To determine if you should buy a condominium (condo), a homebuyer should determine what their budget is, how large of a place they need, and what purpose they need from their home. Answering these questions will help you determine if you should buy a condo, especially because when in the market for a new home, potential buyers have numerous options. Buying a condominium requires potential buyers to consider:
- How much they want to pay
- The amount of living space they need
- How close they want to be to neighbors
- What they’re willing to give up vs. owning a home
Some buyers may want a much bigger overall property, a free-standing home (i.e., single family home), and resale value while others may want a shared building with a homeowners association that handles all maintenance. At the end of the day, knowing if a condominium is the right choice comes down to preference.
Condominiums do offer some advantages, but before making a purchase, know that many individuals experience financial losses when they do, while others enjoy a long-term living solution. It all depends on the state of the market at the time of purchase or sale, or what the homebuyer needs and wants are.
What is a Condominium (Condo)?
A condominium is more commonly referred to as a condo. It’s not exactly like an apartment, but very close. The best way to think about a condo is that it’s an apartment that you own, not simply rent. You own your entire unit (walls, ceiling, floor, etc), but nothing outside of it (hallways, common areas, pool, etc). Additionally, you are a partner, with all of the other owners in the complex, of the exterior structure (the foundation, exterior walls, and roof) as well as any common areas and amenities. Condos usually offer a smaller square footage and are typically perfect options for first-time homebuyers who may want to upgrade in the future.
A condo most often has a homeowners association (HOA) or condo board that is responsible for handling the maintenance of the common areas and the building itself. For many, this is a big selling point as they can have a pool, clubhouse, and other amenities without the worries of having to pay for repairs in the event something goes wrong.
What are the Advantages and Disadvantages of a Condo?
When looking at condominiums, nearly every aspect of the situation can be considered an advantage or a disadvantage depending on the potential buyer’s desires. Regardless of where you stand, some of the most important things to consider include the following:
- Living in a condo means living in a community. Homeowners can either benefit by being around several people and make friends, or it’s a disadvantage if they would rather have more space and be more secluded.
- Building maintenance and issues. Whereas in a detached home, the owners are responsible for all maintenance and upkeep of the exterior parts of their home, in a condo, the HOA is responsible for that work.
- Usually a great location. Condos are often located in the center of the cities in large high rises. If you prefer to walk to work, a condo may be a great fit.
- Less expensive. When compared to single-family homes or townhouses, condos are a much more affordable option on a “per square foot” basis.
- HOA fees. There are monthly dues associated with living in a condo. These fees are used to pay for building maintenance, repair, and upkeep.
- The homeowners association itself. In many cases, it’s great if you have a good homeowners association who you can deal with easily for maintenance and exterior fixes. However, with a bad HOA, it could lead to unwanted stress and additional problems.
- The resale value. For any buyer who intends to sell their home down the road, the value must be considered. A house may be easier to sell than a condo, but a condominium is a great starter home that can be fixed up and sold at a higher value in the future.
- The included appliances. Many condos come with appliances already installed inside the condominium. Refrigerators, washers, dryers, dishwashers, and ovens can be expensive, so if a condo comes with appliances, it can be a huge selling point. On the other hand, potential buyers may want to choose their own appliances, which could be a problem with some HOAs.
Things to Consider
Choosing to buy a condo or a home, or to rent, can be complicated if the potential buyer is unsure what to expect. Knowing what to consider can help you make the right decision for your unique circumstances. Before moving forward, here is some vital information to consider:
- Budget: A homeowner budget checklist can help a potential buyer recognize their ability to purchase a home vs. a condo. Homes are often more expensive because of the land and property they offer, and condos are perfect for first-time homebuyers who may not be looking to spend an exorbitant amount for their starter home.
- Building maintenance: While the condo owner is responsible for the inside of the home, buying a condo means having a homeowners association (HOA) that can provide exterior repairs and maintenance, including taking care of the common areas.
- Location: Condominiums are usually built in some of the most beneficial areas in their town. They’re smaller than normal sized homes and packed together, allowing for them to sit closer to community amenities such as entertainment and shopping.
- Amenities: The common areas for condominiums can be big benefits for potential buyers. When buying a home, there may not be access to things such as swimming pools, gyms, play areas, and sports recreation whereas many condominiums have those amenities.
For potential buyers who may want larger land, more privacy, and room to grow, a condominium may not be the right choice. Instead, it may be best to look at some of the alternatives out there.
What are the Alternatives?
Luckily for potential buyers, condominiums are just one of the many options out there. A few of the other options include buying a home or townhome, or renting an apartment.
Buying a Home
Buying a detached, single-family home often requires a higher initial investment as they can cost more, but they have a lot of benefits. Homes have more property and land, more seclusion, no HOA to deal with, and are typically easier to sell. A home often gives more opportunity for change, allowing owners room to grow, expand on the home, and create more value in the home over time. Homeowners can also do more to customize their home in terms of exterior and interior paint, solar panels, and more.
Buying a Townhome
A townhome is more of a middle ground and serves many families well. It’s a smaller home and may be attached to other townhomes, but you own the land on which the townhouse sits. Buying a townhome may have the same advantages of exterior maintenance and repairs and amenities, but it comes at the expense of privacy and HOA fees.
Renting an Apartment
Renting an apartment is a viable option for those just starting out or someone who doesn’t want to make the large investment into owning a home, townhome, or condo. Instead, a renter pays a monthly cost for their own living area and amenities offered by the apartment complex, but there’s no resale value.
How Do I Know if a Condo is Right for Me?
Choosing a condo over the alternatives means doing research and knowing exactly what the potential home buyer’s needs are. Some of the most important factors to consider include:
- Needs vs wants
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