When it comes to investing in property it can be difficult to know what housing option is going to suit you and your property portfolio best.
As you are aware there are endless options in the market including; apartments, townhouses, brand new builds, existing dwellings, and many more.
Today’s article will help you understand what to look for when buying a townhouse – 17 tips to help you invest in the right townhouse.
Townhouses are an affordable investment option, but it is important to find the right townhouse in the right area with the best features, to ensure you gain the best results from your investment.
So when it comes to what to look for when buying a townhouse…
Here are 17 tips to help you invest in the right townhouse:
Aim to purchase your townhouse within 5km’s – 20km’s of a CBD or closest business hub in a major regional market.
Ensure your townhouse is within close proximity of the nearest train line. If there is no train line in the area, it’s always best to have easy access to a main roadway or highway and stay within walking distance of a bus route.
- Floor plan
Three bedroom townhouses tend to rent more quickly than a two-bedroom townhouse. It’s best to buy a townhouse with 3 bedrooms, 2 bathrooms (an ensuite off the major bedroom), and where possible a third separate toilet downstairs.
It’s best to invest in a complex with good roads and driveways in and out. Most people who look to live in townhouses are small families or elderly people, so it is important that the driveways are wide for large family cars, or for older drivers.
Since a townhouse doesn’t generally have a yard or much outdoor space, it is great to buy in complexes that have good-shared facilities. This includes covered outdoor BBQ area’s, swimming pool, tennis courts, large grass areas, etc.
- Proximity to Amenities
The majority of tenants who rent townhouses prefer to live close to local amenities. For example – within walking, or close driving distance of local and major shopping centres, hospitals and universities.
- Townhouse Arrangement
It is always best to purchase in a complex where townhouses have a duplex layout if possible, this means there are less shared (common) walls. Where this isn’t possible, to purchase the end townhouse in a row, where you have side access and side windows.
- Side Access
As a general rule of thumb, there is generally more capital growth in a townhouse that has side access, as opposed to a townhouse that is in the middle of a row of townhouses. Generally a townhouse with side access will receive more natural light, private access down the side of the property, and more outdoor space.
You should never pay as much for a townhouse as you would a house. 15-20% below the average house price in the suburb is a good rule of thumb.
- Body Corporate
High body corporate fees tend to be an area where many investors make a mistake.
A townhouse may seem affordable and have high rental yield, but its imperative you weigh up the costs and body corporate charges for the complex, and make sure you are making a profitable investment in the long run. Generally you do not want to be paying more than $35 a week in smaller complexes and $45 a week in larger complexes.
Built in robes (especially in the master bed), ceiling fans, air conditioning, lots of storage and a functional kitchen are some of the features that tenants love to have included when looking for places to rent.
- Complex Size
Aim to buy a townhouse in a complex with fewer than 50 townhouses. The sweet spot for capital growth tends to be in smaller complexes.
Its important to ensure there is at least one garage or parking space for the townhouse, as well as ample visitor parking. Tenants generally tend to be small families or young professionals in which case there is more than one car per household, therefore they would need extra parking facilities to accommodate for them.
It is important to purchase a secure townhouse, in a good suburb. Electronic gates, on-site management, security cameras, and the like, are all features that can add to the security of the complex.
A well-presented townhouse tends to have better growth, as well as more appeal to prospective tenants. Where possible, try to purchase a townhouse that has a landscaping or grounds-keeping allowance in their body corporate fees.
As always when investing in any property, it is important to do extensive research on the suburb to ensure you are making a smart investment. Weighing up the pros and cons of the area, the facilities and local amenities, the predicted growth of the suburb as well as the sales history for comparative properties in the suburb.
- Vacancy Rates
Smaller complexes tend to have lower vacancy rates due to each townhouse being in higher demand. It is important to be aware of the current vacancy rate of the complex, as well as the general area, so your investment does not lose money by being left un-tenanted for long periods of time.
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