WHAT IS A CONDO?

Article Courtesy of  BANKRATE

By Jennifer Bradley Franklin      

Published October 6, 2019
 

For some house hunters, the thought of maintaining a house and a yard conjures up anxiety. Luckily, there are different kinds of properties to choose from that don’t entail a lot of upkeep — and come at a reasonable price to boot. One of those options is a condominium.

Not sure if buying a condo is your jam? Here’s a primer on condo living to help you decide.
 

What is a condominium?

A condominium, called “condo” for short, is a privately owned individual unit within a building of other units. Condo owners jointly own shared common areas, such as pools, garages, elevators, outside hallways and gyms, to name a few. While condos are typically found in high-rise buildings, you can find detached condos in some markets.

“A homeowners association typically manages the common areas and oversees the covenants, conditions, and restrictions (CC&Rs) that apply to the property,” explains Holly Leonard, a real estate agent and owner of Haven Real Estate Brokers in Atlanta. “Condominiums are often referred to as a ‘common interest development.’”


 

What is the difference between an apartment and a condo?

Structurally, condos and apartments look the same and people often confuse the two. But the difference between a condo and an apartment is ownership. You own a condo and you rent an apartment. In some limited markets, like New York City, you can buy an apartment.

Both kinds of dwellings typically have multiple floors and units on each, with shared amenities and common areas, including (but not limited to) a gym, pool and parking. In some communities, condos can be rented to tenants, too.

Should I rent or own a condo?

Your finances will be the main deciding factor that answers this question. As in any home type, when you buy a home you’ll need a large sum of money for a down payment, as well as closing costs, says John Ameralis, a licensed real estate broker with Compass Real Estate in New York City.

Renting a condo can also be a good opportunity to test out a particular building or area of town before making a long-term ownership commitment. “(Renting allows an) individual to experience living in a condo to see if the ‘condo life’ is something they want to invest in,” Leonard says.

Pros and cons of living in a condo

If you’re thinking of buying a condo, it’s important to weigh the benefits and challenges, so your decision suits your lifestyle and budget. Here are some top things to consider.

Pros
• Lower-maintenance living
Since most, if not all, exterior maintenance on condo buildings is handled by the HOA, “condos are best for buyers who don’t want the higher maintenance (responsibility) of owning their own house, such as mowing their lawn, fixing a leaky roof, etc. …” Ameralis says.
 

• Sense of security
Some condo buildings have security staff, and the entrances are more difficult to access from the outside than single-family homes or townhomes. “Many single people do not like living alone, and condo living makes them feel safer,” Leonard says. Depending on the building, you may have secure entrances and parking, a doorman or concierge, and other amenities that increase security and safety. This can also be a perk if you work odd hours or travel frequently.


• Opportunities to be social
Some condo communities and their respective HOAs organize social events like pool parties, barbecues and doggy playdates. And because you see your neighbors in hallways and in elevators, you’re more likely than not to meet them in person. “Condos are a great place to meet people since you are close to your neighbors, and this can provide a great sense of community,” Leonard says.


• Affordability
Because condos tend to be more compact and require less land than single-family homes, they can be a more affordable way to own property. Property taxes tend to be lower as well. For some first-time buyers, condos make ideal starter homes precisely because they don’t have the upkeep and maintenance of a detached home but you can still reap the benefits of ownership and building equity.


• Amenities
Depending on the condo community, you may have access to top-notch amenities like a grilling area, business center, pool, dog park, covered parking, clubhouse and more, and the cost of enjoying these perks is shared among all residents.

Cons

• Investment risk
“Condos can be a riskier investment because you are sharing ownership with other people in the building,” Leonard says. “If one person forecloses or short-sells their condo, it can take a toll on your value since you’re in the same complex.”


• Lack of privacy
Because condominiums share common areas like the lobby, hallways and amenities, a condo might not be for you if you value your privacy, Ameralis says. If you want more seclusion or you entertain frequently, for example, a townhouse might be a better option.


• Limited outdoor space
Condo buildings usually maximize real estate by building up, which often means there is limited outdoor or green space. “If you’re the kind of person who needs to park work vehicles at home or needs a lot of outdoor space for your work or pleasure, a condo may not be for you,” Leonard explains.


• HOA rules
One of the biggest complaints about living in a condo community is that HOA rules can be restrictive, providing guidance on everything from trash pickup and noise to what types of items may be stored on your patio and how many pets you can have. “(Read) the covenants and bylaws before buying a condo to make sure the rules won’t be a problem for you and your lifestyle,” Leonard advises, since breaking HOA rules can lead to fines.


• Rising HOA fees
In general, there are monthly HOA common fees and they go up over time to address building maintenance costs and any added amenities. It’s important to factor in the monthly cost of HOA fees into your home-buying budget, especially in more expensive housing markets. Keep in mind too that condo associations can enact special assessments on all homeowners in the development for unexpected expenses or even new amenities.


• Restrictive rental policies
When you buy into a shared building, you commit to following the rules, which can prohibit how many units can be rented at any given time. “Many condominiums don’t allow owners to rent their units after they purchase, so if you’re buying for an investment property make sure and check the rental regulations,” Leonard says.
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