Which is a Better Investment: a Condo or Townhouse?
Data aggregates suggest that the cost of living in Manila is one of the cheapest globally but among the highest in Asia. And that’s without rent factored into the total cost of living.
Rent will depend on the type of accommodation, and one good thing about living in Manila is the plethora of accommodation choices. Two of these are a condo unit and a townhouse.
Differences between a condo and townhouse
Let’s differentiate a condo from a townhouse first. These two types of dwellings are very different, considering their type of ownership.
What is a condo?
The condominium building is usually multiple stories. It is generally owned by an individual, a group of individuals, or a developer. The individual owners purchase the unit from the said building owner or developer.
A condo is like an apartment wherein the dweller lives in an individual unit within a condominium building. However, this unit is owned by the resident and not rented from a landlord, which is typically the case with an apartment.
What is a townhouse?
A townhouse is an attached home with one or more walls being shared with another townhouse unit. Nonetheless, its residents typically own the townhouse units.
In a multi-level house, individuals purchase a townhome because it is cheaper than buying a freestanding home. Additionally, townhouses are usually gated communities with maintenance-free front yards and driveways.
Investing in a condo or townhouse
Investing in a condo unit or a townhouse unit is a matter of preference. Nonetheless, to know whether you should be investing in a condo unit or a townhouse unit requires digging deep into the pros and cons of each, particularly in terms of ownership, cost, and resale value.
In the Philippines, when you buy a condo unit, you are purchasing the unit’s interior and you have access to everything that the residential building offers. These are usually the common areas that owners (and even renters) can access anytime.
When it comes to a townhouse, you are the owner of the unit. You own both the structure and the land where it sits.
Both a condo and a townhouse are generally a good investment potential because they are located conveniently. Some condominium buildings and townhouses are near schools, hospitals, shopping centers, and business districts, while others are transit-oriented or near transport hubs.
Townhouse project turnover, however, is faster compared with condo project turnover. As a result, individual unit owners can accept a townhouse complex when it has as few as five units compared with a condominium building that has to be completed before a turnover happens.
Owning a condo unit or a townhouse unit is more affordable than acquiring a single house and lot. This is why either a condo or townhouse is an excellent choice for a first-time homebuyer or any buyer working on a tight budget, for as long as privacy is not an issue.
Purchase prices of both condo units or townhouses generally vary, and they usually do relative to the location of the residential building or the housing complex. In some areas, condo prices are lower because you are not buying the condo building and the land where it stands. The same is true for townhouses, wherein prices of a townhouse unit in Manila may be higher than those in Cavite, Laguna, or Rizal.
The general notion is that these condo association fees are usually higher than what you’d pay for home homeowners association (HOA) fees. But again, this will depend on the location, available amenities and facilities, and other shared areas. More facilities may mean higher costs, whether you live in a condo or townhouse.
Speaking of the associations, they oversee shared property maintenance, and so they establish rules for all residents to comply with. For example, restrictions apply when renovating the exterior of the townhouse, such as the roof, the facade, and the driveway. The association does this to maintain the coherent appearance of the community.
This is also true for condominiums wherein the sameness of the facade is vital. It would be best to ask for the breakdown of fees and their rules before purchasing a condo or townhouse.
The rate of appreciation between a condo unit and a townhouse depends on several market factors. Condos are generally faster when it comes to resale value growth compared with other property types. For example, an affordable condo in Manila that you bought on pre-selling will appreciate at least 20% once the unit is turned over. So it means when you buy a Php2 million condo on pre-selling, its worth will be Php2.4 million when it is turned over. And that’s a modest estimate.
One downside of buying condominiums compared with townhouses is the smaller floor sizes. In addition, condominium units come in different configurations like studio, one-, two- and three-bedroom units. However, it is nothing compared to the maximum living space that townhouses offer because they typically have a front yard, a driveway, and at least two stories of living space.
Another essential factor to look at is the maintenance of the building or the community. For the former, condo associations are generally strict regarding their rules and regulations, including the collection of monthly fees. For the latter, the curb appeal is critical in making the home fit to sell. For example, a well-kept front yard is an incentive for potential buyers to consider buying the townhouse unit.
With this said, it also pays to be diligent at paying your HOA fees since the associations ensure making common areas and general landscaping look neat. Their roles and responsibilities are limited to what fund is available to work with.
Bottom-line, the resale value of a condo or townhome is relative to factors, directly and indirectly, controllable by the owner. The goal is to retain much of the unit’s value throughout ownership before transferring such to another owner.
Choosing between a condo or townhouse
With this said, whether a condo is a better investment over a townhouse or vice versa is a matter of circumstance. The answer will depend on what you need for a dwelling.
Both can be affordable but may not be convenient in proximity to essential establishments such as a school if you have school-age children. A townhouse is perfect for growing families that favor an outdoor space and a close-knit community. If you don’t mind not having a front and backyard and content with a balcony garden, then a condo is more appropriate.
So, you might as well evaluate your housing needs first before you embark on choosing between a condo or a unit. Then, when you know what you need for a dwelling, you will know which to choose.