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How to buy a townhouse for the first time: A step-by-step guide

“Always pick your yard based on your Summer lifetstyle.”


August 29, 2019 - Karl Yeh

Thinking about buying a townhouse? Where do you start? What questions should you ask? In this episode, we look at the steps involved in buying a townhome and how to prepare. If you are comparing between a townhouse and condo, we also discuss the differences and which costs more. 

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What we discussed:      

Hi everyone. I'm Karl. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics, and tips from home buying experts. Remember, if this is your first time on this channel, and you want to get the latest strategies from the experts, hit the subscription [00:00:30] button below. Hit the little notification bell so you don't miss anything.

Today I'm joined by Karen McDonald, Community Manager with Brookfield Residential. Today the question we're going to answer is:

How do you buy a townhouse for the first time in 2019?

Karen, do you have any tips in terms of buying a townhouse for the first time?

Karen McDonald:            

I think it would be a lot like a condo in that you want to make sure you're buying in the right community [00:01:00].

  • Do you have family around?
  • Is it close to amenities?
  • Is there transit available?
  • If not, when is that coming?
  • Yeah, just like anything else, what space do you need?
  • How do you live?
  • Do you need the third bedroom?

This is a lot of the times families and people that have a lot of visitors, they need that third bedroom.

There's quite a few townhomes that have that option over and above maybe what an apartment-style condo would.

Karl Yeh:                             

Obviously the number one thing [00:01:30] is making sure your pre-approved, got your finances in order, and so on.

Karen McDonald:            

Number one all the time.

Finding out what your budget is so that you're not looking at a $600,000 condo when you really need to be at a $300,000 condo. Right?

I think you'll know that in advance. But make sure that you do the steps to get your approval through a bank first, and through a bank.

Maybe not just online with a mortgage calculator. They're great to find out what your budget would be just on a personal, [00:02:00] but there's so many other factors that go into your mortgage approval that only a professional can give to you.

So go and get your pre-approval, get the steps in place before you're seriously looking at buying a townhouse.

Karl Yeh:                             

Do you find sometimes that they've gone through a calculator but then they come in, they think they have a price, but then they actually when they go to the bank, they don't have that price?

Karen McDonald:            

Absolutely, and there's the rub.

So you set yourself up for disappointment [00:02:30] possibly when you don't do that because it depends on what your income is, and what your debt ratio is.

Again, a mortgage professional will be the best person to talk to about that to give you the absolutes.

Well yeah, you could maybe on a monthly basis afford this payment as per the mortgage calculator, but that doesn't take into account what you're paying out in debt, what other fees that you have to pay on a monthly basis, [00:03:00] your car loans, anything.

So yes, make sure you get your pre-approval first.

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Karl Yeh:                             

I know we talked about, when we talked about how do you buy a condo for the first time, you can check out that video here in the below.

How do you prepare to buy a townhouse?

Is this something a little bit different?

Karen McDonald:            

I think it's a little bit different because you might be at a different stage really.

Townhomes are a lot of the times, it's a second buy for people that are moving up from their condos.

They may not quite be ready to buy that single [00:03:30] family home yet, but they want a little bit more space. Maybe they want the attached garage, a little bit of outdoor space as well too, so that would be something different from buying a condo.

But really it's, yeah, what are you going ... The separation of space in a townhome, it'll have more stairs for sure.

Those are the kind of things that would be a little bit different in townhomes compared to condos.

Which costs more? Condo or townhouse?

Karl Yeh:                             

Is it cheaper to buy a condo or a townhouse, I guess which is [00:04:00] less expensive, but most likely you probably think condo, but for resale value, is it the same, or it depends?

Karen McDonald:            

I think it depends.

Again, if you're looking at apartment buildings that are infills, inner city, certain high-value locations, then you're going to be paying a premium for those regardless of what the size is.

Comparable to something in the burbs that might [00:04:30] be the same size, you could pay half of what the price would be. So location is at a premium always.

But other than that, townhouse compared to a condo would just be, I mean you have a difference in ownership as well too.

You could own the land for a townhome as well that you'd have to maintain. It depends on what type of townhome you're buying, and yeah, what your responsibilities are as far as maintenance [00:05:00] go.

Step by Step: How to buy a townhouse

Karl Yeh:                             

Let's do a little quick step-by-step guide on how to buy a townhouse. Obviously same thing is, get your finances in order, right?

Karen McDonald:             Yes.

Karl Yeh:                             

Make sure you know I guess what the max that you can possibly buy. Again, don't go all the way to the max.

Karen McDonald:             Yup.

Karl Yeh:                              Right? Location. Right?

Karen McDonald:             Yes.

Karl Yeh:                             

Where you want to personally live with you and your family, and then you go obviously into understanding lifestyle.

Now, I think although with a townhouse you do have a little bit more options in terms of type. Right?

Karen McDonald:            

Well, there is. Yeah, there's different types of townhomes. [00:05:30]

What they are is you'll have a re-divided or a barely blended.

The ownership in that is where you own from the drywall in, so you have all of this that you own, right, rather than just the air in this space, because those hand gestures mean that space.

Bare land is where you own from pegs in the ground, so you actually own the land of a bare land townhome, and so in that case you may have condo fees that do or do not maintain [00:06:00] that property for you.

Karen McDonald:            

So look into that, and know what the ownership is.

Again, the lifestyle. If you want to have a yard, a lot of the bare land condos don't charge you condo fees because you're maintaining that yard yourself as well too.

So it's I guess the next step from that apartment living, townhome living, where you're maintenance free.

Maybe if you want a little bit more space, you can get into a bare land condo.

Difference in price point on those ones typically as well too. [00:06:30]

But you're going to have land, maybe a little bit more yard space that you can have kids, or dogs, or anything like that in that home.

Karl Yeh:                              But you still share the same wall as another person. Right?

Karen McDonald:             Yes. Absolutely. You would still be connected.

Karl Yeh:                              It's similar to a duplex kind of thing. Right?

Karen McDonald:            

Yeah, it would be.

It would be almost the same in a bare land, that you are responsible for maintaining that property. You should hope that your neighbor is also going to be [00:07:00] as responsible as you are in maintaining that property.

But that is also something that you need to consider is that, when you're buying a bare land condo, and you're maintaining that, and your neighbor's maintaining that as well too, hopefully it's all maintained at the same.

In something where you are paying the condo fees that maintain the property for you, you know it's going to be consistent in the maintenance of the exterior although the landscaping and the snow removal is going to be the same as well too.

So there's a difference [00:07:30] in that.

Karl Yeh:                             

It's actually quite similar to the discussion I had in terms of a single-family home versus a duplex. Right? If you want to know more about that, check that video up here in the description below.

But in terms of duplex, you're at the mercy of your neighbors too. So even if you maintain I guess your townhouse, if the other person doesn't maintain it as well, it's going to look kind of awkward.

Karen McDonald:            

Yeah. If you go and sell your semi-detached [00:08:00] home, you might want to give your neighbor a nudge and say, "Hey, I'm selling.

Can you maintain your yard a little bit more," because that will affect your overall property value and how attractive that is to a potential buyer as well too.

I guess that's something that is a pro for townhome living, and the maintenance-free lifestyle, is that you know that the exterior is going to be maintained to the same level all the way around. It does maintain your investment in that property, the same [00:08:30] as what your neighbor's is as well. You're not at mercy of somebody else, and how they choose to live.

Karl Yeh:                             

Got it. Let's just quickly finish the step-by-step. You've picked your townhouse. So what are the things you [crosstalk 00:08:46]?

Karen McDonald:            

Yeah. The next step is, of course, depending on resale or new, writing up the agreement.

With anything that's townhome related in the province of Alberta, you have 10 days to review all of the condominium [00:09:00] documentation.

That will have re-division plans, bylaws, budgets that are put forward as well too.

Any other kind of site maps, landscaping plans associated with that, phasing agreements, management agreements, a whole load of things that you need to review.

That's what you have the 10 days for, so within that 10 days.

They form part of the agreement, so if there's anything within those documents that you do not agree with, that you cannot accept, then you're able to cancel your agreement, [00:09:30] and that's without any liability for doing so, through the agent or through the builder.

But if you go through, and you accept all that documentation, a lot of the times you'll need approval of financing as well too, proof of that.

Then you can give your second deposit, and sign off your waiver of conditions with your sales rep.

Karl Yeh:                             

Perfect. Do you have anything else to add in terms of buying a townhouse for the first time?

Karen McDonald:            

I think buying, [00:10:00] resale, making sure that you know what the budget is.

If there's any financials available through the condo board, that's important to get as well too.

A lot of the times with the new builds they'll just give you all the documentation initially, reviewing that. You can employ somebody to do the condo docs review for you, at an additional cost.

But to give you that peace of mind, they'll go through it, and make sure that you're alerted to any points [00:10:30] that you may have issue with, so that's something that you want to consider as well.

Question of the day

Karl Yeh:                             

Great. So the question of the day I have for you is,

Was your first home a townhouse, and what was your experience?

Let us know in the comment section below. If you want to know more about buying a condo for the first time, check out our playlist here, as well as other home buying videos here.

Don't forget to subscribe to keep learning from the experts. We'll see you in our next video.


Your turn:

Let us know if you have additional condo and/or home buying related questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from home buying experts.  

About Karen McDonald:

This is my 12th year with Brookfield Residential.  I have been involved in 8 sites now with 7 in multi-family and 1 Single Family.  I received my certification as a New Home Sales Professional from PHBIA in 2008. 

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