Define Residential Housing – Some Terms
Before we can start to invest in residential property, we need to know some terms and definition so that we are able to make a good judgement on the property in which we are interested.
A residential area, or zone in the US, in one where the predominant use is for housing and this can include a varied type of property. In inner cities, the main type would be flats of apartments so that you can get the maximum use out of the minimum ground footprint. As you start to move out, terraced houses start to proliferate and these are usually single family units and might include their own outdoor space
Further out still, in the more affluent suburbs, housing will take the form of semi-detached and detached propertied with substantial outdoor space and again for single family units. These might be two story or three story “town” house properties and even include some single story building (bungalows) which have, in the past, been used by older people who have downsized Energy Plan Services.
Most property investors start their portfolios in the terraced house areas as these are popular both with new buyers and with long term renters so you both have a ready-made market for your property and also a easy exit strategy.
When looking for property, a substandard housing definition must be known so one can make a judgement on investing. For mortgage purposes, a property must have a room that is seen as a bathroom and a room that is seen to be a kitchen. This does not mean that a bath and a kitchen need to be installed, but they must be seen to be such.
Substandard housing is one in which neither of these is actually in place so although you can purchase the property, before it can be let these features must be installed. Other requirements are that the property will provide shelter for the family in a safe environment which means that gas and electric services are fit and proper.
Although you may be buying your investment property in an area that you would not want to live, you must make the property to the standard that you expect in your own home.
There is a call today for affordable housing in many cities and the workforce housing definition sets this out for many new developments. If a local council is selling land to a developer, they write in the contract that a percentage of the buildings must be affordable for the local workforce in the US, or key workers in the UK. These type of classes of worker include school teachers, firemen, nurses, etc and other critical skills that usually find it difficult to start on the property ladder.
Another thing is subsidized housing definition whereby the local authority will create a housing association and pass on some or all of their social housing to that association which can then be sold on to local residents. Typically the new buyer will buy 25% of the property with a mortgage and then rent the remainder off the housing association. As they save more and increase their income, they can buy a bigger percentage of the property until, eventually, they own the whole house or flat.