So you’ve decided to make a home purchase. Now it’s time to do your research. There are quite a few property types to choose from. The property type you choose will impact what type of financing you can qualify for, how much you will need to spend, and ultimately the type of lifestyle you will have in your new home
A single-family is generally a free-standing dwelling that has these traits:
Single-family homes are financeable through the widest variety of government-backed and conventional loan products. Renovation financing options like Fannie Mae’s “HomeStyles”, FHA’s “203K” and Freddy Mac’s “CHOICERenovation are available.” Jumbo, private, grants and bonds are other options. Talk to your agent about the age of the home and the condition of the property to select which is best for you.
A townhouse is a single-family home that shares one or more walls with other independently-owned units. They are often rows of uniform homes, two stories or taller. Residents own their interior and exterior walls, lawn, and roof. Insurance for both the home and the property is needed. There is often a homeowners association that collects dues to communally pay for shared areas like a community pool and shared maintenance like trash collection, lawn care, and roof repair. Occasionally you will find townhomes that are governed by a condominium association, effectively making them condos and not townhomes. Ask upfront how a townhome is governed to avoid wasting your time because there are major differences when it comes to financing. Your agent can always steer you in the right direction!
A co-op is a non-profit company that owns and operates a residential complex. Buyers lease one of the building’s units by buying shares of stock in the building’s corporation along with a proprietary deed that claims their rights to exclusively inhabit. The land is often leased on a 99-year land lease and renewed every century. Buyers have to go through an approval process, don’t own their apartment, and don’t have ultimate control over renting, subletting, or selling. If renting, you may have to present your potential tenants to the board for approval. Lease and tax bills aren’t sent to the co-op shareholders but instead to the corporation. A monthly co-op fee includes mortgage payments, taxes, maintenance, and utilities. This cost is usually higher than condo fees. And they often require a larger down payment than other options—but usually cost less overall. There are financial advantages of co-op living—including substantial breaks on real estate taxes, transfer taxes, and a state recordation tax that occurs in real estate transactions. In some cases, co-op owners can deduct maintenance fees from their taxes.
Financing a duplex is open to FHA loans, Conventional loans, Jumbo loans, and Renovation financing options like Fanny Mae’s “HomeStyles”, FHA’s “203K” and Freddy Mac’s “CHOICERenovation.” Depending on the location, you may be able to qualify for publicly-funded home improvement costs. Rules change for buildings with more than four units.
Fee simple ownership is the most complete form of ownership. A fee simple buyer is given title (ownership) of the property, which includes the land and any improvements to the land in perpetuity. Aside from a few exceptions, no one can legally take real estate from an owner with fee simple title. The fee simple owner has the right to possess, use the land and dispose of the land as he wishes — sell it, give it away, trade it for other things, lease it to others or pass it to others upon
Leasehold ownership or “interest” is created when a fee simple land-owner (Lessor) enters into an agreement or contract called a ground lease with a person or entity (Lessee). A Lessee gives compensation to the Lessor for the rights of use and enjoyment of the land.
The buyer of leasehold real estate does not own the land; they only have a right to use the land for a pre-determined amount of time.
If the leasehold real estate is transferred to a new owner, use of the land is limited to the remaining years covered by the original lease. At the end of the pre-determined period, the land reverts back to the Lessor (called reversion.) Depending on the provisions of any surrender clause in the lease, the buildings and other improvements on the land may also revert to the lessor.
No pressure, zero marketing fluff. Just tell us what you are looking for in South Florida, and we will provide the straight facts, local insights, and accurate market data needed to help you confidently plan your next smart property move.
