Are you planning on investing in a rental property, but do not know which type of home would be best? There are apartments, condos, duplexes, single-family homes, townhouses, efficiencies, and much more.
It can seem overwhelming to decide which is best for your investment needs. Here – we go over the differences between each so you can see what will fit your, and your tenants, needs!
Types of dwellings
Below is a list of different types of homes you can rent out and their definitions:
- Apartment: a suite of rooms forming one residence, typically in a building containing a number of these.
- Condo: short for “condominium,” a condo is a private residence within a larger building or complex.
- Duplex: a dwelling comprising two apartments with separate entrances, whether the apartments are side by side or one above the other.
- Single-family home: a stand-alone detached property with no common walls.
- Townhome: multi-floor homes that share one- to two walls with adjacent properties but have their own entrances.
- Efficiency: an apartment with everything contained in one room: the living room, bedroom, dining area, and kitchen. Homeowners can take a large living area within their house, block it off from the main home, and add a small kitchenette to create an efficiency.
The main differences
Apartments are different from most other dwellings in the fact that they often reside in a building of other apartments that are owned by one single investor or company. However, although not as common, there are apartment complexes that will let investors buy individual units.
Condominiums are like apartments in that they are individual units that reside in a larger shared building. The main difference is that these units are usually privately owned.
Duplexes, townhomes, and efficiencies tend to fall under the same category in the sense that they don’t typically reside in a large building with several units. They will always share common walls, though.
Single family-style homes are completely different from all the others as these are traditionally bought and lived in by the same owner and the house shares no adjoining walls or building with any other units.
Which is best to rent out
The best dwelling to buy and rent out will depend on your needs as an investor. Do you plan to eventually live in this home, or will it forever be an investment property?
If you plan to eventually reside in the home a single-family home may be best for your needs. However, keep in mind that when renting it out you may be responsible for the lawn maintenance. Condo associations and apartment complexes typically handle the lawn maintenance through a company.
These associations and complex’s also often come with community centers equipped with pools and gyms. This could be an appealing amenity for a potential renter.
Weight out the pros and cons and pull a couple of these different properties for sale in your area. See how much the going rate is a study the market to figure out what your best investment would be.
If you are still having a hard time deciding, we have an award-winning Property Management division that can help you through the process!
