The Pros and Cons of Buying a Condo
A condo could be a great investment for your future, but is it the right investment for you? Condos help you build equity, offer instant community, and cost less up front than houses, but be sure to weigh the hidden costs and other drawbacks before you buy.
Condos are great introductions to homeownership. A condo is usually larger than an apartment, and it comes with many of the same benefits that owning a house does. An affordable condo gives you the opportunity to own your own place and build equity. That said, condos have their downsides. You need to weigh the pros and cons to determine if condo life is the right choice for your financial situation, long-term investment goals, and personality.
PRO: Condos save you money on maintenance.
Condos are part of a community. Consequently, you share more than walls with your neighbors. And everything you share, including the roof over your head, landscaping, parking facilities, and amenities like a pool or a gym, is maintained through your homeowners association (HOA) fees. That’s money you don’t have to lay out individually for keeping the property in order.
CON: Steep HOA fees in condo communities can outweigh the financial benefits.
Condo communities may have gyms, swimming pools, community theaters, and play areas that require expensive maintenance. All these extras mean you have access to amenities you may not have in a single-family home, but they drastically raise the monthly HOA fees. As a result, although a condo may have fewer up-front costs, the monthly expenses may end up being higher than you anticipated.
PRO: Condos typically cost less than a single-family home.
Condos are typically inexpensive compared with single-family homes, making them attractive to first-time buyers, retirees, and investors. They’re also great for easing your way into property ownership without having to immediately take on the expense of and responsibility for maintenance.
CON: A condo’s value may not increase like that of a single-family home.
Dollar for dollar, the value of a single-family home usually goes up faster than a condo’s. The primary reason for this difference is that a condo’s value depends on a few factors that are out of your control. For example, if the HOA is poorly managed and the exterior of the building isn’t properly maintained, the value of your condo won’t rise. Additionally, values often drop in condo developments where most of the units are rented rather than owned, because renters tend not to take care of the property as carefully as owners.
PRO: HOAs handle exterior and yard maintenance.
When you own a condo, if a stiff wind blows off shingles, it’s not your problem. If a tree falls over, it’s not your problem. If the sidewalk needs replacing, it’s not your problem. Your HOA fees pay for the work of outdoor maintenance, including both the building exterior and the grounds. This can be especially appealing to those who want an attractive yard but don’t want the hassle of caring for it. Similarly, families with small children may appreciate access to a pool without having to fork over the money and time needed for maintenance. Although you’re paying for the maintenance with your HOA fees, you aren’t responsible for doing it yourself or making arrangements with professionals to get it done.
CON: Poor HOA management could reduce the value of your condo.
The quality of HOA management affects the value of condos far more than it does the value of single-family homes in a planned community. If the condo HOA drags its feet on big-ticket repairs, such as fixing a deteriorating roof, or if it lets the lawn go to seed, your unit will not maintain its value. Unfortunately, unless you’re on the board, you have little control over the effectiveness of your building’s HOA. If it’s not doing its job properly, your condo could lose value through no fault of your own. Before buying, research the values of other units in the development as well as in surrounding properties, and check the ratio of owners to renters. The more resident owners there are and the higher the value of the surrounding properties, the better the chances that the condo’s value will rise. While you’re doing research, it’s also a good idea to ask the seller or other current owners about the HOA’s track record.
PRO: You live as part of a community.
When you live in a condo, there’s always a neighbor to visit, children around for playdates, and people to offer support. Older couples ready to downsize may enjoy the amenities a condo offers as well as the company of people at a similar stage of life. Young families and families in the in-between years have greater opportunities to make friends too.
CON: You live as part of a community.
In a condo, your neighbors are very close. If you don’t get along or if they have annoying habits, you can’t escape. They’re always right there in the next unit, down the hall, in the lobby, or on the elevator. The neighbor on the other side of the wall who plays loud music at 1 a.m. or that guy upstairs who seems to invite a herd of elephants into his apartment every weekend—those are annoyances that can make condo life unbearable, and that you don’t have to deal with in a single-family home.