Everyone knows what an apartment is. Everyone knows what a house is. But what exactly is a condominium? What is the difference between a condo and an apartment? What is the difference between a condo and a house? It mostly comes down to ownership and property type.
The very first condos were built in 1960 in Salt Lake City, UT. The pilot program was a big driver in passing the Housing Act of 1961. That allowed the Federal Housing Administration to back mortgages on condos. That had not been the case prior.
From there, condo living took off. They first gained significant popularity in the early 1960s in Miami and South Florida. They were particularly popular among snowbirds and retirees from the Northeast Corridor.
What is a condominium?
Condo, of course, is short for condominium. It’s Latin for “together with right of ownership,” which covers generally what such a property is. In short, it’s largely an apartment you own. The individual tenant pays the mortgage or the owner owns it outright.
Commonly, a condo is part of a larger complex or residential building, much like an apartment. And each individual unit is owned by a unique individual person within a larger community.
And within that, you own your living space, but not the exterior, common areas, building amenities or even possibly the connecting walls. You own everything from the paint on the walls inward. It has been described as “owning the air” inside your home, but not the rest.
But can you rent also rent a condo? Yes, you actually can, and that is covered below.
Who can benefit from being a condo owner?
While condos and apartments are similar, condos can be more beneficial for certain categories, lifestyles, ages or demographics. Since you own the property, residents in condos tend to be less transient than apartment renters. Condo residents stick around their investment.
So who can benefit from buying a condo?
- People looking to downsize and purge excess stuff and the space to store it
- First-time home buyers who can build credit or own for cheaper
- Singles or newlyweds who don’t need as much space
- Empty nesters with extra bedrooms no longer being used
- Vacationers who frequent a particular area often and want their own place
- People wanting to own their home but are uninterested in keeping up with repairs or landscaping and having to cover maintenance costs
Differences between a condo and an apartment
There are obvious differences between condominium ownership and apartment renting. It’s owning versus leasing at its core. But the physical differences from apartment living within your four walls are minimal.
Without knowing if a unit is an apartment or a condo, it would be nearly impossible to differentiate when walking through the front door. Floorplans can be identical. Often condos look newer or more updated since the owner is the tenant and there are financial and livability reasons to modernize or create more interesting space. But otherwise, not much difference.
Similarly, one major instance that is different is interior apartment maintenance responsibility. If the toilet clogs or the refrigerator dies, all a renter needs to do is call or text the landlord. That is the responsibility of the property manager. For condo dwellers, however, that repair is their responsibility just as it would be for any homeowner.
Outside the home, as in many an apartment building or complex, individual homeowners and renters alike have common rights to common spaces. These locations on the property but outside individual units are shared by all. Nevertheless, it is more common for condos to have more extensive amenities than apartment buildings.
But the financial cost of upkeep of such spaces – and services like trash, landscaping and snow removal – differ. Such repairs and maintenance costs for apartment renters are the financial and process responsibility of the landlord. That’s what you pay rent for. For condo owners, the burden of those costs is shared collectively by all the owners of other units through condo association fees and assessments.
Homeowners Association fees and assessments
One of the biggest differences between renting an apartment and owning a condo is the existence of a Homeowners’ Association, or HOA. HOAs are overseeing committees made up of complex or building condo owners who have been elected to various board positions. This committee acts as a mini-government. It is charged with deciding and enforcing the community rules as well as charging and collecting condo fees from each tenant to cover shared community responsibilities.
When you rent, things like exterior repairs, waste services, amenity maintenance and upgrades are your landlord’s concern. That’s part of your rental agreement. But when you own a condo, you are beholden to your HOA for such expenses. Individual homeowners have shared rights to common areas, but are also responsible for the money required for their upkeep.
Covered items include:
- Common areas like hallways, entranceways, elevators and parking spaces
- Amenities like swimming pools, game rooms, co-working spaces, tennis courts, front desks, clubhouses, gyms and a dog park.
- Services like snow removal, landscaping, security and trash collection
- Maintenance of grounds, buildings and infrastructure
- Community events like parties, voting precincts, holiday gatherings and tenant meetings
Monthly HOA fees are charged to every condo owner on the property. Fees can range from $100 to $1,000 a month but typically fall in the $200 to $300 range. Dues are often raised every year or so to account for inflation.
And sometimes, larger issues come up. If the building needs a new roof or new elevator or a major plumbing repair, HOA may then charge owners additional payment to cover capital expenses. These are known as assessments.
What differentiates a condo vs townhouse or similar homes?
Walking into a unit, one would have trouble discerning an apartment-style condo from a traditional rental property. The difference is in the ownership, not the physical traits. But, as mentioned, condo owners tend to keep their units more updated and unique than apartment leasees. For the most part, no one is keeping you from remodeling the inside of a condo as there would be for an apartment.
But not all condos need not be stereotypical apartment high-rise buildings or complex living spaces. They could be townhomes, rowhomes, detached units, single-family homes, lofts or even former commercial warehouses. Any structure with multiple units can “go condo.” It all depends on the ownership structure.
Pros and cons for condo owners
Like any living space, you’ll find good parts and bad parts of where you choose to reside. But condos have a different and unique ownership structure. It’s also a different kind of community and offers different rules. Condos are their own animal and come with unique pros and cons.
Pros of renting a condo
- Condos may be a better value in the long term than apartments. Buying a unit builds the owner’s equity and has a finite end-of-payment date, or can be paid off in full. Renters are paying monthly rents that continue until they choose to leave.
- They may also be a better value than buying an equivalent home like a townhouse. As recently as the end of 2020, the median price of a condo was over $42,000 less in purchase price than comparable single-family homes.
- There are much fewer property upkeep responsibilities. This is beneficial for those uninterested in lawn care and landscaping, snow removal or maintaining a home’s exterior or property.
- Owners have (mostly) free rein to update, remodel or alter the interiors of their homes. Painting the walls, redoing the kitchen, adding smart automation or opening up rooms are all personal touches renters usually don’t have.
- Plus, there are often more extensive shared amenities in condo developments. Pools, game rooms, computer spaces, coffee lounges, rooftop decks and other luxury spaces are more common in condos (where the owner personally pays for such comforts) than in apartments (where it is the landlord’s responsibility).
- If you don’t mind having close neighbors, a condo community can foster a tighter sense of cohesiveness than apartment communities. It’s something often missing from transient apartments and from single-family home neighborhoods.
- Similarly, condo communities often house residents in similar stages of life. This includes communities where most owners are retirees or singles or young families.
- As such, homeowners tend to stay in one place much longer than renters. Condo living can foster community togetherness and build a sense of neighborhood long term.
- Within the rules, condos allow owners to mostly freely rent out their owned units. For renters, subletting – if even allowed – comes with a bevy of landlord-dictated restrictions.
- Condo property taxes can be much lower than owning a home as the land is not deeded to individual owners. The less square footage also minimizes property tax. These taxes are usually split among condo owners and added to HOA monthly payments.
Cons of renting a condo
- While landlords do set rules for renters, condo Homeowners’ Association rules and restrictions can be overwhelming. Whereas most owners can do as they please inside their homes, a property management company often sets strict rules for exterior spaces. The HOA can tell you what you can keep on your patio, how you use your outdoor space, what kind of windows you are allowed to have or what style of drapes you can hang. You may have to remove holiday decorations by December 26, or not be allowed to hang them in a private outdoor space at all. It’s all up to the whim of condo associations.
- HOA rules can also cover the interior. They can place strict noise limitations. They can decide how many overnight visitors you can have. They may restrict pets or certain sizes of dogs. They can even keep you from leasing your unit to an unapproved renter.
- There is a political reality of being part of an HOA. Your neighbors can control much of your daily life. This means it’s often necessary for owners to have active involvement in their condominium community HOA. Monthly meeting attendance may be mandatory. If that’s not your scene, that could be problematic.
- Condo owners can find a noticeable lack of privacy that comes with familiarity. Pools, gardens, workout equipment and parking lots must be shared with other residents.
- Finding financing to purchase a condo can be more difficult than a house. Potential owners may encounter higher restrictions on obtaining loans from the FHA or other lending services provided.
- On the other end, it can be more difficult to sell a condo when you decide to move. Condos are less desired by new homeowners generally. Potential buyers may not like the cost or oversight from the HOA. Or they may be turned off by not owning the exterior property. A real estate agent may not take on a property with questionable resale value.
- For small (or major) in-unit repairs, there is no landlord to call to take care of it. Failed hot water heaters, pest infestations or broken windows are the owners’ responsibility. And it’s not just cost, but having to find and schedule repair professionals, or make repairs on their own.
Can you rent a condo?
Just because condos are owned by individuals does not mean all tenants are owners. Like any property, condo owners can choose to rent out their units (within HOA rules). So for those looking to rent, condos are an option as well.
Most HOAs allow units to be rented, and they can often be a great option for renters. It can also be beneficial. When renting from a condo owner, you’re typically renting from a sole proprietor, the same property manager and not a large conglomerate.
With that, rents may be lower, making condos cheaper. You’ll find less red tape and fewer concessions in leases. Repairs might be taken care of more quickly. And a personal relationship with the person in charge of property ownership can lead to a better rental experience. It is certainly in your favor to mail the monthly rent to someone you know and not a giant LLC or property management company leasing office. They might even cover the HOA expenses.
There are benefits to being either the owner of a condo or leasee of an apartment. Both can be what is just right for you. If you are looking for a condo to rent, or any unit, check out all the great properties available on Apartment Guide.