Moving into your first home is a big deal. And deciding which type of home is best for you is even more complex. While a REALTOR® can assist you in making this decision, it’s ultimately a personal one that you have to finalize based on your finances and lifestyle. There are three main types of housing options. Let’s break them down for you.
To condo or not to condo
What is a condo? Short for “condominium,” a condo is a private residence within a larger building or complex.
Condos might look like a lot of other types of real estate you may have heard of — like apartments, co-ops or townhouses, or even stand-alone houses — but condos have their own distinct features, rules, pros and cons.
Since a condo is part of a larger residential structure or complex, condo residents typically share certain common areas and amenities with their neighbour like a roof-top deck, gym or swimming pool. These amenities are enjoyed by all condo members without the need to maintain them on their own. Instead, condo owners pay fees to a board (typically made up of elected condo owners) who then handle the hiring of landscapers, pool cleaners and other professionals for anything that must be maintained or fixed. Condo fees vary depending on how many amenities are offered. Part of that fee goes into a reserve fund to cover things like paving, reroofing, replacing water heaters, exterior painting, hallway and lobby flooring and more.
Condo vs. apartment
While condos and apartments might look exactly the same — a residence in a larger building — the key difference has to do with who owns the property. Condos are homes you can buy, own and sell when you wish. Apartments are places you can rent, but do not own.
Another key difference between a condo and apartment has to do with property’s maintenance and repairs. With a rental, the apartment’s owner — often called a landlord — is typically responsible for any maintenance and repairs inside the unit as well as out. So for instance, if a renter’s faucet drips or they’ve got pest problems like mice or roaches, all they need to do is call the landlord to come fix the problem. Condo owners, in contrast, are responsible for any repairs or maintenance inside their unit.
Whether you should buy a condo or rent an apartment can be a tough decision, since each scenario comes with distinct pros and cons. For instance, renting an apartment is great if you’re not sure how long you’ll stay in the area, or don’t want the hassles of maintaining your residence.
Buying a condo, however, makes more sense if you plan to stay in an area for at least a few years, and are willing to maintain your property (by paying repair professionals or by doing the work yourself).
Here are some other factors to consider:
1. Cost Condos are meant to be purchased. Even if you get a mortgage, condos will typically require a down payment. If you lack a chunk of money to offer upfront, then you’ll probably have to rent, which typically requires lower upfront costs (like first month’s rent and a security deposit). But depending on the inventory available in a particular area, the monthly costs of renting vs. owning could be similar, so it’s worthwhile talking to a REALTOR® about your options.
2. Home equity The main advantage for being a condo owner over a renter is that condo owners gain equity in their real estate over time. As they slowly pay off their mortgage and owe less on their property, they own a bit more of their condo free and clear, month by month. Once the mortgage is fully paid off (which can take up to 30 years), they own the property in full. This is in stark contrast to renting, where you pay your landlord rent every month but do not gain equity.
3. Freedom Condo owners are able to make changes to the property from painting the walls to renovating the kitchen. Meanwhile, renters are not allowed to make any permanent changes without their landlord’s permission.
4. Housing quality Since homeowners tend to care more about their property than renters, condos tend to be better built and maintained than rentals.
Condo vs. house
But what if your real estate debate is whether to buy a condo vs. house? While owning your own property and building equity are common to both, there are distinct differences between these two popular residential options. The benefits each can provide to you and your family need to be carefully considered.
1. Price Condos can be more affordable than a house, and are thus great starter homes for younger home buyers. To figure out how much you can realistically spend, try using an online home affordability calculator.
2. Location If you want to be in the heart of downtown, condos will be more prevalent. Single-family homes at around the same price could be found, but likely farther out from metro centers with a longer commute.
3. Privacy Having complete privacy is possible in a single-family house, while condo living means neighbours will be quite close. Condos may not offer private outdoor spaces, or even a balcony.
4. Freedom Many condo communities have strict rules about everything from paint choices to the hours when you can take out your trash. As a result, a condo complex isn’t a great idea for fiercely independent homeowners who don’t want anyone telling them what they can and can’t do with their property. Single-family home communities tend to be more lenient.
5. Maintenance With a house, the homeowner will have to take care of all maintenance on their own, whereas condos include maintenance fees that cover landscaping and (sometimes) exterior maintenance on the unit. So condos are ideal for people who want to own a piece of real estate but don’t want to worry about yardwork and repairs.
6. Budget How much do you want to spend on the property? Condos are usually more affordable than a house. Give this point considerable thought. The last thing you want is to overextend financially.
When you’re ready to move into your own home, a professional REALTOR® is available and ready to help.