeHope Fund. They invested minimally until they were able to receive a downpayment for a 2-family home.

Fast forward, she is now 26 renting the first-floor apartment—it has two bedrooms and two bathrooms in The Bronx, NY on the border of Mount Vernon. Norma’s rent is only $1,400/month. As of today, August 27th if she were to go out and try to find an apartment she would be paying anywhere from $2,500 to over 3k/month. So, it’s safe to say that her family's decision to purchase a home was in both their best interest and now, hers as well.

Programs such as The HomeHope Fund rely on the community to solve pressing matters that otherwise will go overlooked. With this program, a one-time investment as low as $150 can earn you anywhere from $18,000 to $28,000 in as little as 3 months. This money can go towards a down-payment on a home, back-rent, and much more. But the most important thing to understand is that once you invest, you are immediately eligible to win a pool.

As long as the community continues to participate, funds are always dispersed to the members who invest in the pot. Unfortunately, many will not join this endeavor and continue to trust big companies and government programs that are specifically designed to approve and assist a particular demographic. The HomeHope Fund is without prejudice. If you want to succeed and have a passion for working with other community members for the greater good, then this program is for you. You can learn more here.

Additionally, when you apply for programs such as the First Time Homebuyers program you may be eligible for a zero downpayment. In this case, the money won from the pot can be used for furniture shopping, closing costs, or even reserves. Either way, the benefits far outweigh the risks with The HomeHope Fund and if you can invest small to win big, then the simple question is, what are you waiting for? The next winner will be announced on October 15, 2023, so there’s still time to invest.

HOME VS. TOWNHOUSE
Equity building should be your second priority below building generational wealth for your children. Equity is the amount of your home that you own. Equity can be a powerful financial tool that you can use to pay off debt, renovate, or make other financially savvy decisions. “I remember when I first graduated college and could not find a good-paying job right away. My mother took equity off of the house and paid the debt.

So, now I can work and not have to worry about any student loans. My mother and grandmother were immigrants, but both worked very hard to give my brothers and me a good headstart in life,” says Mendez. “Seeing my family do that for me and my siblings helped me to understand how important it is to own a home, not just for myself but for my future children as well.”

Remember though if you still have a mortgage you can only own the percentage of your home that you’ve paid off. Your mortgage lender owns the rest until you pay off your loan. For example, if you buy a home for $200,000 with a 20% downpayment of $40,000 you will have $40,000 of equity in your home as soon as you close. With every mortgage payment you make, the balance of your loan decreases, and you build more and more equity (assuming the home value does not decline). When your mortgage is 100% paid off, you have 100% equity in your home.

Now, let’s chat about that last part and what separates a home from a townhouse—home value. A townhouse loses its value faster than a single-family or multi-family house. You can buy a house for $200,000, and invest $20,000 in repairs which then raises the value of the home. You can then flip it, selling it at $500,000 for a profit. Townhouses on the other hand have small yards for individual homes and these yards do not allow for gardening or to personalize the exterior of your home. Additionally, townhomes with an HOA can be both a nightmare and expensive. Despite the costs being lower here than a condo, it can pose a headache just the same.

You must check the rules and guidelines for your homeowners association. Some exterior repairs or replacements that the homeowners association would normally cover for condos could be your responsibility if you own a townhouse. You’d therefore be spending more than if you were to own a single-family home because costly repairs would now be accompanied by a monthly homeowners association fee.

INFESTATION ISSUES AND NOISE COMPLAINTS
One of the biggest negatives about condo and townhouse living is you are at the mercy of your neighbors. Unclean neighbors can cause an insect or rodent infestation that can cost you money without any real resolution. If you pay for pest control out of your pocket, you stand to risk not stopping the problem at its source. In this situation, you have unfortunately added another cost that you can do nothing about unless you move or find out it’s your neighbor causing the infestation.

While townhomes are great for first-time homebuyers, there are still many issues that can become a financial burden. Take your time to decide what is best for you.

by Riley Cook