Buy a Townhouse – 11 Tips to Ensure You Buy With Confidence
Are you thinking of buying a townhouse? It’s an exciting time, shopping for a house. Whether you’re buying to live in or as an investment property, the ride can be wild.
Especially with a hot property market, buying a home can be a stressful yet thrilling adventure. There is so much to consider and lots of things to do.
Even if you’ve bought property before, buying a home is not something that you should rush into. You need to consider every step. After all, real estate is not cheap. Getting too excited could mean you make the wrong decision.
You want to be confident yet considered. It’s okay to be excited, but don’t let that cloud your judgment.
For example, we’ve seen people get fixated on a particular house. It could be the area or because they grew up in a similar place. They put all their eggs in one basket and then miss out on auction day and end up devastated.
Or people believe that one particular house is perfect and buy it blindly, only to discover huge issues. Things like a compromised foundation or faulty wiring can wind up costing in the tens of thousands of dollars.
And generally speaking, when you buy a house, you need to make every dollar count.
So, in this helpful article, we’re going to explore buying a townhouse. We’ll share 12 tips to ensure that you buy with confidence.
We’ll explore why you might want to buy a townhouse and then some buying tips that will leave you informed and educated.
Ready to learn more? Let’s go!
Why Buy a Townhouse?
There are several reasons you might be in the market for a townhouse. These will depend on your stage of life and lifestyle. So, they might not all apply to you, but some should.
1. To Get to the Desired Location
If you have your heart set on a particular suburb or area, buying a townhouse can be a great way to get a foot in the market.
A standalone house on a larger block of land will always be more expensive than a townhouse.
If you are looking at houses and they are out of your price range, a townhouse can be a great compromise.
That way, you can get into the location, live there for a while and let your property accrue in value. Then, once you are earning more and have some equity in the townhouse, you can look at selling and buying the house of your dreams in the chosen suburb.
As a rule of thumb, a townhouse will always be a few hundred thousand dollars cheaper than a house on the same street. This saving could mean the difference between entering the market and continuing to rent.
Always consider buying a townhouse if you want to wedge into the market.
2. To Downsize
A townhouse can be the perfect choice of home for those looking to downsize. Typically, downsizers tend to be older people whose children have grown up and left home.
You may be in this situation, and you find yourself looking around your home, wondering what you will do with all this space and empty bedrooms.
A great option, in this case, is to downsize to a townhouse. With the kids gone, you don’t need a big house anymore.
Downsizing can be great to reduce the housework load and stress. You have a smaller area to maintain and keep tidy, and the maintenance costs on a townhouse are less than in an older house.
This is an excellent move for those who are retired and empty nesters.
3. As a First Home
Buying a townhouse can be an excellent move for first home buyers. Again, this is because, on average, a townhouse will be cheaper than a standalone house.
This means a smaller deposit, a smaller mortgage, and smaller repayments on the home loan. This can be an excellent advantage for first-time homebuyers. You can focus on your career and quickly pay down the mortgage.
And remember, once you’re in the market, you have an edge. You can always upgrade a few years later.
For instance, if you are a young family, you might be relying on one person to earn money while the other stays home with the kids.
Fast forward a few years, and once the kids are at school and the other parent can re-enter the workforce, you can sell up and buy a bigger house. Or you might want to keep the townhouse as an investment property and upgrade. As we said, once you’re in the market, you have options.
4. As an Investment Property
Another reason you might consider buying a townhouse is that it makes for a great investment property.
Again, it’s cheaper than a standalone house. However, the rental yields tend to be higher than apartments, on par with a unit.
You can use the rental income to pay down the mortgage and hopefully have a little leftover.
Also, you can claim depreciation on your tax return, offsetting it against your regular income. This is a significant tax benefit that many property investors utilise each financial year.
A townhouse is also a superior investment because it is an appealing choice of rental property for renters for all the reasons listed above.
Also, once you’ve paid the mortgage down a bit, you could access the equity in the property as a deposit on another rental investment. Snowball this across ten years or so, and you will have a serious passive income stream.
Tips for Buying a Townhouse
Now that we’ve detailed some of the reasons why you might buy a townhouse let’s explore some tips and strategies for actually buying one.
5. What is Your Budget?
This is arguably the most important tip, and hence why we’ve put it first.
There is no point in researching houses in a location where you are priced out of. What a waste of time.
Chat to your mortgage broker or bank about your borrowing capacity. You should know your deposit amount as well.
Then, you have a range to search. Use the real estate apps as you can filter by price.
If you will purchase at an auction, you need to consider the competition and know how much you can afford. You don’t want to overbid and then must make up the shortfall somehow.
And you need to be all over the terms of settlement for the auction.
Your budget will inform every other tip in this article.
It is about finding the balance between your budget and other factors.
6. Know Your Non-Negotiables
You need to know what you are looking for in a property and the non-negotiables.
For some people, they need a decent-sized backyard. This can be challenging as some townhouses have relatively small outdoor spaces. However, not all do; you can still find a townhouse with a decent yard.
Others won’t buy a house without split systems, and others still need a bath.
There might be a certain number of bedrooms you require.
Make a list of your non-negotiables.
Again, you can filter the real estate apps by the number of rooms and other features, so you can narrow down your search.
7. Owner’s Corporation?
This essentially means that the group of townhouses are managed by an owner’s corporation. A specialist manager or company manages all the common areas, insurance, and other matters.
A strata townhouse is not always a bad idea, but you need to know what the fees are. These are usually charged quarterly. Learn this before you get serious about a townhouse. Work out the fees and the mortgage repayments.
In some cases, the fees work out to be roughly the cost of insuring the townhouse. If this is the case, it can be a good move. However, if they are higher than insurance, you may want to look elsewhere.
8. Off the Plan
You might find off the plan townhouses for sale when you are searching.
Buying off the plan means that you put down a deposit on a townhouse that is yet to be constructed. You then settle on the property once it is built and take possession.
There are a few reasons why buying off the plan is a great idea in some cases.
Firstly, you are guaranteed a brand-new home. All appliances, fixtures, fittings, and finishes are brand spanking new. This will save you money because, for a few years, you won’t have to repair or buy anything for the home.
Also, if you plan to occupy the place, there’s nothing like living in a shiny, brand-new house.
Furthermore, if you are a new home buyer, there are serious incentives to buy an off the plan property. You may be eligible for first home buyer grants and discounts or complete waiving of stamp duty.
9. Arrange a Property and Pest Inspection
This is a must-do for any home purchase. You need to do your due diligence.
When dealing with the real estate agent, ask for a property and pest inspection. If there is any resistance to this request, walk away. Buying a lemon property is like buying a dud car but with hundreds of thousands of dollars, the difference.
A property inspection will determine if the house has significant flaws such as structural integrity issues, foundation problems and more. These are extremely expensive to remedy, so get the report done and make an informed decision.
A pest inspection will determine if there are termites or other vermin in the home. Rodents are easily killed, but termites can cause extreme damage to the frame. Play it safe and get these inspections done.
10. Check Out the Neighbours
When inspecting properties, have a look at the neighbouring townhouses. The last thing you want to do is buy a home with the neighbours from hell.
This can be difficult to discern, but there are a few things you can do. Look out for rubbish outside, such as hard rubbish. If a neighbouring property has hard rubbish out the front, this is a warning sign. No one wants to live next to a dump.
Other things to look for are loud music, yelling, and partying. A good tip is to do a sneaky drive by on a Saturday night. Walk past the house and listen for loud music or signs of a party.
11. Location Location
Consider the location when buying a townhouse. For instance, is it near a main road or highway? If so, the noise will be constant, and you might not want to live there.
The same applies to train tracks. However, these are probably less intrusive than a highway because trains run less often late at night.
Also, consider the location when compared to the local amenities. How far away are kinders, childcare, schools, shops, leisure centres and gyms? Ideally, you want some within walking distance and some a short drive away.
If amenities are located further afield, you’ll need to consider the cost of petrol in your decision. The same applies to your commute to and from work.
If the townhouse you are interested in is close or far from your work, this is a significant consideration. This is not a deal-breaker if you work from home, but if you commute every day, you’ll need to consider this.
We’ve shared twelve tips for those thinking about buying a townhouse in this article.
There is a lot to consider and remember that you should never rush into buying a property. Take your time, evaluate all the options, and make an informed choice. Keep your cool, and don’t get emotional. You want to be always detached and thoughtful.
So, use this knowledge and enter into your townhouse search forewarned and forearmed.