The Pros and Cons Of Buying a Condo
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Summary:
Buying a condo can be a great option for first-time home buyers, those looking to downsize, or anyone interested in homeownership without the burden of property maintenance. However, living in a condo community isn’t for everyone. For example, you’ll need to abide by condo association rules, live in close proximity to your neighbors, and pay monthly HOA fees. It’s definitely worth your time to consider the pros and cons of buying a condo before you make a purchase.
When you’re ready to become a homeowner, you have a lot of choices to sift through — townhouse, duplex, single-family home. A condo (short for condominium), is another option to consider, and there are a number of reasons why condo life might be the right fit for you.
On the other hand, there are some possible drawbacks to living in condominium communities that homebuyers should be aware of before signing up for condo living. Read on to learn more about the pros and cons of buying a condo and some additional issues to consider before deciding to live in a condo. But first, let’s clarify what a condo is.
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What is a condo?
A condo is much like an apartment, except that you own the unit, meaning you can build equity and resell it down the road. Similar to apartments, condos are individual living spaces within a larger building or complex of buildings. You may have neighbors above, below, or next to you.
Condos also include a number of shared areas, which can include lobbies, clubhouses, swimming pools, green spaces, elevators, hallways, and parking garages. Owners of condos contribute monthly maintenance or HOA fees to pay for the upkeep of the building, grounds, and common areas.
In addition, a condo’s association team handles the management of the condominium complex and oversees the covenants, conditions, and restrictions (CC&Rs) that apply to the property and spell out the HOA rules. As a condo owner, you’re required to abide by the association’s rules in order to live there.
Some questions to ask yourself before moving into a condo living situation include:
- How do you feel about living in close proximity to your neighbors?
- Can you afford the monthly HOA fees?
- Can you live with the HOA rules that you are required to follow?
- How many units are available for sale and how many are being used as rentals?
- What is the condition of the unit you want to buy and the condo complex itself?
Pros and cons of buying a condo
As with any home-buying situation, it’s important to be aware of the advantages and disadvantages of a real estate purchase. Condos have their own set of perks and drawbacks that future homeowners should be aware of.
Pros explained
Maintenance services
Possibly one of the biggest advantages of living in a condo community is that you’re not responsible for maintaining anything except what’s within your four walls. There are crews to handle the duties of, among other things, landscaping, snow removal, gutter cleaning, and the maintenance and repair of all common areas.
This is a huge perk for condo owners that don’t have the time or desire to handle the ongoing home maintenance chores that owners of single-family homes are responsible for.
Amenities
Another big plus that comes with buying a condo is the amenities. Many condo communities offer luxuries such as swimming pools, tennis courts, an on-site gym, or a heated parking garage. They might also have other meeting and entertainment spaces, among other amenities.
These common areas also give homeowners the opportunity to meet and make friends with other residents of the condo building.
Ability to build equity
When you lease an apartment you pay rent to the landlord. However, when you own a piece of real estate, your mortgage payment goes toward building equity in the home.
This is especially beneficial for first-time buyers who want to build equity and save for a down payment to eventually buy a bigger place or a single-family home. And, if the housing market goes up, the condo owner could stand to make a profit on top of the equity built up in the home.
Location
Many condo buildings are located in cities or highly-populated areas. (After all, you don’t see a lot of detached single-family homes in downtown areas.) This means you’ll generally have easier access to shopping, dining, concerts, events, and public transportation. This is great for people who want to enjoy all that city life has to offer steps from their building.
IMPORTANT! When you live in an urban area where you can walk to the theater, restaurants, museums, and shopping, you can fit in a lot more exercise than those who need a car to get around.
Security
Most condos offer some type of security that helps residents feel safer in their homes. Security features could include gated or locked entrances, call boxes, door personnel, and security patrol. Plus, knowing the people who live around you can bring an added sense of security that neighbors are nearby if you need help.
Can make home improvements
Apartment living generally means that you’re stuck with what you get. This is not the case when you own your own place. Condos offer significantly greater independence than an apartment because you can customize it to your needs and wants.
In that respect, you’re just like the average homeowner in a detached house except you don’t have to handle the exterior maintenance and repairs of a single-family home.
Sense of community
Part of the condo lifestyle, if you choose to participate, is getting to know your neighbors and having a shared sense of community living. At the very least, you’ll run into each other in the halls, at the mailboxes, or in other common areas.
Plus, because you have a shared ownership of the condo building, there’s a financially vested interest in how the place is managed, which can bring people together.
Affordability
In general, condos tend to be priced lower than single-family homes. According to 2022 data from the National Association of Realtors (NAR), the median price of an existing single-family home is $376,700, and the median cost of an existing condo unit is $321,600.
Of course, this can vary widely depending on where you live. However, the main reason condo prices are cheaper than your average affordable single-family home is that you don’t own the land underneath the building; you only purchase the unit itself.
You also have the advantage of potentially cheaper insurance, though this (again) can vary by location). This is because your coverage doesn’t have to include the building itself. Typically homeowners insurance for a condo only needs to cover what’s within your four walls. The HOA’s insurance policy should cover the condo complex itself including all common areas.
Pro Tip
“It is important to check with your insurance agent and condo association to determine which type of coverage you need,” says Jon Sanborn, licensed realtor and co-founder of SD House Guys. That way you can make sure your homeowners insurance fills any gaps the HOA’s insurance policy doesn’t. To get a better idea of what homeowners insurance may cover, take a look at some of the policies below.
Cons explained
Maintenance fees
The extensive on-site maintenance doesn’t come cheap, which is why you have to pay maintenance fees. Several people are needed to clean, repair, and maintain the condo building and (often) costly amenities, and that money comes out of your monthly HOA fee.
This can significantly add to the total cost of owning your condo unit. In some cases, the added expense of monthly maintenance fees can make owning a condo too expensive for some people.
Privacy
Not surprisingly, condos tend to have less privacy than detached single-family homes. You may have units above or below you, and you may even share walls with an adjoining unit. This could be a problem if you have noisy neighbors who have kids, pets, or stay up at all hours.
Pro Tip
If you’re concerned about noisy neighbors, try to visit the unit in the evening or on a weekend when more people are around and you can better assess the noise factor. If you view the unit at 2 p.m. on a weekday, the complex may be largely unoccupied and therefore quieter than usual.
Homeowners association rules
Condos generally don’t allow you to have as much autonomy as you have in single-family homes because it’s a shared community. This means you have to agree to follow the rules and regulations of the homeowners association.
For example, there might be rules regarding the number, breed, or size of pets, noise restrictions, and rules on how you can use shared spaces. Make sure you’re comfortable with the condo rules before you make that down payment and move into a situation you’re not comfortable with.
No land ownership/lack of green spaces
As mentioned, when you buy a condo, you own only the unit and not the land it sits on. To some, this could be a plus because it frees you from having to deal with maintenance issues. On the other hand, if you want to have a yard for your kids to play in, or a garden to grow vegetables, you may have little to no green spaces in which to do so.
Resale challenges
It’s not a hard and fast rule, but it can be more difficult to sell your condo than it would be to sell a detached house. For one thing, there may not be as many buyers since a lot of people looking to buy a home want a yard for their children or don’t want their neighbors quite so close.
There may also be issues with the association that manages the condo buildings. If there were pending legal issues, for example, that could scare off potential buyers. Another problem could be if a significant proportion of the condos are owned by investors who use them as rental properties. Talk to your real estate agent about your concerns and they can walk you through the potential issues.
Minimal storage/limited parking
Most condos don’t have a lot of extra room in terms of storage space or parking spots. In most cases, you will have a small storage unit and one allotted parking space. In some urban areas, you may not have a parking space at all. If you need a car, finding street parking can be difficult and finding a place to store it can be very expensive.
Other considerations before buying into condo living
Even if you find a condo unit you love, in a location you want, and for the price you’re willing to pay, dig a little deeper before you plop down a hefty down payment.
Read the condo association rules and regulations
Know what you’re getting into before buying a condo. Purchasing a detached house can be fairly straightforward — you buy the house and the land it sits on and, within reason, you can pretty much do whatever you want with it. Condo living is a bit more complex.
Ultimately, if you discover that you can’t live with the restrictions imposed by the association, you may want to think about buying a different type of property, like a townhouse or duplex, or at least choose a different condo complex.
Talk to the neighbors
If you have the opportunity, talk to some of your potential neighbors. They can be one of your best resources to find out what it’s really like to live in this community, how noisy it is, if most of the units are owner-occupied or rented out, and other details. They may also have some insight into how well the building is managed and its overall financial health.
Financing
While financing a condo should generally be as straightforward as getting a conventional loan for a house, there could be a few complexities.
“On one hand, condos are often in more desirable locations near public transit or other amenities, making them attractive investments for lenders,” explains Shaun Martin, Owner and CEO of The Home Buying Company. “On the other hand, lenders may be more apt to require higher down payments and credit scores for condos due to their shared ownership structure.”
In any case, Martin says, “It is important to work with a reputable lender who has experience working with condos in order to get the best financing terms possible.” Start comparing your options using the lenders below.
FAQ
What happens if you don’t pay condo association fees?
Paying HOA fees is part of your agreement when you buy a condo. If you fail to pay, you can face legal consequences. At the very least you could be subject to late fees, interest charges, or collection measures, which can negatively impact your credit score. In more extreme cases, you could be subject to eviction or foreclosure for failure to pay your HOA fees.
Key Takeaways
- Buying a condo can be a great way to own your own place without having to deal with exterior home maintenance and repairs.
- Condos offer great amenities, security features, and desirable locations. You can also build equity in a condo, which is typically more affordable than a detached single-family home.
- Be aware of total monthly costs, like maintenance or HOA fees — they can really add to the total cost of owning the condo.
- Some downsides to condo living include lack of privacy, no land ownership, and potential difficulties when you want to sell.
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