Condominium and apartment living both have a lot in common. Condo ownership, however, comes with more responsibility, while living in an apartment is virtually carefree. Understanding the advantages and disadvantages of both types of housing will help you decide which makes sense for your current and long-term needs.
One of the biggest advantages of owning a condominium is building equity each month as a property owner. Although condos appreciate at a slower rate than single-family homes, you'll still build equity 100 percent faster than if you were renting an apartment, since renters can't build equity at all in property they don't own. As a condo owner, you can leverage equity in the future to purchase additional property, make improvements to your condo or add to your overall net worth.
As a renter, your monthly costs may not be very different from that of a condo owner so there are no clear advantages or disadvantages. Renters pay insurance, utilities, phone service, cable and internet, if you choose to have them. As a condo owner, you'll be required to pay your monthly mortgage and condo association fees, which may include your utility costs and extras like cable, which you will have to pay whether you use it or not. If you enjoy controlling your own costs, living in a condo could be a disadvantage to you. But if your goal is reducing your monthly housing costs, and association fees and a mortgage are less than what you would pay as a renter, then owning a condo would be a definite advantage.
As condo owner, you won't have to perform any outside exterior building maintenance or landscaping. As a renter, you wouldn't be required to do so either unless it's specified in your lease. As a renter, however, you would have an added advantage since you wouldn't be responsible for your unit's interior maintenance either. Condo owners do pay for their own inside maintenance, whether it be a leaky faucet, plumbing or appliance repairs.
To buy a condo, you will have to secure financing, unless you plan to make a cash offer. In addition to your down payment, you will also have to come up with closing costs. The significant upfront costs are a disadvantage in comparison to getting an apartment, which typically requires a security deposit and the first month's rent.
Perhaps the biggest disadvantage of condo ownership compared to renting an apartment is moving. Since you can't just walk away from your mortgage if you have to leave the area, you'll have to decide if you will sell or rent your condo. But your condo association may not permit renting to tenants, and your mortgage may contain restrictions on renting the property. If you're looking for a short-term living arrangement, leasing an apartment is a definite advantage over buying a condo, and offers more flexibility.
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