For investors looking for the right investment property, freehold townhomes are a great middle ground between condos and single family homes. Whereas a condo townhome implies you’re a part of a condo corporation who will manage maintenance, budget and to whom you’ll pay a condo fee to, freehold townhomes are owned in full by the homeowner including the land the home is built on and any space within the property line. With a freehold townhome, you’re not a part of a condo corporation and the full onus of homeownership is yours, including all maintenance and repairs. The benefits of a freehold townhome can include homeowner autonomy, full control of the look and feel of your home and freedom from condo fees.
The following are important things to consider when purchasing a freehold townhome for an investment property. The below can help you decide if a freehold townhome is a good investment property option for you based on your capabilities and goals:
Tenants of a freehold townhome investment property
With the current competitive rental market in Ottawa and the fact that more people are waiting longer to buy their first home, freehold townhomes often have high interest from renters. Townhomes have many different types of potential tenants and often rent quicker and for a higher price than apartments or condos. The affordability of renting a townhome in comparison to a single family home means that townhomes can be accessible to young couples, divorced parents with children, aging couples and nearly everything in between. Townhomes are often in central locations with great access to amenities while having enough space for a family and children. With some autonomy and privacy such as a backyard and no neighbours above or below, townhomes can be an attractive alternative for those wanting a “home” feel within an affordable budget. Because of the size and autonomy that many townhomes offer, they are likely to draw in more long-term tenants such as small families who want to find a place to call home.
Purchasing and selling a freehold townhome investment property
Townhomes represent a growing share of the Ottawa real estate market. In comparison to a single family home, a freehold townhome is more affordable and more accessible for first-time home buyers and first time investors. A townhome can be a middle ground between a condo and a single family home. When it comes to townhomes, freehold townhomes which do not have condo fees are an opportunity to save off the bottom line of your monthly expenses as a rental property owner. Freehold townhomes become a great opportunity for an investor to achieve a positive return on investment compared to condos or condo townhomes which will have condo fees added to your monthly cost. In comparison to single family homes, freehold townhomes often have a lower cost investment without necessarily offering a lower rent yield. As well, freehold townhomes have the potential to appreciate in value quicker than their condo counterparts. Because freehold townhomes tend to be more valuable and in more demand than a condo townhome, when the time comes to sell your investment property you can be in for a quicker, more lucrative sale.
Management of a freehold townhome investment property
Townhomes have less exterior walls and often less unexpected costs than when owning and maintaining a single family home. There will be somewhat less maintenance month to month on a townhome than a single family home but freehold townhomes don’t require condo fees in exchange for services and are therefore your responsibility to maintain. It is important to include maintenance expectations in the tenancy agreement you create for your tenants. This agreement should include responsibilities surrounding things like lawn maintenance and snow removal. Because freehold townhomes do not have a condo corporation to conduct any repairs big or small, it becomes an even bigger priority with these investment properties to keep a close eye on the state of your property as well as have a responsible and trustworthy tenants who will care for the home and inform you of any repairs needed.
Locations of freehold townhome investment properties
A big key to making lucrative decisions in the rental market is choosing a location that makes sense for the target renter you need to feel secure and make the numbers work for you. Townhomes have a fairly vast array of likely tenants, and therefore give you more flexibility as to where you choose to purchase your investment property. You may be keen on the peace of mind that comes with renting to a family who will make a home of your house and stay for a long time. On the other hand, you may be interested in trying to achieve positive cash flow each month by renting to multiple individuals who will share the common areas of the house like students. You should make a thoughtful decision about the location of your investment property based on your priorities of cash flow vs. appreciation and your comfort with different types of tenants. While single family homes are more typically found in suburbs outside of the downtown core, townhomes can be regularly found in urban neighborhoods as well which provides you a multitude of location options as an investor in a freehold townhome.
Our team at Sylvain Bourgon Real Estate have experience in all different types of investment properties whether it’s been in personal investments or facilitating successful investment property purchases for our clients.
If you are seeking buying an investment property in the Ottawa area, or have more questions for us, we are happy to provide you with helpful guidance and support. Email us at info@buyandsellottawa.ca or call us at 613-590-3036.