Those fees contribute to the maintenance of the shared common areas, building amenities and the exterior of the complex. Determining your budget and finances will help you decide whether renting or buying is the better option for you. Additionally, consider the following advantages and disadvantages of going the buying route. The benefits of purchasing a condo versus renting or owning a single-family home include property ownership with added amenities, less upkeep and affordability.
Condominiums are great choices for empty nesters looking to downsize, seniors who prefer less maintenance and first-time home buyers looking for a starter home in an urban area. The pros and cons of buying a condo will vary depending on the type of condominium and its location, the size of the complex and the type of tenant.
You may think of condos and apartments as interchangeable residences. Essentially, you rent an apartment and buy a condo — which you can also rent. Single-family homes are often purchased outside of city centers because they generally cost more than their condominium counterparts. Typically, the decision to buy a condo versus a house is based on your desire to live in an urban neighborhood or have more square footage. A townhome is where a condo and a single-family home intersect.
Typically, townhomes are multiple stories and may share walls, though not above or below the unit. There are two primary types of condos: freehold and leasehold. With freehold condos, the unit is owned by the tenant outright. Leasehold condos have tenants with contracts with their landlord instead of owning the unit.
Typically, individual condo units make up one building or a complex of several buildings in a condo community. However, you may also come across detached condos, where owners live in their own freestanding house unit — more like a single-family residence — but pay into a condo association that takes care of the shared space within the community.
A standard condo home is a residential property where the owner only owns the portion of the building that consists of the interior of their home. A timeshare condo, or condo share, is typically used as a second home or vacation home. Its tenants are allocated use of the condo for a certain time and number of days each year. These types of units can be difficult to sell, but offer the property in desired locations for a fraction of the price of resorts or hotels during vacation.
Detached condos come with the advantages of condominium living with minimal upkeep and planned communities within an HOA. The major difference between these types of condos and condo homes is the lack of shared walls. Instead, a detached condo community is near cities, and units are often found clustered together.
Typically, these types of condos are rented out to tenants, but they differ from standard apartments. The application process, criteria and deposits may vary with these types of rental condos. The condo building refers to a complex made up of individually owned units. Ownership is typically controlled by an HOA or community property management that maintains the property upkeep and some maintenance.
Freehold condominium developments indicate that the developer owns the land the units are on. Once a tenant buys the condo, ownership is transferred to the buyer. The key difference between freehold condo developments and traditional condo buildings is that owners are responsible for their own upkeep and maintenance on their unit, including exterior walls, while management maintains common areas.
While condo living has its perks with minimal upkeep and amenities, it also comes with the possibility of noisy neighbors, less privacy and high monthly fees. Kevin Graham - September 10, Looking to refinance your condo? The process isn't too different from refinancing a traditional home mortgage. Here's how to get started with the process. Condo owners jointly own shared common areas, such as pools, garages, elevators and outside hallways and gyms, to name a few.
While condos are usually found in high-rise buildings, you can find detached condos in some markets. For many buyers, the answer to this question is simplicity. With most condo developments, you only have to take care of the interior. All the rest is handled by a professional management company. Another important piece is the price tag. Condos have historically been more affordable than single-family homes, and that trend continues today.
Condos are often cheaper in terms of taxes, too: A smaller space means a smaller bill from the county. Structurally, condos and apartments can look the same, but the key difference between a condo and an apartment is ownership: You own a condo, and you rent an apartment. In some limited markets like New York City, however, you can buy an apartment.
Both kinds of dwellings typically have multiple floors and units on each with shared amenities and common areas, such as a gym, pool and parking. In some communities, condo owners can rent their units to tenants, too.
Consider if you owned a detached single-family house and the roof needs to be repaired. As a homeowner, that expense would fall entirely on your shoulders. If you owned a condo, that cost would likely be split between other owners in the community, and a portion of it might also be paid for via the reserves of the homeowners association.
For example, there could be aesthetic requirements to adhere to, such as a mandate to install the same windows as every other unit. Your finances will be the main deciding factor that answers this question.
Renting a condo can also be a good opportunity to test out a particular building or area of town before making a long-term ownership commitment. Here are some top things to consider. How We Make Money. Jennifer Bradley Franklin. Written by. Jennifer Bradley Franklin is a multi-platform journalist and author, often covering finance, real estate and more. Edited By Suzanne De Vita. Edited by. Suzanne De Vita. They also often give purchasers the chance to customize their units. One of the advantages of purchasing an existing condominium is that you get to see the unit, building and grounds before you make your purchase.
You also have the opportunity to meet other unit owners, speak with a representative of the board of directors of the condominium corporation and ask questions of the property manager. For example, many loft-style condominiums are converted from former commercial or industrial buildings. Conversions can also refer to the switching of units from rental units to condominium units. Owning a condominium differs from owning a conventional home in several ways.
Key differences include:. You also share ownership of the common elements and assets of the building and community. Some condominium units called freehold condominiums include ownership of the land your home is on. If this is the case, your unit may be the entire house including the exterior walls, the roof and the lawn. Common elements may include lobbies, hallways, elevators, recreational facilities, walkways, gardens and other amenities.
They may also include structural elements and mechanical and electrical services. Some common elements may be outside the unit boundaries, but are for the sole use of the owner of a particular unit. Balconies, parking spaces, storage lockers, driveways and lawns are common examples. In addition to paying for your unit and a proportionate share of the common property, you also pay monthly condominium fees, along with all of the other unit owners.
This covers the upkeep and replacement of common elements — whether you use them or not. Part of those monthly fees may be put into a reserve fund to cover the estimated cost of future maintenance and repairs. Required by law in some provinces and territories, a reserve fund study is often used to tell condo owners how much money should be paid into the reserve fund. Conducted by an engineer or other professional, it involves a detailed examination of all components, an analysis of when repair and replacement are expected, and an estimate of these costs.
Refunds are not commonly given to unit owners. Instead, surpluses are typically either applied to future common expenses or paid into the reserve fund.
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