The first question you should ask - What can I buy? Well the best place to start is always at the beginning, so let’s cover the key terms and most common options available to buyers on the market:
A single family home is a free-standing residential building with no shared walls, its own land, and its own utilities. It is designed to be used as a single-dwelling unit. Single family homes are among the most common types of property and likely what you envision when thinking of buying your first home.
These properties typically spark the imagination of a homebuyer and help to frame the needs, wants, and dreams of what you can do with your own space! Whether you’re looking for a serene backyard retreat, additional space to host guests, or even a garage where peace of mind comes with a parking spot, single family homes offer countless opportunities for comfort.
A housing cooperative or "co-op" is a type of residential housing situation where the owners do not own their units outright. Instead, a corporation owns the property and each resident is a shareholder in the corporation based in part on the relative size of the unit that they live in.
Oftentimes co-ops and condos are thought to be interchangeable, but that isn’t the case. One of the key distinctions of a co-op is that a buyer must be approved by the co-op board or association. While this might be a benefit in selecting ideal tenants and neighbors, it can also be a hindrance should you want to sell and approval from the co-op board can delay the sales process.
A condominium or condo is a housing or residential complex in which there are separate units with each owned by an individual. Condo owners are responsible for what goes on within their respective units. Utilities, maintenance, and repairs are the individual owner’s responsibility.
Condos can be rather dynamic with some additional amenities on site like a pool or common areas. Additionally, many condos solve the issue of commuting with proximity to nearby attractions and public transportation.
Tenancy in common (TIC) is an arrangement in which two or more people share ownership rights in a property or parcel of land. Each independent owner may control an equal or different percentage of the total property, which can be commercial or residential.
A TIC might come into play further down the road in your real estate journey, but it is still a good one to cover now. Tenancy in common is an effective way for you and your friends or family to go in on that piece of land you’ve been eyeballing for the last 18 months. A Tenancy in common agreement can be created at any time which can help you and other like minded investors get started now.
A townhome or townhouse is typically a single-family structure with at least two floors and shared walls with an adjacent unit. Townhomes are not stacked ontop of eachother in the way that condos are, but rather placed side-by-side. Individual owners are responsible for the utilities and maintenance in a townhome. Most townhomes will adhere to the rules and regulations of a Homeowners Association (HOA) which allow for a certain quality and aesthetic to be maintained throughout the complex or subdivision.
A rental property is a residential or commercial property that is leased or rented to a tenant over a period of time. Simple as that, right? Well, ideally yes! Most everyone has experience with being a tenant in a rental. Rentals can be a great solution for a tenant in need of housing in a specific area, and they can be a great opportunity for an owner that wants to generate an additional stream of income. We’ll go over some of the nuances of owning a rental property in another article.
Typically thought of as a luxury unit, the term penthouse has become a marketing ploy in recent years. In fact a penthouse is an apartment or unit typically situated on the top floor of an apartment building, tower, or hotel. These units tend to have different floor plans than the other units in the building. Oftentimes the exterior walls of a penthouse are separate from the exterior walls of the building which allows for creative floor plans as well as outdoor space, and scenic views.
A Below-Market-Rate (BMR) home is a home that is priced to be affordable to households that are low to moderate income. Usually, the BMR price is lower than the prices of similar homes that are being sold on the open market. These are properties to help first time homebuyers that qualify as low, moderate, or middle income.
A multi-family property is defined as a building that houses more than one family at a time. Specifically, each unit has its own kitchen, bathroom and shared walls. The distinction of a multifamily property is that there is one owner for the building. You can think of duplexes or apartments where each unit has its own address. Typically multi-family properties are structures that do not exceed 4 units.
Now that we’ve covered what you can buy you probably have a sense of which property type fits your style and you’re starting to clarify your own wants and needs. Next up, we’ll cover some of the most common financial terms and options you’ll encounter when considering how to pay for your home. Stay tuned for our next article!
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Aalto is a real estate broker licensed by the State of California, License #02062727 and abides by Equal Housing Opportunity laws. This article has been prepared solely for information purposes only. The information herein is based on information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy of the information. Aalto disclaims any and all liability relating to this article.