Condo or apartment: which is best for you?
The current real estate market makes it difficult for many people to afford a single-family home or a townhouse. In most areas, condos and apartments are more affordable solutions for those looking for housing.
However, if you don’t understand the difference between a condo and an apartment, you’re not alone. There are important distinctions between these two types of properties that will impact the best choice for you. Keep reading to learn more about the differences between condo living and apartment living.
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Both condominiums and apartments are units in multi-family residential buildings.
What is a condominium? Like an apartment, this type of property is a single unit in a multi-family residential building. One of the reasons condominiums and apartment complexes are often confused is that they can look a lot alike. You often won’t be able to tell if a multi-family residential building houses condominium units or apartments just by looking at the exterior.
Condos and apartments can also offer similar amenities to their residents. These shared facilities may include swimming pools, gymnasiums, tennis courts, playgrounds or picnic areas. Another similarity between condos and apartments is that they often have similar rules or regulations in place. While these vary from property to property, they could limit residents’ ability to decorate the exterior of their individual unit, impose restrictions on the use of common areas, or dictate parking policies.
The main difference between a condo and an apartment is ownership.
The most important differences between condos and apartments relate to ownership. In most cases, a resident of an apartment rents their unit from a property management company or a landlord. The entire building is owned by a management company or an individual, and these parties rent out each individual unit. Condominium units, on the other hand, are owned by an individual (or, increasingly, a company). Condominium owners can choose to live in their unit, or they can rent it out and collect rent from a tenant.
When buying a condominium, buyers accumulate equity the same way they would when buying a single-family home. Equity – which is calculated by subtracting the current amount owed on a mortgage from the value of the property – can help build equity, increase a condo owner’s profits if they decide to sell, and allow receive a home equity loan to cover repairs or other expenses. Each time a payment is made for a condominium mortgage, the owner increases their equity.
Meanwhile, most apartment owners do not build equity. Their rent goes to the management company or landlord, who can use that money to build their own equity in the property.
Generally, it costs more to buy a condo than to rent an apartment.
Also, in most cases, the cost of owning a condo will exceed that of renting an apartment. Apartment tenants are responsible for paying an agreed monthly rent, certain fees and a security deposit (usually equal to one or two months’ rent).
Those looking to buy a condo have additional upfront costs that renters don’t. For example, they must provide a down payment for the unit (between 3 and 20% of the purchase price), pay for a home inspection, and cover closing costs.
Tenants and co-owners must pay insurance. However, tenant insurance is significantly less expensive than condominium insurance. This is, in part, because renter’s insurance only covers an individual’s personal effects inside the unit, not the unit itself.
Condo owners also face additional recurring costs, such as property taxes and homeowners association (HOA) fees, that don’t apply to apartment dwellers. HOA fees may vary depending on condo location and included amenities. Median HOA fees in the country are just under $300 per month, although they can exceed $500 in some areas.
For both types of ownership, the costs of maintaining and repairing shared spaces are covered by the HOAs or landlords.
As mentioned above, condos and apartment buildings offer shared community spaces, including gyms, pools, playgrounds, dog parks, and walkways. The owner of an apartment building is responsible for covering necessary maintenance and repairs to these areas and the exterior of the building. For co-owners, the HOA is responsible for covering these maintenance and repairs.
People who rent an apartment cannot be charged additional fees to cover necessary repairs to equipment, although their landlord can choose to increase their rent when signing a new lease. Condominium owners may face special assessments to cover unexpected costs of maintaining or repairing amenities. Owners of HOA dues pay to cover routine maintenance, but in the event of an unforeseen expense, the HOA can split the cost among residents through a special assessment. This possibility is one of the disadvantages of buying a condo.
Condo owners are responsible for repairs and improvements in the unit while landlords cover this for renters.
Another important difference between condos and apartments is who is responsible for covering repairs in the unit. The co-owners are entirely responsible for the costs of maintenance, repair or renovation of their accommodation. However, apartment tenants do not have to pay the cost of maintaining or repairing their accommodation (except for damage not covered by a lease). This responsibility rests with the owner or the management company, since they are owners.
An unexpected water leak, for example, could put a condo owner in a tough financial spot when trying to fix the leak and the resulting damage. In the same scenario, an apartment tenant would only have to contact their landlord, who would be responsible for fixing the problem.
On the other hand, condo owners enjoy more freedom in updating or customizing their unit’s interior than most renters. As a tenant, it is up to the landlord to decide when or if to make renovations to the property. They will also be responsible for selecting paint colors, flooring materials, etc. The co-owners can make all these decisions themselves and choose the colors or materials they want.
It is generally faster and less complicated to move from an apartment than from a condo.
A final difference between apartment and condominium concerns the ease (or difficulty) of moving. Whether someone is renting a micro apartment or a three-bedroom unit, they will be signing a lease. The tenant will be responsible for making payments for his unit for the period of time indicated in the lease. Once that lease expires, they can move out without any penalty. Knowing the end date of your lease can also make it easier to start looking for a new property. If a tenant wishes to leave an apartment before the end date of their lease, they can terminate the lease, but they will have to pay a fee (usually an amount equal to the month’s rent remaining on the lease).
Leaving a condo can be much more complicated. The owner must find a new buyer and find a new property to buy or rent and move in. It can be difficult to find the right time for this transition to avoid paying double bills or finding yourself with no place to live after the condo is sold.
These differences between condo and apartment generally make apartments a better choice for those looking for more flexibility in where they live, while condos may be the best choice for families or people who plan to live in an area for a while. an extended period.
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