What Is a Stacked Townhouse?

Stacked townhouses are types of townhomes that has multiple units and combines the advantages of both townhouses and condos. Stacked townhouses, like traditional townhouses, connect at the side, but they also feature one-story or two-story homes stacked on top of each other to maximize living space. Each dwelling has its own entrance and private space, which eliminates shared lobbies typically found in condominiums. These properties can be part of a condo corporation or freehold.

Stacked townhouses are becoming more popular in densely populated cities that pose affordability challenges such as Toronto, Vancouver, and Montreal. Stacked townhouses offer the flexibility of being sold individually or rented out to tenants. As Toronto’s population and housing costs rise, more developers are constructing stacked townhouses for rental purposes. Building multiple units on one piece of land allows for more square footage at a lower price than similar-sized detached houses, townhouses, and condos.

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Stacked Townhouse Vs Townhouse?

Stacked townhouses and townhouses exhibit their own distinct characteristics.

We’ve put together a list of key features for each townhouse type to help highlight the differences between traditional and stacked townhouses.

Stacked Townhouses

  • First unit is typically part of the basement and main level and additional units are on the second or third floor.
  • Shared walls and utilities can lead to significant cost savings while being more energy efficient.
  • Options for parking may include underground parking, shared parking spaces, or individual driveways.
  • Popular in denser urban areas which offer residents a more centralized location and access to amenities.

Townhouses

  • Side-by-side units with multiple levels, typically attached to neighbouring townhouses.
  • The absence of shared floors above allows for more vertical space.
  • Potential parking options include shared or private parking spaces.
  • Common in both metropolitan and rural areas.

Do I Need Insurance on My Stacked Townhouse?

Insurance for a stacked townhouse can vary depending on the type of ownership. If the stacked townhouse is a freehold property, meaning you have ownership of both the property and land, it is important to have insurance coverage for both.

When a townhouse is owned as a leasehold property, there is no requirement for land insurance, but it may be necessary to get insurance for the structure.

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Pros And Cons of Stacked Townhouses

Stacked townhouses offer various benefits that make them an attractive housing option. The pros and cons of investing in stacked townhomes for residential property investors can vary depending on the market and individual circumstances. It is important to consider each of the advantages and disadvantages before making a major property investment. Our teams compiled a list of pros and cons to stacked townhouses:

One of the biggest advantages of investing in stacked townhomes is the potential for higher rental income. Since stacked townhomes often combine multiple units within a single building, this allows you to generate more income compared to traditional single-family homes. This is especially beneficial in densely populated urban areas such as Toronto, because of the demand for rental properties.

Housing markets across Canadian cities like Toronto are seeing a rise in real estate prices each year. Stacked townhouses are affordable alternatives to detached, single family, or semi-detached homes. Sharing a property reduces expenses for tenants which makes them an attractive housing opportunity. When investing in real estate, minimizing carrying costs is often a priority, which is why stacked townhomes with lower fees can be very appealing.

Space efficiency is a key advantage of stacked townhouse floor plans. These multi-level units optimize space, providing more usable square footage compared to single-level condos. Stacked townhouses offer more versatile interior spaces compared to condos, as they can have either an open concept layout or a more traditional segmented design.

Stacked townhouses typically offer a wider range of outdoor amenities compared to condos, such as a front yard, backyard, or rooftop terrace. Some other amenities that may be available to residents are shared parks, gyms, playgrounds, community pools, and lounges. By offering spaces for relaxation and social interaction, these amenities can improve the community experience of living in a stacked townhouse.

Stacked townhomes can be more vulnerable to market fluctuations than single-family homes. Changes in the real estate market can affect the demand and rental rates, potentially affecting cash flow and profitability for investors. As more investors begin to see the advantages of investing in stacked townhouses, there is a potential risk of the market becoming over-saturated. which can lead to increased competition for tenants and the need to lower rental rates.

Stacked townhouse maintenance fees typically cover gas or water tank expenses and landscaping costs such as grass cutting. If the stacked townhouse is a leasehold property, residents won’t have to physically maintain the exterior themselves but they are responsible for regular maintenance fees.

The primary entry point for residents on the top floor of stacked townhouses is a staircase leading to the front door. Everyday tasks like bringing in groceries, carrying packages, and moving strollers can become harder when there are stairs to climb. Living on the top floor of a stacked townhouse poses particular difficulties for individuals with impaired mobility.

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Are Stacked Townhouses a Good Investment?

Stacked townhomes offer a good investment opportunity because they provide the chance for profitable returns, whether they are sold as a primary residence or used as rental properties. Stacked townhomes are particularly popular among first time buyers because they offer the comfort of detached-home living and the convenience of a condo layout, all at an affordable price.

Consider the real estate market in the development area to thoroughly to determine if stacked townhouses are a worthwhile investment, considering factors such as current market trends and the average age and income of individuals in the region.

Related Article: Why In-law Suites & Multi-generational Homes Are Trending In Toronto

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Stacked townhouses bring more affordable housing to metropolitan areas. From first time home-buyers to people seeking rental properties, stacked townhouses make excellent investments. While maintenance fees may be a hassle, they are still more cost-effective than those associated with comparable townhouses, condos, and detached homes. If you’re in the market for a stacked townhouse in the Toronto or GTA area, we invite you to explore our Invest in Real Estate webpage. If you want to build new townhouses, check out our New Townhouse Developments page.

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