Real estate remains one of the best investments a person can make in their lifetime. The property builds up equity over time, putting the investor’s money to work for them. If they choose to rent the property to someone else, the rent checks pay the mortgage and might even provide passive income over and above the mortgage. But where should you start? Which is the best “first property” to buy? Here is a comparison between townhouses, condos, and houses when it comes to getting started in real estate investing. With this information, you can determine whether they need a single-family home or if a townhome or condo will better suit your needs.

Starting with a Single-Family Home

A detached home on its own lot is typically what people refer to when they call a dwelling a “single-family home.” The single-family home represents the most common type of real estate investment that people make.

A single-family home offers a tremendous amount of freedom for the owners. The yard surrounding the home provides a bit of space and privacy between the nearest neighbors, and the home does not share a wall with a neighboring property. The buyer owns the structure itself, everything inside the house, everything outside the house, and the land it rests on.

The owner can develop or improve the entire property if local housing authorities approve improvements. For example, if the owner buys a waterfront home, they may add a private dock or a boathouse to improve the property. The owner can add a swimming pool or hot tub in the backyard, repaint the house, or change up the landscaping, so it’s more to their liking.

While a single-family home offers the most freedom, it also comes with the most responsibility of the three types of housing discussed here. The owner is solely responsible for paying for any repairs or improvements to the property.

A house also costs the most upfront. It’s likely to require a larger down payment. Homeowner fees, closing costs, property taxes, and other monetary responsibilities can also add to the owner’s expenses over time.

Starting with a Townhome

A townhome structure is similar to a single-family home but with much closer neighbors. One or two side walls of a townhome are shared with a neighboring townhome. Townhomes are also usually two- or three-story structures.

Due to the shared exterior walls, a townhome represents less property ownership than a single-family home, but more than a condo. Townhomes will sometimes have small front and back yards or an outdoor deck or patio. A big major difference between townhomes and single-family homes is that a townhome buyer does not own the land beneath the structure.

One aspect of this lifestyle that differs from many single-family homes is that there is a real sense of community surrounding townhomes. These homes often belong to a homeowners association (HOA) and have some shared community amenities. Sometimes these are excellent amenities.

For example, sometimes townhomes will be part of a golf community with its own private course. Some communities may have a private clubhouse with a swimming pool, fitness center, park, or green space. Townhome owners live close to each other due to the shared walls, so they should be prepared to get to know their neighbors!

As far as maintenance goes, the owner is responsible for the interior of their townhome, the exterior paint or siding, and the roof. Monthly HOA fees cover things like snow removal and landscaping. Changes to the exterior of a townhome are usually subject to approval by the HOA.

Starting with a Condo

A condo will often provide the biggest return on investment out of the three types of properties. They also require less responsibility from the owners in certain ways. Condos and apartment-style homes are generally part of a large structure divided into different units.

When you buy a condo, you own less than someone purchasing a single-family home or a townhome. This is because condo owners do not own any land. They own the “air space” within the condo’s walls and everything, but that’s about it.

Maintenance requirements from condo owners are much less than for a homeowner or a townhome owner. If something goes wrong with the plumbing inside a condo unit, the owner must call the plumber. But if the roof starts leaking, that’s the responsibility of the building’s condo owners association (COA).

Shared community areas like the elevators, the lobby, and the hallways between units are the responsibility of the COA. Many first-time homebuyers enjoy condo living because it allows them to invest in a piece of real estate with fewer maintenance duties.

One of the biggest draws to condo living is the shared amenities available to the community. Many highrises, for example, will have a large retail sector on the lower floors of the building. Private gyms, movie theaters, rooftop pools, and other perks and amenities make condo living unlike any other housing experience.

The rules for living within a condo community can be stricter, however. All of the private amenities are paid for by COA fees, which tend to be higher than regular HOA fees.

The Owner’s Lifestyle Should Guide a First Property Purchase

First-time buyers should decide which lifestyle is the best fit for them. If they want the most freedom and autonomy in ownership, a single-family home might be their best choice. A townhome might be best if they want a shared sense of community and close neighbors, while a condo could be the way to go if they wish to have fewer maintenance responsibilities and luxurious amenities.