Blog posted On May 13, 2021
Choosing where to buy or rent a place to live depends on many different factors. How far is the commute? What are the school districts like? Is it located in a nice neighborhood? All important questions to consider. But before you answer them, you’ll need to answer what kind of property am I looking for? There are several options to consider besides a house.
A condo, or condominium, is like an apartment in structure. It is a part of a bigger building with other condos but has its own entrance, amenities, and living area. The major difference between a condo and an apartment is ownership. Typically, an apartment is owned by a building landlord or property management company. A condo is owned by a private purchaser.
While apartments are solely used for rental purposes, condos are individually purchased and can either be a primary residence for the owner or rented out by the owner to tenants. When condo owners rent out their property, they will have full control over the process. They will choose the best-suited renter, approve their rental application, and receive monthly payments directly from them. Compared to the apartment process, the condo rental process is a bit more direct and personal. Tenants communicate directly with owners instead of going through a property management company that’s likely dealing with multiple renters.
If you ‘rent a condo,’ you’re essentially renting a place structurally the same as an apartment but making monthly payments directly to an owner instead of a company. Plus, you might find more of a personal touch to the condo’s style and more updated features throughout. The owner of the condo likely decorated everything themselves and want to keep the features updated for high resale value.
While owning and renting out a condo can be a great way to build equity and increase your wealth, being the condo owner will also put you in charge of property maintenance. If there’s a leak, an A/C issue, appliance breakdown, or any other maintenance problem, you will be required to fix it (or find someone else who can).
An apartment, like a condo, is a part of a multifamily building with its own entrance, amenities, and living area. In an apartment building, all tenants follow the same guidelines and report to the same landlord, who typically works for a property management company. While condos adhere to regulations set by the Homeowner’s Association (HOA) in your area, apartments adhere to the property management company’s rules.
Unlike condos, apartments are primarily rented. They’re a convenient way for many people to live without the commitment or responsibility of homeownership. If you don’t know where you want to settle down or if you want to invest in a home, then renting an apartment might be a good option. It also saves you the responsibility of property maintenance.
However, when you rent an apartment, you’re not building equity. You’re actually paying someone else’s mortgage and helping them build equity, and many times that’s a management company or investor. Condos and apartments are relatively similar in terms of cost, so purchasing a condo could be a better option if you are ready to settle down or manage an investment property. For many people, condos are a more affordable entry to homeownership.
A townhouse differs from an apartment in its structure and ownership. Rather than being a room or floor in a multifamily building, a townhouse is just a house that is connected to other houses. You have your own roof, entryways, and sometimes your own yard space as well, but you share one or more walls with another townhouse. Sometimes townhouses are called ‘attached homes.’
Similar to condos, townhouses are privately owned (not owned by a management company or corporation). If you decide to rent a townhouse, you will be making your payments to the homeowner. You will also live by HOA guidelines.
Some benefits of buying a townhouse instead of a condo or single-family house is the space and maintenance. With a townhouse you have more space (both inside and outside) than a condo but less space (typically) than a home. Having less space than a home can be easier to maintain and will likely cost you less overall. “You can get a lot of space close to the cities when you’re only paying for the inside of the house and not the acreage of the yard of a single-family home,” says Ben Hoefer, broker at John L. Scott Real Estate. “It can be a cost-effective way to get more of what you want.”
Though all three property types differ slightly, they all can be more affordable options than purchasing a home (depending on location, size, and other factors). To learn more about the different paths toward homeownership and their varying costs, contact us.