For many prospective homebuyers, the idea of tending to a house and yard can be daunting. The price tag of single-family homes today can also test your budget’s limits. Luckily, various property types are available that minimize maintenance headaches and are more wallet-friendly. Enter the condominium, commonly known as a condo. But what is a condo, exactly?

In this guide, we give you a complete breakdown of condos. We cover what they are, how they work, the types of condos, the pros and cons of condo ownership, and more. Read on to discover all you need to know.

What Is A Condo?

A condominium, or condo for short, is a large property complex with individual units that are owned and can be rented out privately. When you own a condo, you’re investing in your living space and gaining a shared interest in the common areas. Think lobbies, fitness centers, and pools that are maintained by the homeowners’ association (HOA).

The HOA consists of a board that you and the other condo owners elected. They ensure that collective responsibilities like landscaping, snow shoveling, and updates to the property are taken care of. 

This means that, while you enjoy the perks of homeownership, you’re not left to deal with the day-to-day upkeep alone.

How Does A Condo Work?

Technically speaking, when you buy a condo, you only own the airspace within the walls of your unit. This excludes the four walls dividing your space from your neighbors’. Imagine it as an invisible cube where all your personal living space exists.

Condo boundaries are legally defined by a document called a Declaration, which is recorded and available through your local government office. Generally, you’re free to remodel and alter the inside of your condo.

For example, you can paint walls or update your kitchen if the changes don’t infringe upon the building’s common areas or structural integrity. Beyond these walls, everything else is jointly owned by the condo community. This includes the land, the building exteriors, hallways, and amenities like pools and gyms.

That said, you can exclusively own parking spaces and storage units in some condo complexes. However, the condo’s declaration of covenants, conditions, and restrictions may limit your ability to rent or sell these spaces.

Types Of Condos

You can choose from different types of condos, depending on your preferences and budget. When on the market for a condominium, you’ll find large complexes with hundreds of units or small converted homes with two to four units. The ownership of these condos might differ; they might be leasehold or freehold.

One of the main differences between these types is that in leasehold condos, you only own the right to operate your unit for a specific period. In freehold condos, you have full ownership rights forever. 

Here are the different types of condos you’ll come across.

Condo Home

A condo home is a private residential unit within a larger property or complex that you can purchase and own. While you have complete ownership of the space within your walls, you also share common facilities and areas with other condo owners in the complex. It’s like traditional home ownership without the maintenance responsibilities.

Private Own Apartment Or Private Condo

If you purchase a condo and choose to rent it out, it falls into a private condo or privately-owned apartment category. In this scenario, you become the landlord, possessing the authority to lease the unit to tenants.

This arrangement allows you to generate income from your investment while still retaining ownership rights. Private condos differ from standard apartments regarding property management and customization options. The application process, deposits, and criteria might also vary.

Condo Building

A condo building is a large property complex divided into individual units, each separately owned. Condo buildings give you an exclusive living space stacked in a community setting.

You own your unit, but you also share ownership of the common areas and facilities with your fellow residents. This means that while your home is yours to customize internally, areas such as the fitness center, pool, and gardens are under the collective care of the HOA or condo management.

Condominium Development

When you delve into freehold condominium developments, initially, the developer is the owner of the land on which the units stand. Once you decide to buy a condo, the ownership of the land upon which your unit is built is transferred to you.

This differs from traditional condominium buildings, where the land ownership remains with the condo corporation. In the case of freehold condos, you, as the owner, are responsible for the maintenance and upkeep of your unit. This includes the exterior walls.

This contrasts common areas, which are maintained by the management of the condominium complex.

Detached Condo

A detached condo is a unique type of ownership model that blends elements of condominium living with the perks of single-family homes. When you own a detached condo, you have a standalone structure that doesn’t share walls with neighboring units. This offers you a higher degree of privacy and independence.

Detached condos are part of a larger condo community, meaning you still enjoy shared amenities and communal areas that the homeowners’ association maintains. You’re responsible for your unit’s interior maintenance.

However, the exterior and common areas are covered by the associated fees you pay, similar to other types of condominium living. This setup affords you the lifestyle of a traditional home with the convenience of low-maintenance living.

Condo Share

A condo share, often called a timeshare condo, is a form of real estate where you, alongside others, own a piece of property. Think of it as sharing the pie; you have a slice that entitles you to use the property for a certain period each year.

It provides you with all the benefits of a vacation home without the burden of year-round maintenance. With a condo share, you can access your home during allocated times, which is especially appealing if you’re looking for a vacation or secondary residence.

Pros Of Owning A Condo

Here are some of the reasons why you’d choose condos over traditional homes:

Low Maintenance Living

As a condo owner, you benefit from low-maintenance living because the homeowners’ association (HOA) takes care of its upkeep. This means you won’t have to worry about mowing lawns, shoveling snow, or repairing roofs. These tasks fall to those owning traditional single-family homes.

The HOA also maintains common areas such as hallways, elevators, and pools. This arrangement allows you to enjoy your home life minus the cumbersome list of maintenance chores.

Security

Another advantage of owning a condo is the enhanced security features that come with it. Many condominium complexes offer security services such as gated entries, 24-hour surveillance cameras, and on-site security personnel. These features can provide you with peace of mind, especially if you live alone or travel often.

Living in close proximity to neighbors can also increase overall safety. There’s always someone to keep an eye on things when you’re not around. This means fewer worries about break-ins or property damage, even if you’re not home.

Opportunities To Meet New People

Condo living naturally fosters a strong sense of community that can lead to new socializing opportunities for residents. Common spaces, such as pools, fitness centers, and lounges, increase the chances of crossing paths with neighbors more often than in a single-family home setting.

This constant interaction can quickly turn casual hellos into meaningful relationships. Most condo communities also organize social events and activities. This gives you an excellent chance to meet new people and build your social network in the comfort of your living space.

Amenities

One of the most appealing benefits of condo living is the access to a range of amenities that might be costly or impractical to have in a single-family home. Most condos feature swimming pools, fitness centers, or a rooftop patio. These facilities elevate your lifestyle and provide you with leisure and fitness options at your doorstep.

Build Equity

Owning a condo means investing in your financial future through building equity. Unlike rent, which offers no return on investment, every mortgage payment you make on your condo is a step toward full ownership.

Over time, as you pay down your mortgage, the equity—the portion of your property that you truly ‘own’—increases. As the value of the condo appreciates, so does your investment. This equity can become a financial springboard for you, serving as an asset for future real estate ventures.

Cons Of Owning A Condo

Here are some of the downsides to owning a condo:

HOA Rules

Homeowners’ association (HOA) rules can significantly affect your lifestyle in a condo. Condo owners must comply with the HOA’s regulations. These regulations may dictate everything from the color you can paint your door to the types of vehicles you can park in your spot.

HOA restrictions can be limiting, especially if you value personal expression and freedom in your living space. Consider whether you can adhere to these rules before committing to a condo. Non-compliance can result in fines or other penalties.

Can Be Hard To Sell

Market saturation can make selling your condo a challenge. If there are many similar properties for sale in your area, you’ll find yourself in a competitive market. The overall upkeep and reputation of the community can also impact your unit’s desirability.

If the HOA fees are high or if there have been recent assessments, prospective buyers might be deterred. You may also face restrictions on marketing your property. Buyers must often be approved by the HOA, extending the selling process.

Condo Association Fees

In addition to your mortgage and property taxes, condo association fees can be expensive. These fees go towards maintaining and repairing common areas, amenities, and the building’s exterior.

Consider these fees before buying a condo as they can significantly affect your monthly budget. You’ll have to pay the fees whether you use the shared amenities or not.

Lack Of Privacy

Condo living often means close quarters with neighbors, leading to a potential lack of privacy. You might hear your neighbors’ conversations, their music, or other noises through the walls, floors, or ceilings.

Large windows and balconies can also mean your life is more visible to those around you. Evaluating your comfort with proximity and shared spaces is important, as these aspects are an intrinsic part of the condo lifestyle.

Condo Vs. Other Housing Types

Let’s look at the differences between condos and other housing types.

Condo Vs. Apartment

At first glance, high-rise condos and apartments might appear indistinguishable. However, these housing types are very different. When you buy a condo, you purchase the individual unit along with a shared interest in the common areas. With an apartment, you’re renting the space, and a single entity or landlord typically owns the entire building.

Moreover, as a condo owner, you can customize your living space. In contrast, apartment living usually restricts the extent of personalization you can do. Another distinction is the fees and financial responsibilities.

In your condo, you’ll contribute to the homeowners association (HOA) fees for maintenance and repairs. In an apartment, the landlord bears these costs.

Owning a condo can also offer you the opportunity for equity growth, a potential advantage that is absent when renting an apartment.

Condo Vs. House

Condos and houses differ, especially on the subject of maintenance. For instance, if the floor of a detached single-family home requires repairing, the responsibility is solely the homeowner’s. 

As a condo owner, the burden of such repairs doesn’t fall solely on you. The expense is shared among your fellow condo community members, with part of it possibly covered by your HOA’s reserves.

While dividing expenses can certainly ease financial stress, condo living comes tethered to a host of additional guidelines. You might find there are standards to meet. These include things like ensuring your front door paint mirrors those of your neighbors or having a mailbox identical to others in your community.

Condo Vs. Townhouse

When considering a condo versus a townhouse, you’ll notice distinct differences in ownership and structure. Unlike a condo, owning a townhouse means you also own the land it sits on. You’re also responsible for the exterior, yard, and any maintenance that these areas require. 

Townhouses often come with fewer HOA fees as a result, but with increased personal responsibility for upkeep.

Furthermore, townhouses typically offer more privacy with multiple floors separating living spaces, compared to the often single-level layout in a condo. You’ll also have direct access to the outside rather than shared corridors or lobby spaces. 

This provides a living experience that’s akin to a traditional single-family home.

Requirements For A Condo

Before securing a condo, it’s essential to understand the declaration of covenants, conditions, and restrictions (CC&Rs). This legal document outlines the requirements and limitations placed on condo owners.

It defines the use of common areas and individual units and details the obligations of the HOA. Adherence to these regulations is mandatory to maintain the community’s standards and ensure a harmonious living environment.

Aside from following the guidelines in this declaration, condo owners must also pay HOA fees, as highlighted earlier.

Buying Vs. Renting A Condo

Buying a condo can be a sound investment and a great choice for your living situation, yet it involves careful considerations. Here are some key differences between buying and renting a condo to take into account:

• Equity: When you opt to purchase a condo, you’re on the path to building equity. Unlike renting, every mortgage payment you make is a step closer to full ownership.
• Upfront costs: The initial financial commitment is generally higher when buying. Expect to pay around 20% of the condo’s price upfront. In contrast, renting typically requires just an application fee, a deposit, and the first month’s rent.
• Freedom: As a condo owner, you can customize your living space to your liking and enjoy stable housing costs without rent increases.
• Unexpected expenses: Ownership may bring unanticipated expenses—things not always accounted for in the monthly budget.
• Maintenance costs: Owning a condo means paying regular fees for the maintenance of common areas and amenities, providing worry-free upkeep of these shared spaces.

The Bottom Line

Owning a condo lets you experience the joys of home ownership without the burden of maintaining a traditional house. 

While renting and owning a condo have unique advantages and responsibilities, buying a condo is a wise choice for those seeking long-term value. It allows you to build equity and control your living space, while offering stability against rent hikes.

As with any big financial decision, do your research and seek advice from trusted professionals.