Condo vs. Apartment: What’s the Difference, and Which One Is Right for You?
Identify the key differences between an apartment and a condo as they relate to ownership, cost, maintenance, and more.
The current real estate market is making it difficult for many individuals to afford a single-family home or a townhouse. In most areas, condos and apartments are more affordable solutions for those looking for a place to live.
However, if you’re confused about the difference between a condo and an apartment, you’re not alone. There are some important distinctions between these two property types that will impact which is the best choice for you. Continue reading to learn about the differences between condo vs. apartment living.
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Condominiums and apartments are both units within multifamily residential buildings.
What is a condo? Like an apartment, this type of property is an individual unit in a multifamily residential building. One reason that condominium and apartment complexes are frequently confused for one another is that they can look very similar. You often won’t be able to determine whether a multifamily residential building holds condo units or apartment units just by looking at the exterior.
Condos and apartments may also offer similar amenities to their residents. These shared amenities may include pools, gyms, tennis courts, playgrounds, or picnic areas. Another similarity between condos and apartments is that they often have similar rules or regulations in place. While these vary from one property to the next, they could limit residents’ ability to decorate outside of their individual unit, place restrictions on the use of common areas, or dictate parking policies.
The main difference between a condo and an apartment is ownership.
The most important condo and apartment differences relate to ownership. In most cases, an apartment resident rents their unit from a property management company or landlord. The entire building is owned by a management company or individual, and these parties lease each individual unit out. Condo units, on the other hand, are owned by an individual (or, increasingly, a company). Condo owners may choose to live in their unit, or they can lease it out and collect rent from a tenant.
When purchasing a condominium, buyers build equity in the same way they would by purchasing a single-family home. Equity—which is calculated by subtracting the current amount owed on a mortgage from the value of the property—can help build net worth, increase a condo owner’s profits if they decide to sell, and makes it possible to receive a home equity loan to cover repairs or other expenses. Each time a payment is made toward the mortgage on a condominium, the owner increases their equity.
Meanwhile, most apartment owners do not build equity. Their rent goes to the management company or landlord, who may use that money to build their own equity on the property.
Typically, it costs more to purchase a condo than to rent an apartment.
Also in most cases, the cost of owning a condo will exceed that of renting an apartment. Apartment renters are responsible for paying an agreed-upon monthly rent, certain fees, and a security deposit (typically equal to one or two months’ rent).
Those looking to purchase a condo have additional up-front costs that don’t apply to renters. For example, they need to provide a down payment for the unit (between 3 and 20 percent of the purchase price), pay for a home inspection, and cover closing costs.
Both renters and condominium owners need to pay for insurance. However, renter’s insurance is significantly less expensive than condo insurance. This is, in part, because renter’s insurance only covers an individual’s belongings inside the unit—not the unit itself.
Condo owners also face additional recurring costs, such as property taxes and homeowners association (HOA) fees, which don’t apply to apartment dwellers. HOA fees can vary depending on the condo’s location and its included amenities. Median HOA fees in the country are just under $300 per month, though they can be over $500 in some areas.
For both property types, maintenance and repair costs for shared spaces are covered by HOAs or landlords.
As mentioned above, both condos and apartment buildings offer shared community spaces, including gyms, pools, playgrounds, dog parks, and walkways. The landlord of an apartment building is responsible for covering necessary maintenance and repairs for these areas and the building’s exterior. For condominium owners, the HOA is responsible for covering these maintenance and repairs.
Individuals renting an apartment cannot be charged additional money to cover necessary repairs to amenities—though their landlord may choose to raise their rent when it’s time to sign a new lease. Condominium owners may face special assessments to cover unforeseen amenity maintenance or repair costs. The HOA dues owners pay cover routine maintenance, but in the event of an unexpected expense, the HOA may split the cost between the residents through a special assessment. This possibility is one of the cons of buying a condo.
Condo owners are responsible for in-unit repairs and improvements whereas landlords cover that for renters.
Another important difference between condos and apartments is who holds responsibility for covering in-unit repairs. Condominium owners are fully responsible for maintenance, repair, or renovation costs within their unit. However, apartment renters do not have to pay maintenance or repair costs for their unit (barring damages not covered by a lease). This responsibility falls on the landlord or management company, since they are the property owner.
An unexpected water leak, for example, could place a condo owner in a tight financial spot when trying to fix the leak and any resulting damage. In the same scenario, an apartment lessee would only need to contact their landlord, who would be responsible for addressing the issue.
On the flip side, condo owners enjoy more freedom in updating or personalizing the interior of their unit than most renters. As a renter, it’s up to the property owner to decide when or whether to make any renovations to the property. They’ll also be in charge of selecting paint colors, flooring materials, and more. Condominium owners can make all of these decisions for themselves and choose whatever colors or materials they desire.
It’s usually faster and less complicated to move from an apartment than a condo.
A final apartment vs. condo difference relates to the ease (or difficulty) of moving out. Whether someone is renting a micro apartment or a three-bedroom unit, they will sign a lease. The renter will be responsible for making payments for their unit for the period of time stated in the lease. After that lease is up, they can move out without any penalties. Knowing your lease end date can also make it easier to start looking for a new property. If a renter wants to move out of an apartment sooner than the end date of their lease, they can break the lease, but they’ll have to pay a fee (usually an amount equaling up to the remaining months’ rent left on the lease).
Moving out of a condo can be much more complicated. The owner has to secure a new buyer and find a new property to purchase or rent and move into. Getting the timing right for this transition to avoid paying double the bills or being left with nowhere to live after selling the condo can be difficult.
These condo vs. apartment differences generally make apartments a better choice for those looking for more flexibility with where they live, while condos may be the better choice for families or individuals who plan to live in one area for an extended period of time.
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