Do you know your real estate? Differences between a single-family, condo and a multi-family property.
I’m so glad that I’ve finally got some desk time to write a post today.
It’s been at the back of my mind for the past couple of weeks; this nagging feeling that I’ve got something to share on my blog and I’d just like the world to LEAVE ME ALONE so that I could get down to it.
Alright… who am I fooling.
The fact is, if something was truly important, I would have prioritized it over anything else that pops up.
Sorry, clients far outweigh blogging at this point.
That said, I was determined to finish a post today so I woke up exceptionally early to do so.
Gonna get this weight off my shoulders now!
Do you know your real estate?
Let me just put it out there - I love working with first-time homebuyers.
It’s actually one of the most rewarding parts of my job to be able to share my knowledge and see my buyers grow and come to share my excitement in this too. A dear client (now friend) of mine once told me that she now notices chimney flashings whenever she passes by homes! Ha! Little things like that thrill me to no end.
Along the way, I have come to realize that many of whom I speak with aren’t quite familiar with the classifications of real estate out there. It has become a reoccurring theme for me to explain the differences between a single-family home, a condo and a multi-family property.
Not everything is as straightforward as it looks, of course. Worse, if I’ve to explain it over the phone.
I’ll give you an example. This house - this charming, Greek style house with its very telling ionic columns.
Is this a single-family, multi-family, or condo?
Photo taken from Bostoncondoloft.com.
The answer is, I can’t tell for sure.
It’s probably a single-family, but theoretically, it can be either of the three. I’ll have to look up the town’s records to confirm the classification.
Confused yet?
Read on. I promise the haze will be lifted.
In my previous job, my former CEO would tell us that one needs to write in order to crystalize knowledge and be coherent about a topic.
So, here goes my post on identifying the common types of real estate. I’ve got pictures and illustrations, heck, I’ve even come up with a VENN DIAGRAM to categorize these homes!
Last time I did a venn was… probably 15 years ago.
I’ll be writing about single-family homes, multi-family homes and condos. I won’t be touching on on co-ops, mixed-use properties, commercial or mobile homes today.
Enjoy!
What is a single-family home
To be fair, no one really asks “what is a single-family home”.
It seems pretty obvious, like the house on the left, but do you know that single-family homes come attached too?
Detached means that one neighbor’s house is not touching another’s. Attached homes are less common, and often get mistaken to be condos.
What makes a single-family is the land that runs with the title to the property.
If you pull out the deed of the property, it would read “A certain parcel of land with the buildings thereon bounded and described as follows…”
Ownership of land, is the reason that single-families – or for that matter, multi-families – appreciate at a greater rate than condos.
Detached single-family. Credit-free image from Pexels.
Attached single-family. 36 Joyce Lane, Boxborough MA. Photo credits to Jason Jeon of Premier Realty Group.
what is a multi-family home
One of my earliest memories of Buyer education is having a conversation with my client who told me that she would like to get a split home.
“Why split?”, I asked. Split-level homes are typical of the 50s, and have not been a common request these days.
“Oh, so I could live in one side and rent out the other.”
“Ah, you’re not talking about a split-level home then! That’s a type of design for a single-family house. You’re talking about a 2-family.”
A multi-family home consists of multiple, separate legal housing units in a single structure. There are 2-families, 3-families, 4-families… the list goes on.
Legal is underlined because yes buddy, there are rules. :)
Your installation of an additional kitchen, heating, rooms and baths do not make your basement/attic/garage a second unit in your home and allow you to call it a 2-family.
In fact, if you do that, you violate town zoning codes. If not already made to remove them and revert to a conforming structure, you’d most definitely be required to remove and revert prior to selling your property.
Multi-families, like single-families, come with land. The visible difference between this and a single-family, is the legal presence of a second (or more) set of essential living areas like the kitchen, bath etc. Imagine having 2 families live in the same building - they could essentially live their lives apart without sharing or infringing on another family’s space.
Multi-families can often be spotted from on their design - there’s a certain symmetry or division that is telling of the number of units in the property.
2-Family at 127 Elm St Somerville. Photo credits to LAER Realty Partners / iBremis Realty.
3-Family at 275 Minot Street, Boston. Photo credits to Beth Materna, Boom Realty.
4+ Units multi-family at 46 South St, Somerville. Photo credits to Dennis Kelleher of Horvath & Tremblay.
However, at times, visual observations do not tell the full story. One has to check the town’s records to see if the owner still maintains ownership of the entire building AND land, or if the structure has been converted into condominiums.
More on that below.
What is a condominium (condo)
Condominium ownership exist in many forms of residential living. It could be in a high-density apartment building - what most people think of when they think “condo” - or a lower density one, like a Townhouse (explained below).
What makes a condo, is shared ownership of common areas. A condo owner does not own land in its entirety.
In fact, the only true ownership is with the fixtures and whatever that resides IN the unit. Everything else outside is taken to be common space; the maintenance of which, a common expense shared by all unit owners of the condo.
Imagine having a cube filled with water. You own the areas that the water makes contact.
Condos are a pretty obvious spot when they exist within a development. You’d notice the common areas like a shared parking lot, garden or lawn, or shared facilities like a gym, pool or tennis court.
Johnson Woods Condominiums. Photo credits to Rick Nazzaro of Colonial Manor Realty.
Condos get a little tricky to identify when they exist from a conversion.
In any zoning that allows multi-families to exist, homeowners/investors may choose to convert the property into separate condos so that they could sell each unit separately (often at a higher $/sqf). Conversion isn’t that challenging because multi-families already exist with separate residential areas.
So basically you need 2 things:
Physical separation of utilities, as well as entrance and egress.
Legal separation of ownership from one to two (or more) owners. A well-versed real estate attorney would be able to easily handle that. There would be condo docs - the Master Deed, identification of units’ interest in common areas and formation of a Condo Trust.
When that happens, land becomes a common area and no longer belongs to one entity (the owner) but multiple entities.
My listing at 527 Bennington St in East Boston is a classic example; as with this beautifully symmetrical home in Lexington.
2-family, condo converted. 24 Sherman Street, Lexington MA. Photo credits to Elizabeth P. Crampton of Coldwell Banker Residential Brokerage - Lexington.
The part where it gets grey: Townhouse, ROWHOUSE & Single-family homes that pay HOA fees
Townhouse
Townhouses are a pretty common sight in up and coming suburban towns. They are a nice solution to increasing the density of available housing, and at the same time allowing more distance and privacy for owners as compared to being in an apartment condo.
Townhouse. 15 Railroad Ave, North Reading. Photo credits to Anthony DiCesare of JR Associates.
Townhouse. 88 Worcester Ln, Waltham. Photo credits to The Madden Team of Berkshire Hathaway HomeServices Commonwealth Real Estate.
People often mistake Townhouses to be another word for condos. While Townhouses do – and often – exist as condos, the fact is, Townhouses are merely a description of architectural design.
A townhouse is defined as an attached, privately owned single-family dwelling unit which is a part of and adjacent to other similarly owned single-family dwelling units that are connected to but separated from one another by a common party wall having no doors, windows, or other provisions for human passage or visibility.
Remember, a property exists as a condo only if there are shared areas/facilities, and no single ownership of land. You could have a Townhouse AND still own the land that your property sits on. It’ll just be called a single-family townhouse.
Rowhouse
It took me a while to wrap my head around a Rowhouse. Eventually I learnt that it’s a similar concept to a Townhouse, except the latter tends to be clustered in a development, whereas Rowhouses line the street.
15 Keswick St, Boston. Photo credits to The Jared Wilk Group of Benoit Mizner Simon & Co. - Wellesley - Central St.
23 Pinckney Street, Boston. Photo credits to Bernadine Tsung Megason of Compass.
Again, a description of design rather than type of ownership. In a more densely populated area like San Francisco, you’ll even get rowhouses that exist as multi-family properties.
Multi-family rowhouses. Photo self taken at the Richmond District.
Single-family homes that have a Homeowner’s Association (HOA)
Having a HOA does not make a property a condo. It just means that there’s an association that takes care of shared areas and amenities.
They are pretty common in suburban towns where single-family homes in a development cluster would 90% of the time share a common septic, along with common walkways and landscaping. Sometimes there’s a shared clubhouse too.
Owners of Acorn Park Condominium Association in Acton pay a monthly HOA fee for shared septic and common area landscaping.
Owners of Harvard Estates in Boxborough pay a monthly HOA fee for a tennis court and common area maintenance.
Single-family home. 39 Steele Lane, Boxborough. Photo credits Anne Marie DeCesar of Keller Williams Realty Boston Northwest.
Single-family home. 9 Steele Lane, Boxborough. Photo credits to Kristin B. Hilberg of Keller Williams Realty Boston Northwest.
Unless you’re familiar with that neighborhood, you probably can’t tell from looking at these homes that they have shared amenities.
Having an HOA does not change the fact that these are still single-family homes that own land with title. It’s just often the case in suburban towns that it’s a better – more economical – decision to develop a tract of land and have 20 homes share one main septic system, than have 20 septic systems peppered throughout people’s backyards.
Summary
That’s all! Have a look at my venn diagram below and see if it makes sense to you!
