What is the difference? – Forbes Advisor

Some people don’t need as much space as a single-family home, where other types of homes like condominiums and apartments come into play. However, while these two options have a lot in common, there are a major distinction between the two. : home ownership.

With a condo, you make mortgage payments to own the unit. Whereas with an apartment, you pay monthly rent to the owner of the unit. Here’s what to know about the differences between a condo and an apartment and how to know which is right for you.

What is the difference between a condo and an apartment?

Unlike stand-alone structures, condos and apartments are units within a complex (meaning they share walls with their neighbors). These types of homes typically come with similar amenities, such as access to a swimming pool or fitness center.

However, while a condo is privately owned (who can rent out the unit if they wish), an apartment is often owned and rented by the same owner as all of the other units in a complex. This means that you can buy only one condo but can only rent one apartment.

Condominiums are also often part of a Home Owners Association (HOA) which can institute rules and regulations. HOAs typically charge fees, which can range from $100 to $1,000 or more. These fees could be used for exterior management of your property, lawn maintenance and other services. In most cases, the landlord is still responsible for home-related things inside your unit. For example, if your refrigerator or dishwasher breaks down, you will be responsible for those costs if you own the unit.

Apartments, on the other hand, are usually overseen by a landlord or property management company that sets rules and regulations for all tenants in the complex. You will pay rent as well as maintenance costs (if applicable) to this entity, and any necessary repairs will likely be carried out by an on-site maintenance crew at no additional cost to you. Read your rental agreement carefully, as some landlords will pay more for repairs than others.

What is the difference between a condo and a townhouse?

A townhouse is another type of home that shares walls with another unit, at least one or two, depending on whether you have an end unit or not. Unlike a condo or apartment, a townhouse usually has two or three stories, and there will usually be no units above or below.

Townhouses also offer similar amenities to condos and apartments, and they tend to be part of HOAs. This could make a townhouse a good option if you’re looking for more space than a condo but less maintenance than a single-family home.

Advantages and disadvantages of buying a condo

If you’re thinking of buying a condo, there are pros and cons to keep in mind.

Benefits of Buying a Condo

• Cheaper than a single family home. Condos tend to be smaller than single-family homes, which often makes them cheaper. A condo can also be a good entry point to buying real estate if you want to start earning equity but don’t have the capital to afford a larger property.
• Easier to maintain. If your condo is part of an HOA, services like lawn care or pool cleaning will be handled by the association.
• Potentially more secure. Some condos are located in gated communities or secure buildings with a guard or phone booth.
• Personalization. Unlike renting an apartment which will likely have restrictions for tenants, buying a condo means you can make customizations as you see fit.

Disadvantages of buying a condo

• HOA fees. For many condo owners, an HOA comes with the purchase. This means you’ll need to budget anywhere from $100 to $1,000 or more each month to cover the required fees, which might be too high for some potential buyers.
• Close contact. Condos share walls as well as amenities with other units. If you prefer more privacy than that, condo living may not be for you.
• Rules and regulations. If your home is part of an HOA, you must adhere to all limitations outlined in the HOA’s Statement of Covenants, Conditions, and Restrictions (CC&R).

Advantages and disadvantages of renting an apartment

Just like buying a condo, renting an apartment also has its pros and cons.

Advantages of renting an apartment

• Cheaper than a single family home. Like a condo, an apartment is generally less expensive to rent than buying a single-family home. However, as a tenant, you will not accumulate equity or wealth as you would if you owned the unit.
• No maintenance costs. If you rent an apartment, you won’t have to worry about covering the costs of most necessary repairs.
• Approvals. Apartment complexes typically offer a variety of amenities, such as access to a swimming pool. These amenities are often built into the rental cost of your apartment, so you don’t have to pay extra. However, some apartments with lots of amenities will charge an annual fee.
• Flexibility. If you’re not ready to settle where you are or aren’t in the right financial position to buy property, renting an apartment might be a better option that offers more flexibility than owning. of a house.

Disadvantages of renting an apartment

• No fairness. Buying a home is an investment that can help you build wealth. But if you rent an apartment instead, you won’t accumulate any equity with your payments. You’ll also miss the tax deductions that come with home ownership, such as those for mortgage interest and property taxes.
• Smaller space. Apartments are generally smaller than condos. If it’s just you, it could be a lot of space. But if you have a partner, pets, or kids, an apartment can end up feeling a bit cramped.
• Personalization Limits. Tenants must abide by the rules and regulations established by the landlord or property manager. These can cover anything from the type of paint color you want to the type of pet you have.
• Lack of privacy. Like with a condo, living in an apartment means you’ll be close to your neighbors. For example, you might end up sharing walls, hallways, stairs, and amenities with other residents of your compound.