I can’t and won’t speak to the rental market on the islands. I do own two townhome rentals here in Colorado. I considered both single family and townhouses when I set out. There are pro’s and con’s to both. Here is my reasoning and experience.
Living in a HCOL area the townhomes offered a lower entry point and to acquire our first rental sooner. Having no yard to maintain was big. You can task the renter with yard care, but its one less thing to worry about with a townhome. The HOA and association fee are a pain at times and you are surrendering some control, but you gain some things too. The HOA can be any early warning system if your tenants are breaking association rules or otherwise causing a disturbance. The association can offer amenities and common green spaces, playgrounds, tennis courts, etc. that can help attract renters. That said, I try to avoid associations with pools or too many amenities because the price to value added isn’t worth it. Also, keep in mind that the HOA fees often cover water, trash, sewer, external repairs and maintenance and insurance for the walls out (roof, siding, etc.). These are things you’d pay directly or have to pass along to your renter with a single family home. I also like townhomes because they offer a low entry point for first time home buyers and are typically at the lower end of the price spectrum. To me this offers bit of a hedge in the event of a real estate market crash (not as far to fall and value propped up since people will always need some place to live). In my area, townhome appreciation has kept pace or exceeded single family home appreciation the past 4 years. Most single family homes in my area are out of reach for first time home buyers, this has increased competition for the more affordable options. Maintenance and renovation costs are lower and there’s generally fewer things structurally that can go wrong IMO.
The association can be an issue, so do your due diligence. Make sure the HOA has a good cash reserve. Inquire if there are any upcoming special assessments. Check the roof, fencing and siding, are they in good shape or in need of repair/replacement? These are some of the biggest HOA expenses. When crunching your numbers, assume the HOA fee will increase over time (5-10%/yr on average). Ask current residents what they think of the HOA. Be sure you know what the HOA fee covers and doesn’t cover. Compare the fee to neighboring communities.
Good luck!
