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What is a condo? If you ask most people to explain, they’ll tell you, “It’s like an apartment or townhouse, but you own it.” Or, “It’s like a home, but without a yard.” Both of these descriptions are mostly true, but there’s a lot more to the condominium meaning and the condos versus apartments debate, especially if you’re trying to decide where you should live.
What is a condo?
A condo, which is short for “condominium,” is a private residence owned by an individual homeowner or family in a building or community with multiple units or townhouses. Although they are usually part of a larger high-rise building, “detached condominiums” also exist.
What all condos have in common is that they share common areas—such as yards, garages, tennis courts, swimming pools, rec rooms, or gyms—with other units that the condominium owners don’t have to maintain themselves, making home upkeep that much easier.
For this convenience, owners pay dues to a board—typically made up of elected condominium owners—who handle the hiring of landscapers, pool cleaners, and other professionals for anything that must be fixed, from faulty elevators to gopher infestations in the common areas. This is much the way a homeowners association, or HOA, functions. (Leaky pipes and plumbing and/or roof repairs fall into more of a gray area, but generally if it’s outside the walls of your unit, it’s the board’s responsibility to fix.)
Matthew Gordon Lasner, author of “High Life: Condo Living in the Suburban Century,” adds this twist to the meaning: The first condo in the United States was built in Salt Lake City in 1960—and since then, this residence style has truly taken off. Currently, there are approximately 17 million privately owned condominiums in the U.S., which may have you wondering: Should you be a condo owner, too?
Should you consider condo ownership? Here’s how to decide
You can see why condominiums would be ideal for people who want to own a piece of real estate but don’t want to worry about yardwork and maintenance. The condos versus apartments conundrum is often an easy choice for retirees, young adults without kids, or anyone who would like to own property in more densely populated areas where detached, single-family homes just cost way too much. You might also be looking for a coveted amenity or the services of an HOA or property management company. There’s also more of a community to be found in a condo association compared with an apartment building.
And the advantage of buying a condominium over renting an apartment or townhouse? One, condos tend to be better built and maintained than rentals and they likely have an attractive amenity package. Plus, condo owners or unit owners will gain equity in their real estate over time—so why not invest your money in a home rather than throw it away on rent?
“Mortgage interest rates in today’s market are extremely low. Most individuals seeking a $2,500-a-month apartment or townhouse could easily afford a mortgage of $500,000. Monthly payments would be similar if not the same,” points out Jessica Peters, a Realtor® with the Peters-O’Brien Team at Douglas Elliman. “Depending on the area and whether or not the buyer is savvy, the unit would appreciate during the length of residency. Whereas in a rental, there is no opportunity for a return on investment.”
Condominiums vs. apartments: The deciding factor
On the other hand, a condo complex isn’t a great idea for fiercely independent homeowners or tenants who like their own privacy and space, and don’t want anyone telling them what they can and can’t do with their real estate. That’s because in addition to collecting dues, a condo board or HOA also enforces rules and regulations that owners agree to abide by when they purchase their condominium. The board can regulate everything from the size and number of pets you’re allowed to the number, the color of your townhouse exterior, and the ages of the people living in your unit. Retirement condo communities, for example, can legally require that all long-term residents be over the age of 55.
So if you’re looking into buying a condo, make sure to study up on the condominium association rules (called covenants, conditions, and restrictions, or CC&Rs) and extra costs such as HOA fees or association fees. Also, be sure to check out each amenity before you contact a real estate agent or commit to a purchase.