Real Estate the Ramsey Way - Is Buying A Townhome A Good Idea?

Episode Date: September 28, 2026

A homeowner is considering buying a townhome and wants to know if it’s a smart investment. This call explores what to consider before making the purchase. Next steps: ·   🏠 Not sure what to do next when buying or selling your home? Check out our ⁠⁠Real Estate Home Base⁠⁠ for free tools and resources to guide your next steps. ·   🏠 And if you’re ready to buy or sell your home, ⁠⁠connect with a RamseyTrusted® real estate agent⁠⁠. They’re experts who’ll help you confidently navigate homeownership the way we teach. Explore more from Ramsey Network: 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💰 George Kamel 📈 EntreLeadership   Ramsey Solutions Privacy Policy

So me and my wife are starting to look for purchasing our first house. And so live in Florida and there's townhouses everywhere. And I wanted to see what y'all's opinion is on buying a townhouse versus a single family home. You know, you can get probably a little bit nicer of a house in a townhouse and for less. But I sometimes worry about, you know, you don't own all four walls. You know, you have that shared wall. So what do you all think in terms of that? Townhomes are moronic, Tom.

I'm totally kidding. I just said that because George. George is right next to me and he lived in a townhouse for a long time. My first two homes were townhomes and I have no regrets. No, great a good idea. And if that gets you your foot in the door with home ownership, lovely. And I think town homes, people poo poo on them for really no good reason. Sometimes it's a slightly higher HOA fee.

So the key really is location. Is it a neighborhood that's going to give you decent appreciation, whether it's single family homes or townhomes? Does it make sense for your family based on the space you need? We had a, you know, three-bed, two-and-a-half-bath townhome with 1,900 square feet. That's like twice the size of my childhood home. And so townhomes are bigger. They're nicer than ever. They got the nice countertops.

And so if that's what you guys can afford and you don't want to wait to jump to the single-family home, then go for it. How much is it? A lot of them start in the high twos. So, like, if we're looking at a decent single-family home in the area, you're looking kind of upper threes and, you know, try not to go too much past four. but you can get a pretty decent townhome for upper two, low threes. And so, you know, especially with trying to not, you know, go above the 25% take-home pay, it's, that's kind of one of the big things. But one other concern is what do you see on appreciation versus that?

I know I feel like I've read that townhomes don't appreciate maybe the location, like you said, is one of the biggest things. Yeah, the location will matter the most. They might appreciate slightly slower if you looked at the data, but I'll tell you the numbers on our town home, obviously this was during like the COVID boom. but we bought for like 300 and it sold for 529, which is insane. Wow. And so to say that townhomes don't go up in value is BS.

And the key is it was a very desirable neighborhood. A lot of people wanted to be in that neighborhood, regardless of what kind of home it was. And so that's where I would caution you to work with your real estate agent to go, what is a great location with good schools that's going to have decent resale value that we can afford? And so once you look at across the board, you're going to make a smart decision that's not going to leave you wondering well, we could have made 4% more.

You're not doing this to make this spread. You're doing this because you want a place that you can call your own. And you're going to build some equity in the meantime. And what we did, we paid it off. We took that 100% equity, rolled it into the next one. And that's what will happen instead of you just renting for the foreseeable future instead of waiting for that single family home. So I hope that helps anybody out there wondering, should I do it, should I not?

Especially for young people, if you want to get that first home, a townhome could be a great option. I have a question on behalf of my great grandma. She is debt-free, lives on a farm, has a home, has a cell tower on the farm that pays her monthly. I think it's like $1,800 a month that she gets for having the cell tower on her farm. They came to her with three different offers, a one-time lump sum payment of $355,000 for $2,000. 20 years or a second option of $390,000 over installments over five years or the third option $428,000 over 10 year installments. What happens if during, what happens to the deal if for some reason over that period of time,

whether it's the 510 or 20 and she moves what happens to the deal? She will not be moving. But I'm just saying. We need to know. I think it would go to the person who... It would have to be part of the land lease, part of the contract of the new sale of the home. Yeah.

Or even if she passes away, James, and you guys sell the property to someone else, I guess is that part of the language, that if there's a new owner, they automatically... They have to assume this tower for X amount of years. Yes. Okay, gotcha. How much money does she have?

She has right now, I think, like $50,000 in cash, but she also gets Social Security and she has a retirement. And I think her husband had something that she gets. He's passed away and she still gets something. I don't know if it was a military benefit. Okay. Do you know what the retirement next day is? What, like, meaning what she has in retirement. Mm-hmm. I think it's just the $50,000.

Okay. And so she's... Actually, no, I don't know what's in her retirement account, actually, because she does have something saved that is in addition to social security. But I know it's not very much. Okay. I mean, my knee-jerk, James, I'll be curious what Jade has to say is I always like a lump sum because she can turn around and invest that and make a great return.

I think she'll get probably the most bang for her buck doing it that way. Even though it's a lesser amount, I think she will make from a return perspective more getting it within five years versus 20 years. Yeah. I mean, that's basically what we would say with even a pension or something like that. If you can have the lump sum and reinvest it. Or the lottery. With the lottery, yeah, it's like go ahead and take it all.

So that's she's 82. Okay. So she has been living her whole life off of what she gets at monthly. So this is something completely foreign to her. She's never heard of anything like this. Sure. The tower, my grandpa, handled it all. And they were, he just wanted him out of his face, basically.

And they were paying him $500 a month. now her son, my uncle who has passed away, got them up to $1,800, and now it goes up, I think, 5% every five years. So if we did not take a lump sum, it would go up 5% every five years after the 20 years it would have gone up. Yeah, I think she could make more in the market

having a lump sum input. Because if it's every five years, Would you say every five years it goes up five percent or every year? Yes. Yeah. Every five years. Yeah. I think I lean towards taking the lump sum in five years.

I lean towards that too. Yeah. I think it's a no-brainer, honestly. And have her sit down with, and you probably will help her, James, because you're kind of an advocate, you know, for her, even in this call. Sit down with a smart vester pro. can find one on ramsysolutions.com and figure out the best way from even a tax perspective of if she invests this money because it sounds like she's pretty low maintenance she's probably not going to use if any of it but from a generational perspective what a beautiful thing right to be

passed down one or two generations to be able to help out family right with what this money could be and so I would sit down with an investment professional and just figure out from a trust sam the trust A trust standpoint or even a will, the taxes. I would want someone looking at this amount of money and just saying how can we make this go the furthest? Yeah, the best way. The best way possible for her. And if she needs any of it, it is hers.

I'm not just like, I'm not tagging that. This lady sounds like not for her. She doesn't hardly. It doesn't sound like she cares for. I mean, she's like, I'm good, which is amazing. But man, what a crazy thing. That's pretty cool. Pretty wild.

Yeah, so great. Well, thanks for the call, James. A lot of these calls could have been solved by connecting with a Ramsey trusted agent. We don't want you to make the same mistake. To find a trusted agent near you, go to ramsysolutions.com slash agent.