Condo vs Apartment: What’s the Difference?
Whether you choose a condo vs. an apartment is a choice that will impact your life for years to come. Many first-time homebuyers gravitate towards condos for their first venture into homeownership. But how do you know if a condo is right for you or if you're ready to make the purchase? As a Chicago property management company, our team at 33 Realty is here to help.
A condominium, or condo for short, is a type of property ownership that is usually located in a residential building or community, but the unit itself is owned by an individual condo owner. This owner becomes the landlord of the property, meaning they have full approval regarding tenants renting their unit. Condo living is a bit more personal compared with renting an apartment as you are dealing with the condo owner directly as opposed to larger residential buildings. Unlike apartment living, the owner of the condo is typically not on site unless they live in another condo within the same building.
An apartment complex is a type of rental property that is owned and managed by a property management company. It is usually located in an apartment community and it has shared amenities for the residents. In an apartment complex, all of the units are the same and the owner is the same. The tenants must follow the same guidelines when renting the unit within the complex and they all report to the same property manager who usually works from a leasing office.
When it comes to condo vs. apartment living, the most significant difference between the two is ownership. As we've mentioned, residential buildings such as apartment buildings have various renters under the same roof. However, unlike a private residence that the condo owner controls, apartment buildings are full of people who pay rent to property managers. Landlords pay the property taxes in apartment buildings while the condo owner is responsible for things such as monthly mortgage payments and monthly HOA fees.
The amenities and locations of both condos and apartments are often similar as they have the same structure. Many times, both condos and apartments come with amenities such as a sharable swimming pool, trash disposal, lawn and gardening work, on-site gyms, and other communal benefits.
The difference, however, comes down to monthly dues. In a condo unit, the owner is responsible for paying monthly homeowners association (HOA) dues in addition to paying for all interior maintenance. Apartment renters are not responsible for a monthly HOA and will always defer to the property manager or landlord to address maintenance issues.
One of the main differences between these two living situations is the difference between owners. Condominium owners typically live within the unit that they've purchased unless they are renting to a tenant. Apartment units are usually rented by a tenant who pays rent to a landlord.
If you are an apartment renter, you likely pay monthly rent to a landlord or a management company in order to live there. Before securing the lease, the tenant will typically need to fill out a rental application to become approved. In addition to paying rent, a security deposit is typically required by the property owner. The monthly cost of rent often increases if there are luxury amenities such as swimming pools, gyms, etc. In some cases, there are other costs to factor in such as cable, gas, electricity, cable, and internet.
On the other hand, condo communities are often comprised of the owner and the tenant as the same individual. just as regular homeowners and landowners are responsible for property taxes, the same is true for condominium owners. Even though there is condo maintenance that the owner must pay if something needs fixing, there are some practical benefits to being part of a condo community such as the ability to build equity, additional freedom, and an ideal purchase for first-time home buyers.
When it comes to the pros and cons of buying a condo vs. renting an apartment, the cost is undoubtedly a factor in play.
In apartment communities, rental costs are usually straightforward. Most buildings require that new renters to the building must pay a deposit when the lease begins in addition to the first and last month's rent payments upfront. Once those fees are paid, the renter makes monthly payments until their lease agreement is up.
Condo owners face steeper prices upfront. Not only do they have to factor in enough money to make a down payment, but they must also consider closing costs and inspection fees. Depending on the type of mortgage you're able to get, you may put as little as 3 percent down on the condo and pay as much as 5 percent of the overall purchase price during the closing process. It's standard for condos to come with monthly HOA dues that depend on the amenities and services offered.
Apartment maintenance differs drastically from condo maintenance. We've highlighted some differences between the two below.
Let's say you're renting an apartment unit and the oven breaks. Rather than calling a repair person to come and fix it yourself and paying for the repair out of pocket, renters should call the landlord as it is their responsibility to repair the issue. This means no out-of-pocket cost to the renter, making it a more affordable option for any updates or fixes. In addition, all communal spaces such as the fitness center, hallways, etc. are maintained by the property owner.
Condo owners are financially responsible to fix these types of issues on their own. In the case that there's an unexpected malfunction with an appliance, for example, the condo owner is on the hook to pay for such a fix. While this gives owners more freedom to make the changes that they want, it undoubtedly adds costs to the bottom line.
Many condo and apartment buildings have the same structure, either a high rise or a few floors. Due to the similarities, condos, and apartments often have comparable amenities.
When making your decision between the pros and cons of renting an apartment, consider the types of amenities that are the most important to you. Do you need a pool, gym, or a doorman? Do you have a dog that requires green space? This can help you make your decision on the apartment building that is the best fit for you. As apartment buildings are typically bigger than condo buildings, there are often many impressive amenities such as pools, tennis courts, a doorman, laundry services, etc.
Specific condo amenities vary depending on the condo community. Some offer a range of amenities that are similar to an apartment complex but other buildings that are smaller might have minimal amenities. If amenities are particularly important to you, you'll want to find a building that offers similar amenities to an apartment building.
Location is a significant factor when deciding where you want to live. Both apartment buildings and condo buildings are easily found in both large cities and smaller suburbs. Both condos and apartments are often located near local coffee shops, restaurants, retail shops, parks, and more.
In larger cities, it's not terribly difficult to find an apartment building that's located in a desirable part of town. As there are usually more units available to rent in an apartment, it is also typically easier to secure a lease in the location of your choice.
There are plenty of condos that are available throughout major cities and surrounding areas. If you are hoping to buy and you want to get more bang for your buck, however, you might have to reside a bit outside of a major city.
RULES AND REGULATIONS
Following rules isn't ideal for most people, but when it comes to condos and apartments, it's important that you abide by any established rules for your particular living situation.
IN AN APARTMENT
As it is often a corporation that oversees apartment buildings, it's not uncommon for there to be rules regarding pet waste, trash, personal items in the common areas, pets, etc. Most units don't allow you to paint the walls or inflict any type of damage to the property as repairs come from the property manager.
IN A CONDO
In addition to paying a monthly mortgage payment, there are rules established by the condo association. For example, there could be rules about where you put your trash, whether or not your unit is pet-friendly, property maintenance, etc.
Factoring in the pros and cons of buying a condo can help you make a decision that suits your needs both now and in the future.
If you're a first-time homebuyer or you simply want to downsize, consider a condo due to its lower prices. By the start of 2022, the median sales price for an existing condo in the Chicago area was $438,000. On the other hand, the median price for a single-family home is about $339,000, according to the National Association of Realtors.
Condo associations are often responsible for taking care of any necessary property maintenance such as yard work, shoveling snow, etc. This is ideal so you don't have to handle these tedious projects on your own.
It's common for condo buildings to be located near local shops, recreational areas, and public transportation. If walkability is a large factor for you, it's possible that a condo could be a great choice.
LIMITED BY RULES
Despite the fact that you own the condo, you are still bound by the rules of the HOA. This could limit how you decorate the exterior of the property, the types of pets that you have, etc.
LACK OF PRIVACY
Depending on the type of condo building in which you're living, you could share walls with neighbors. You may also share common areas such as front doors, vestibules, etc. This gives you less control over noise and your privacy level.
It's standard for condo owners to pay a monthly HOA fee. It's not uncommon for these fees to increase over time as they are usually based on the amenities of the condo association.
Apartments are an ideal choice in many circumstances, particularly for those who don't want the responsibility and added expenses that accompany owning a home. Here are some pros and cons of renting an apartment.
With apartment buildings, there's no need to put down a large down payment or worry about closing costs. The monthly rental costs are often more affordable compared to paying a mortgage, too. Plus, if you need anything fixed, you won't have to pay out of pocket.
Generally speaking, your landlord takes on any necessary maintenance during your lease. Make sure to check the terms of your lease agreement to see if you're obliged to take care of anything on your own.
Apartment buildings are often located in city centers and hubs, making them walkable to surrounding restaurants, parks, public transportation, and more.
LIMITED BY RULES
Unlike condo buildings, apartment buildings don't offer the freedom and flexibility that many people seek. You may run into restrictions surrounding pets, decorations, parking, and more. This could be frustrating if you are ready to live on your terms.
LACK OF PRIVACY
Depending on the size of your apartment building, you could run into privacy issues. If your building has thin walls and floors, it could also come with noise concerns.
In the case that you're renting, you aren't building equity in the same way that you are by owning a condo. Instead, you're contributing to building your landlord's equity.
There isn't a right or wrong answer when it comes to choosing between condos versus apartments. While the differences between condo and apartment buildings are expansive, each has its suggested use case and unique pros and cons.
Contact our team at 33 Realty if you're interested in learning more information about renting vs. buying. Our Chicago apartment property management company is happy to guide you in the right direction and answer any of your questions!