Most people aren’t aware of the differences between renting a condo and renting an apartment unless they experience living in both them. The general impression is that condos are are easier to maintain over apartments and have more services available to them.
A quick look on condos and apartments will quickly show the differences of both of them. Let’s take a look at some of the details of a condo and an apartment to see which among the two would better fit your lifestyle.
What is a condo? What about an apartment?
While it seems that condos can share the building with business establishments and their offices, a condo is a definitely an area of residence equivalent to a house. Most condos have the same features as houses and can even include a garden or a porch.
So, basically a condo and an apartment are real estate properties. Both are shared properties that are parts of a building and they are considered as individual living units. In a condo, each unit is owned and most of those living in condos are the owners of each unit.
Therein lies the main difference– a condo is typically an owned property. While there are condo owners who lease their units to others, most condos are actually being leased as rent-to-own type. The apartment is a rented property and it is rarely ever owned by the tenant. That is the main difference between the two.
Renting an Apartment: Pros and Cons
Let us take a look at a more detailed description of how it is to live in an apartment. The following are the advantages of renting an apartment:
There is more flexibility in terms of choosing a short-term or a long-term lease. Some apartment owners allow monthly payment which gives you the chance to move whenever you want at a short notice. It is a good option for those who move from one place to another as a part of their lifestyle or job.
There is no need to worry about maintenance in an apartment. It is the owner’s responsibility to shoulder the problem promptly. This is an advantage especially if money is tight and unexpected repairs suddenly pop up.
Lower initial expense:
There is a lower upfront expense when choosing to live in an apartment as the owner asks only a security deposit of two months and an advance rent of one month.
Not a long term investment:
Since you are just renting, you pay for each month or year you live in there. There is no long term investment in it.
No tax advantage:
There are no tax deductions in renting an apartment.
Apartment owners have the option to increase the rent when they feel the need and if you are not amenable to it, then you go through the hassle of moving out and finding another place to stay.
There is less stability in an apartment as you have no control on some matters such as when owner decides not to renew your contract.
There is lack of freedom in an apartment as some owners will have their own restrictions such as no pets allowed, no noise, etc.
Buying a condo: Pros and Cons
Just like living in an apartment, living in a condo has its own pros and cons:
Long term investment:
It is cheaper to buy a condo because the unit eventually becomes your property which you pay at affordable terms. There may be higher upfront costs such as paying for its equity and processing fees for its purchase but the monthly payments are typically priced at a lower rates and the unit becomes an investment when you finally pay it off.
The monthly mortgage payments that goes with having a condo is fixed throughout the number of years that you are going for pay it.
Freedom to upgrade:
The property is yours and you are free to do what you like within its walls provided you do not disrupt other portions of the building.
A condo is a real estate property so, each time you pay for it, you are investing with the hope of getting your cash back with a little mark up when you sell it. Along with that, you are qualified for tax deductions such as property tax and mortgage interest.
The cons of having a condo:
Condo owners pay homeowners’ association fees because condo owners are considered business partners in that shared community. It may be a monthly fee of $300 a month so make sure you know the fees beforehand.
The possibility of paying additional fees to cover up shortage whenever some members are delinquent in paying as well as other fees determined by the building.
Unlike an apartment, owning a condo means taking care of your own maintenance. While apartment owners don’t have this problem, it is the condo owner’s responsibility to maintain his own unit.
Long term value
Investment-wise, condos appreciate in value slower than the typical single-family homes as there is no land associated with it. Also, it is difficult to sell a condo for this same reason. But then, real estate markets can fluctuate and there is a possibility that you may have to sell it at a loss.
Given this information, whether to rent an apartment or buy a condo, you are now in a better position to decide which option is the best for you. Though buying a condo may seem like the better option since you are ‘investing’ in something and your monthly payments are actually adding to your investment (not a benefit you get when renting an apartment) you need to do some extra research to ensure you profit from your investment. Not all condos go up in value as time passes.
Many factors affect the decision of rent vs. buy. some people even have to use an online rent vs. buy calculator to make sure they arrive at the best decision. Other factors that need to be considered are the rents on where you live, current mortgage rates of condos, an estimate of the increase in rents, an estimate of condo price appreciation, tax rate, and other information. Don’t forget to take potential legal implications to heart when making any transaction. Always speak to an experienced real estate attorney near you before buying, selling or renting any real property. In the fast growing rental estate market, sometimes renting an apartment can be a better option than investing in a condo.
Robert Aronov & Associates, PC 88-02 136th St, Jamaica, NY 11418 (718) 206-1555 https://realestatelawyernys.com