Condo vs House Which is a Better Investment?
For the average American, investing in real estate has historically been one of the most surefire ways of earning a positive return.
Within real estate however, there are several alternatives to consider, such as a single-family home (the most common), a multi-unit home, condo and so on. Before purchasing anything, however, partner with a qualified realtor to streamline the process and make sure you are getting the best deal possible.
Let’s compare the two most purchased property types: a condo and a house. Although there are many similarities, there are also key differences between a house and a condo. So, which one is a better investment for you?
Read on to find out.
What Exactly is a Condo or Condominium?
The term condominium is derived from the Latin words “con” (meaning “together”), and “dominium” (meaning the “right of ownership”). A condo or condominium is a privately owned unit in a series of multiple units. In simple terms, it is an apartment in a society or complex. Under it, the common areas like the stairs, walkways, walls, floors and outdoor spaces are shared or jointly owned. The outdoor areas usually include parking spaces, a clubhouse, a gym, swimming pools, etc. All these are kept up and maintained by an HOA (or Home Owners Association).
Condos are usually compact, and have smaller square footage as compared to houses. Now that we have used the term house, let’s get acquainted with the concept of a house.
What is a House?
A suburban home surrounded by trees with a lawn to mow is what most people think of when they hear the word “house.” But obviously, a house, or “single family home” can have any aesthetic or look. The important distinction here is that It is a free-standing residence separated from other residential structures by its own four walls. Most houses also have a yard or a garage.
Condos vs. Houses: Key Differences
Condos and houses are both types of residential properties owned by individuals and both require a property tax. Apart from this, almost everything about the two property types differ. Below are the key differences between condos vs house:
The costs of buying a condo vs a house are vastly different. Condos are almost always less expensive than a house in the same market, although location can greatly impact the costs. A condo in a prime neighborhood, may actually end up being more expensive than houses.
Another critical aspect to consider when it comes to costs is the HOA fees of maintenance. The outdoors and common areas of condos are maintained by HOA for monthly fees paid by owners. It is essential to know the HOA fees so you are aware of all-inclusive costs when you buy them.
The insurance is relatively pocket-friendly for condos as quite a lot is covered by HOA. On the other hand, owners of single family homes must pay for insurance on the entire structure–from foundation to roof. In the case of condos, all the exterior aspects are covered by HOA and only the interior needs to be covered by owners.
This is one of the major differences between a house and a condo. If you purchase a single family home, you are responsible for the maintenance. You must mow your own lawn, fix things and make repairs for things that are broken all by yourself. In the case of condos, the individual owner simply needs to take care of the interior, while the external areas like recreational areas, streets, stairways and so on are taken care of by the HOA (in exchange for a monthly or annual fee). The building plumbing, water supply, electricity, and garbage disposal are also covered by the HOA.
In a house, you are solely responsible to install, pay and maintain for the amenities that you want. Whereas in the case of condos, amenities like a pool or gym are jointly funded by the community, which reduces the expense and makes it more affordable to enjoy these perks.
Houses are usually located in less densely populated areas and offer more space and better privacy. On the other hand, the nature of condos makes them higher density. Oftentimes, condos are located in more central or higher traffic areas, which comes with less privacy, but may also come with some added convenience.
6] HOA Rules
When it comes to condos, there are some strict rules and regulations, which ought to be followed by owners. These could include rules about having pets, where to park, and so on. If you want to purchase a condo, you should familiarize yourself with the rules first, and only go through with the purchase if you are willing to adhere to them. In the case of houses, there can also be neighborhood HOAs with certain rules, but they are typically less restrictive and offer more autonomy.
Selling a house will most likely be easier than selling your condo. The biggest reason for this is that there are just typically more people that want a single family home. In the case of condos, you will also have to consider the HOA and their restrictions when it comes to prospective buyers. However, selling largely depends on the condition of your house or condo and the listing price.
Condo vs. House: Lifestyle Pros and Cons
There are positives and negatives to both property types, which can make it difficult to choose. So let’s breakdown some of the pros and cons of condo vs a house:
A] Affordable: One of the major pros of condos that make them a popular choice is their affordable price. Condos are pocket-friendly as compared to houses, and can be ideal for first-time buyers.
B] Less maintenance: In today’s fast-paced world, it can be difficult to find the time or energy to maintain a house. With condos, the majority of the maintenance is outsourced, as the HOA undertakes the property upkeep.
C] More amenities and perks included: With condos, you get access to facilities like a gym, pool, and a clubhouse, for a low price as expenses are shared by the community. If you were to install these perks in your house, it would cost you a fortune!
A] Fees: The fees charged by the HOA are mandatory, and fixed by the board of directors. Though there are opportunities to vote on certain things, as an individual owner, you have very little say in it, yet you have to pay them annually or monthly without fail.
B] Less privacy: If privacy is a concern, living in a condo that shares walls with your neighbors would be less than ideal.
C] Rules: You need to adhere to the rules laid down by the HOA, and can’t make abrupt decisions about customizing your condo in certain ways. The rules can even make selling difficult.
A] Autonomy: You have the freedom to customize and change your house as you want, within the restraints of your local jurisdiction’s ordinances.
B] Privacy and space: Houses are larger, and offer you more space to call your own. In addition to this, neighbors’ homes are separated, so you won’t have to share walls.
C] Easier to sell: With no barriers imposed by a third party, you can put your house on sale and usually have more prospective buyers than you would with a condo.
A] Expensive: As compared to condos, houses are more expensive.
B] Maintenance: Your house is entirely your responsibility. You will have to upkeep the indoors and outdoors, which will take time, effort, and money.
C] Lack of built-in community: Sometimes, the pro of privacy can end up turning into a con of isolation. You might miss out on some of the built in social opportunities of having a community so close to you.
Are You Looking to Buy a House or a Condo?
Hopefully, this helps you choose between living in a condo vs living in a house. Each of the two has their own benefits and downsides. So in reality, in the end, it all depends on your preference, and the lifestyle you envision for your next chapter.
We hope you have found an answer to the question: should I buy a condo or a house? And the good news is that no matter which property type you choose, an expert realtor can help you find the perfect fit. Contact Jessica Bush today, to start your home-buying journey the right way.