When deciding to invest in residential property, it is imperative to first know the various types of residential properties and how they compare in your region. You also need to envision how your investment might evolve in the next several years.
Making a residential investment is no easy feat, and calls for thought, no matter the reason for it. As such, we have provided a guide on the various types of residential investments in the UK, plus their pros and cons.
Holds Resale Value
The best single-family home doesn’t lose value over time and if it is located in a booming area, it will hold a higher resale value.
Tenants Last Longer
Investors are always on the search for residential properties that have high occupancy rates and that because longer leases tend to increase the annual return on investment (ROI). Fortunately, tenants tend to rent single-family houses longer compared to other residential properties.
The ROI Reduces with Vacancies
Single-family houses become vacant as soon as the lease expires. Unlike multi-family houses contribute multiple sources of income, single-family ones ROI can gradually decrease with vacancies. This makes it easy to lose revenue when looking for a new tenant to occupy the property.
Lower Purchase Price
Perhaps the best thing about buying a condo is the purchase price. Condos usually have a lower purchase price compared to other residential properties and even though they vary depending on the location in the UK, general costs are usually 25% to 30% lower than conventional properties.
Another great thing about buying condos is that there’s less competition compared to other kinds of residential properties. So, unless you are in a very hot real estate market, you are likely to find a buyer’s market for condominiums.
Monthly Association Fees
Even with the many benefits these units have to offer, like low buying price, insurance and tax, it is hard for most people to enjoy them with the monthly association dues involved. So, before investing in a condo, it’s important to check the cost of association first and determine whether it is a wise decision.
Cheaper to Purchase
Generally, townhouses are cheaper to purchase as it is way less expensive for a real estate developer to construct them compared to condos or single-family homes.
Plenty of Living Space
Most people tend to associate the term ‘townhouse’ with small space or no room for movement, given how towns tend to be cramped. However, for many townhouses, this could not be further from the truth. Most of them are as roomy as their residential counterparts and those wit smart floor plans can actually feel like a much bigger house.
Expensive Homeowners Association Fees
One of the biggest downsides when it comes to investing in townhouses is the HOA fees required to keep the yards clean and ensure the trash is collected. HOA fees can add a significant amount of cost to the monthly expenses and so, it’s important to keep them in mind when thinking about investing in one.
So there you have it, the different types of residential investments you can find in the UK.