Townhouse vs Single Family Home Investment | Expert Guide

One of the numerous options available to real estate investors when purchasing a rental property is the townhouse vs. the single-family home investment. Single-family houses are public in a variety of styles. So, how does an investor weigh the pros and cons of the various residential property investment options? This post contains all of the necessary tools. It will also act as a reference when weighing the advantages and disadvantages of attached vs. detached family houses.

We’ve all heard of a single-family house. It is a separate, stand-alone home with no shared sections or walls with other homes. Typically, the phrase refers to a single piece of real estate. Although a homeowner’s organization may manage certain community services, a single-family house is separate.

A townhouse is a multistory residence that connects one wall with another property. You will get your door and maybe your utility room, carport, driveway, and backyard with a townhouse. The residence will be a member of a homeowners association or HOA in most cases.

Possessing a rental property that is not separate and instead is part of a community of residences has significant consequences. At the very least, some aspects of the investment property’s maintenance and upkeep will depend on individuals you have little influence.

A townhouse differs from a condo because it is not a specified community. However, it may be comparable in many aspects. Most real estate investors consider the word “townhouse” a subset of the term “condo,” with less participation with a condo organization.

Townhouse vs Single Family Home Investment– Pros and Cons

Townhouse vs Single Family Home Investment

The following Pros and Cons will be very beneficial to you:

Townhouse Advantages

Townhouse vs Single Family Home Investment

A townhouse may be a good investment and a good decision in certain instances. Here are some of the merits you’ll enjoy:

A more affordable buying price

Acquiring a townhome is not always less costly than acquiring a residential home. When comparing a primary residence to a condo in the same area with equal upgrades, the condominium will normally be less expensive.

What is the rationale behind this? House construction with SharePoint is substantially less expensive than home construction with separate walls, and the benefits are carried on to customers. If you will not have a vast home-buying income, a townhome may be a good and affordable alternative. It’s also a fantastic way to get a second home.

Easier to maintain

You are responsible for all exterior maintenance when you buy a single-family house. You must mow your lawn, organize for snow removal (or shovel yourself), and deal with the additional responsibilities that come with having a separate dwelling.

When buying a townhome, you normally need to think about the inside since your HOA usually takes care of the outside. If you’re a first-time buyer and aren’t sure how much upkeep you can take, a townhouse can be a decent place to start.

Amenities in the common areas

Many townhouse communities have facilities in the regular areas that might improve your quality of life. 

A feeling of belonging

A townhouse might help you get to know some of the individuals in your neighbourhood if you’re new to the region or still figuring it out. If you love socializing with your neighbours, the fact that you all share common locations will aid you in this endeavour.

Reduced rent

Owners that opt to rent out townhouses will often demand less rent since they are less expensive to acquire than single-family homes. This might result in significant savings for you.

If you have a family and want more room than an apartment provides, renting a townhouse might be a wise option. A townhouse might also be a good option if you want a low-cost property with some outside space.

Townhouse Disadvantages

Townhouse Disadvantages

Compared to a single-family house, there are several advantages to choosing a townhome. However, there are a few drawbacks to consider. This includes the following:

There is less room

Townhomes are lesser than solitary homes. In certain cases, this may entail a decrease in living space. Storing may also be an issue with townhomes. Many houses lack cellars or garages, and people with kids may discover themselves residing in cramped quarters.

Less privacy 

Once you own any residential home, you could come and go whenever you choose without having to deal with your neighbourhood all of the time. In a condominium, you as well as your companions are virtually on top of each other. As a consequence, maintaining any kind of privacy may be challenging. Remember that townhomes aren’t completely quiet.

Increased commotion

When you buy a townhouse, you may be sure that another property gets linked to yours on at least one side. In many situations, you’ll have residences on both sides of the street.

If you share such walls with your neighbours, you may get subjected to their conflicts. This is on top of being jolted up by a crying kid in the middle of the night.

Exorbitant HOA fees

The monthly maintenance costs you’ll pay to live in your townhouse might be prohibitive in certain situations, making it less affordable. Many individuals purchase townhouses to save money. However, if your HOA costs cancel out, you’ll lose your savings.

Another thing to remember is that paying such fees will help with routine area care. They will not cover inner house maintenance. To maintain your townhouse in excellent repair, you’ll still have to put in the effort and spend the money.

Advantages of Owning a Single-Family House

Advantages of Owning a Single-Family House

The following are some of the merits of owning a single-family home:

Less expensive initially

Because single-family houses are less costly, they demand less money upfront. Loans for residential house purchasers often need a 20% down payment if you’re financing an investment property.


Getting a mortgage loan may be very simple if you have the funds to make the 20% down payment. Aside from that, considering the property’s loan is just for one single-family house, the financing procedure is as simple as it gets. When purchasing SFRs, long-term fixed-rate mortgages are pretty enticing.

Easier to sell down the road

People will always want to purchase single-family houses. This makes selling this property considerably more straightforward and quicker than townhouses.

Extensive demand

We’ve witnessed an increase in demand for single-family houses even during COVID-19. There isn’t enough cheap housing available, which has been a problem since before the outbreak.

Increased appreciation

Because of the tremendous demand for single-family homes, they are usually valued more than townhouses. Single-family houses are valued depending on supply and demand. The value of a townhouse, on the other hand, is decided by the property’s condition and the rental revenue it generates.

Tenants of higher quality

One of the primary reasons many people like to rent single-family houses is personalizing them. Thus, renters are more likely to take better care of the property since it is more than simply a rental.

Disadvantages of Owning a Single-Family House

Disadvantages of Owning a Single-Family House

The following are some of the disadvantages of a single-family home:

A lower rate of return on your investment

If you desire to expand your investment portfolio, SFHs will do so, albeit at a far slower rate than a townhouse.

The monthly cash flow is lower

Single-family rental property owners will only get one rent check for each home because fewer renters are paying rent. As a result, the monthly cash flow on an SFH is often smaller.

Job openings

The risks of owning an empty single-family rental home are substantial. This is true since you won’t make up the difference with rental money from other renters. You’ll be obligated to pay the mortgage until it gets leased out.

Property managers’ fees are expensive

Property managers may demand a higher fee for single-family rentals. This is because managing one SFH in various places is inefficient. Townhouses with numerous apartments in one place are easier to operate and frequently less expensive.

Investment in a townhouse compared. a single-family home: A table comparison

The highlights of townhouse versus single-family home investment get summarized in the table below. Come along!

Townhouse vs Single Family Home Investment

Townhouse vs Single Family Home Investment
TownhouseSingle-family home
A more affordable buying price  Property Managers face higher purchasing prices and fees.  
Even if the purchase price is lower, the financing choices are frequently more complicated.  Easy financing choices  
Easier to maintainMore difficult upkeep  
Less space  More space
Common amenities  Secluded amenities
It will be much more challenging to sell afterwards.  It’ll be easier to sell afterwards.  
Reduced rent  Increased rent  

Frequently Asked Questions

Which is a better option between a townhouse and a single-family home investment?

The above highlight of townhouse vs. single-family home investment will aid you immensely in making a suitable choice.

Do townhouses value at the same rate as single-family homes?

No. Townhouses, unlike single-family homes, do not value as much. They appreciate at a considerably slower rate than other types of property. This is because they do not have the same land as single-family houses.

Is it true that townhouses are safer?

In any event, it is your responsibility. Whenever you purchase a townhome, the housing association (HOA) normally takes care of the outside and common space maintenance for you. Terraced houses could also make it much easier and safer for you to travel anywhere you want because they generate a feeling of connectedness.

What is a reasonable cap rate for a single-family residence?

A cap rate of 10% or above is suitable for most single-family property owners. Many investors, however, may still profit from homes with cap rates of 7-8 percent. Some investors may make money on apartments with capital values of 5% to 6%.


In conclusion, real estate comes with numerous investment opportunities. And if you need more help on this, the above highlight of townhouse vs. single-family home investment will aid you immensely.