What is a condo? For starters, a condo is not the same thing as an apartment.
While condos and apartments share similarities, both are unique and suitable for different types of homebuyers.
Overview of Condos
The fundamental difference between condos and apartments comes down to ownership.
First, a condominium, or condo, is a collection of units that are each owned individually. This is similar to homeownership; however, the unit owners live in a shared building as opposed to on their own plot of land. Condo owners may decide to reside in their units or lease them out, making them the landlords of their property.
Condominiums are managed by homeowners associations (HOA). Each unit owner is a member of HOA and is required to pay monthly fees which enable upkeep and services provided to the community. These services may include external maintenance, garbage removal, and the upkeep of amenities, such as a pool or gym.
Homeowners Associations are also responsible for establishing the rules and regulations that residents must abide by through governing documents. These documents are formally known as the Covenants, Codes, and Restrictions (CC&Rs). Before moving forward with a purchase, it is critical that prospective buyers thoroughly examine these CC&Rs to have clear expectations of resident guidelines.
Condos vs. Apartments
While condo units are independently owned, apartment units are all owned by one person or company and located in a single building. The owner of the building often hires a property manager, who is responsible for much of the unit maintenance and management. This means that they will take care of leasing out units, purchasing large appliances, and ensuring the units are up to code.
Apartment tenants pay a monthly rent, without accumulating any equity during their residence. On the contrary, condo owners set themselves up with an investment. The monthly mortgage that they owe on the house obtains ownership over their property and the potential to sell later and profit on their unit.
Many house hunters find themselves drawn to condominiums because of the impressive amenities offered. In general, condos offer a more extensive list of amenities than apartment buildings. Many luxury condos boast valet-service, coffee shops, concierge, spas, and even more. While these services are tempting, keep in mind that they will increase the costs owners and renters end up spending.
While it is possible to find a sense of community living in both apartments and condos, condo communities tend to promote greater opportunities for neighbors to get connected.
First, condo residents tend to stay put longer than those living in apartments. The lower turnover rate in condo units helps strengthen neighborhood relations.
Additionally, each condo owner’s HOA membership further promotes community. Residents have an easy opportunity to come together to get to know one another and discuss community visions, goals, and guidelines.
Now that you can answer ‘what is a condo?’, you may be better able to answer whether this is the right investment for you. If you are ready to find the perfect condominium, find an experienced broker to help with the process today.