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Since 2003, Dan Green has been a leading mortgage lender and respected industry authority. His unwavering commitment to first-time home buyers and home buyer education has established him as a trusted voice among his colleagues, his peers, and the media. Dan founded Homebuyer.com to expand the American Dream of Homeownership to all who want it. Read more about Dan Green.
Homebuyer.com is your trusted guide to homeownership. Since 2003, our team has offered real-world expertise and advice to tens of millions of U.S. home buyers. Our content stands on its integrity: it's factual, unbiased, and free from outside influences. Read more about our governing editorial guidelines.
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When you live in a condo, you own it as property. When you live in an apartment, you just rent from a landlord.
Some would-be home buyers prefer to rent because it’s a flexible way to live. However, homeownership has benefits, too.
Rent increased 10.9% in October 2021, which is the fastest year-over-year increase in over 16 years, based on the CoreLogic Single-Family Rent Index. This year the Federal Reserve Bank of New York is expecting rent prices to rise about 10% as well. So, if you are thinking about owning a condo vs renting an apartment, now might be the time to understand the difference.
This article covers everything about condo vs apartment living so you can choose which fits your life best.
The difference between a condo and an apartment is who benefits from you living in it.
When you own a condo, you can build wealth through home appreciation. As the property value increases, so does your net worth. When you rent an apartment, the home appreciation goes to someone else.
If you’ve ever heard the expression “renting makes your landlord rich,” this is what they mean. Renters get none of the benefits when home prices rise. Landlords get it all.
Freedom is another difference between owning a condo and renting an apartment. When you own a condo, you can redesign your home, renovate your rooms, and replace your appliances if you’re into new technology.
You can even get a pet.
Apartment renters don’t have these rights. Your landlord makes the rules, and you’re just there to follow them – until you move out in a year, that is.
Condo ownership isn’t all wealth and considerable freedoms, however. When it comes to repairs and recurring costs, renting can have advantages.
Condo is short for condominium. A condominium is a private residence within a larger group of units or homes characterized by shared ownership of common areas such as lobbies, gyms, and green space.
Condos are also self-governing legal entities.
When you buy a condo, you also buy voting rights for the condo’s governing body – the homeowners association, which many people call “the HOA.”
Each condo owner gets votes equal to their ownership percentage in the building. If you own five percent of the condo, for example, you get five percent of the vote.
Condo owners can vote on such items as:
Owners pay recurring membership fees to the association. The fees pay for the building’s standard operating expenses, including landscaping, pest control, property insurance, snow removal, maintenance, and upkeep.
An apartment is a private residence owned by a third-party landlord or management company and rented by a tenant.
Apartment rental contracts typically last 12 months, after which the rental terms can change. It’s common for rents to increase annually.
Apartment rental contracts are restrictive.
Tenants may not alter apartments physically, nor can they replace apartment fixtures. Customizations must be approved by a landlord and are subject to landlord approval.
In exchange for rent payments, landlords are responsible for essential apartment maintenance on plumbing, electrical, and heating and cooling systems. Tenants have very few rights.
Learn more about what happens when you break a lease to buy a house or condo.
Let’s break down condo vs. apartment expenses, one by one.
Condo: When you own a condominium, it’s your property, and everything within its walls is yours to repair, update, and maintain. However, there are times when the homeowners association will step in to assist.
Remember, common spaces and systems are co-owned in a condominium and governed and insured by the homeowners association. When pipes burst or systems fail, the association’s insurance policy pays for your repairs.
Similarly, if outdoor-facing windows leak into your condo unit, the association will reimburse your damages.
Before purchasing a condo, ask to see its governing documents, including the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and Bylaws which describe which parties are responsible for which damages.
Apartment: When you rent an apartment, your landlord manages and pays for all manner of repairs and maintenance to your unit. Your contract terms will define within how many days your landlord must provide service.
Many large apartment communities use online portals for routine maintenance requests such as loose bathroom fixtures and clogged kitchen drains. Larger requests for issues, including broken appliances and damaged pipes may require an on-site visit before a serviceperson will repair them.
Condo: Like other homeowners, condominium homeowners pay real estate taxes to their local municipalities. Tax rates vary by county and school district and are proportional to your home’s valuation.
Condo owners commonly escrow funds to pay their real estate tax bills.
Condominium owners aren’t required to carry homeowners insurance because the building and its fixtures are insured by the condo association’s master condo policy. However, it’s wise to purchase insurance for your valuable items with a separate policy and to purchase liability insurance to protect against injury in your home.
You should also purchase a life insurance policy that covers the size of your mortgage in the event of your untimely death. A cheap policy may cost $25 per month.
Condo owners may also be subject to one-time fees for special building projects, as voted on by the association.
Apartment: When you rent an apartment, you pay rent to your landlord, and nothing else is due. All other costs, including real estate taxes, association dues, and special assessments, are borne by your landlord.
If your rent does not include basic utilities, expect to pay:
If you have a dog, cat, or other pet, you may be asked to make a safety deposit. A dedicated parking space may cost extra, too.
Renters should purchase two insurance policies for their protection.
Choosing between living in a condo and an apartment is choosing between owning a home and renting one.
When you own a condo, you own real estate and get the benefits of property ownership. Homeowners build wealth faster than renters because of home appreciation; and when you own a home, you can decorate and renovate in whatever ways you want.
By contrast, apartment living offers flexibility.
Apartment dwellers can relocate every year as their job or life requires, or simply move to a building with better tenant amenities. Owners don’t have that luxury. However, freedom to move comes at a cost – rents tend to rise year after year.
When you’re ready to stop renting and start buying, buying a condo can be an excellent way to generate wealth.
And, if you’re not paying cash, the best first step is to get pre-approved for a mortgage.
Happy homebuying!
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Mortgage Rate Assumptions
The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of , but please remember that mortgage rates change without notice based on mortgage bond market activity.
The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of {{ formatDate(rates[0].createdAt) }}, but please remember that mortgage rates change without notice based on mortgage bond market activity.
Our mortgage rate assumptions may differ from those made by the other mortgage lenders in the comparison table. Your actual mortgage rate, APR, points, and monthly payment are unlikely to match the table above unless you match the description below:
You are a first-time buyer purchasing a single-family home to be your primary residence in any state other than New York, Hawaii, and Alaska. You have a credit score of 660 or higher. You are making a down payment of twenty percent and using a 30-year conventional fixed-rate mortgage. You earn a low-to-moderate household income relative to your area.
The information provided is for informational purposes only and should not be confused for a mortgage rate commitment or a mortgage loan approval.
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