Buying a home may well figure heavily into the American Dream, but it’s not the end goal for everyone. After all, around 39 million Americans live in apartments. That’s to say nothing of all the people who currently reside in condos.
On the surface, the condo vs apartment question might seem kind of silly. They aren’t that different, are they? You still live in one unit in a building, after all.
Yet, there are meaningful differences between apartments and condos that you should know before you choose one over the other. Keep reading for a breakdown of those differences and the benefits each option offers.
What Are Apartments?
An apartment is a subdivided space inside a building. The building is owned by someone else, either an individual landlord or a real estate company. Tenants rent or lease the apartment from the landlord or real estate company.
Types of Apartments
There are several common types of apartments that you may encounter. The type of apartments available often depends on your location.
The micro-apartment is typically a one-room space. They are extremely space-limited with an average of less than 350 square feet. You generally get one open space, a bathroom, and a small kitchen or kitchenette.
The next step up from the micro-apartment is the studio apartment. These apartments average somewhere around 500 square feet. Designs vary with some adopting an alcove approach, while others go for a straight open floor plan.
A duplex apartment is typically a traditional home that the landlord divides into two separate living spaces. Sometimes that means an upper and lower floor, and sometimes it means a side-by-side arrangement.
Low-, Mid-, High-Rise
Probably the most recognizable types of apartments are those found in low-, mid-, and high-rise buildings. In these buildings, apartments with variable numbers of rooms and total square footage take up most of the space. You may find apartments ranging from studio apartments right on up to three-bedroom apartments.
How Do Apartments Work?
Virtually all apartments work in the same way. You rent the space for a fixed period of time. The most common lengths of time are six months and a year, although some apartment owners will allow a month-to-month lease.
You must typically pay a security deposit for the apartment. A month’s rent is a fairly standard amount. If you plan on bringing pets into the apartment, you can expect an additional pet deposit or a monthly fee.
First and Last
Many apartments also require that you put down “first and last,” meaning you pay the first and last month’s rent when you sign the lease. However, some landlords only require the first month’s rent at signing.
While you don’t get homeowner’s insurance for an apartment, it’s smart to get renter’s insurance. Renter’s insurance typically covers the cost to replace your personal property after some kind of a disaster, such as a building fire, some kinds of water damage, and theft.
Most leases include a lot of specific language about what you can and, more importantly, what you cannot do in the apartment. For example, many leases expressly forbid making any substantial changes to the apartment, such as painting the walls.
The lease may also specify things like quiet hours, guest policies, parking policies, and pet policies. For example, the landlord may permit cats, but forbid dogs.
Always make sure you read and understand what you can and can’t do under the lease agreement.
Benefits of Apartments
Apartments offer a lot of benefits. One of the biggest benefits is that the landlord takes responsibility for most repairs.
Let’s say that your shower or kitchen sink stops draining. You don’t fix it or call a plumber. You put in a maintenance order and the landlord handles it.
Most lease agreements do put some caveats on this maintenance clause. For example, let’s say that you do something that creates willful damage like setting your carpet on fire or punching a hole in the wall. In that scenario, you typically become responsible for repair costs.
Another key benefit is that apartments are, by nature, a short-term agreement. At the end of your lease, assuming you didn’t do any real damage to the place, you can just move out and never look back.
Apartments are often cheaper than living in a house when you factor in things like property taxes, homeowner’s insurance, and maintenance.
What Are Condos?
A condo, while often similar in overall design and size to an apartment, differs in a couple of significant ways. While you rent an apartment, you buy a condo. You can think of buying a condo as one form of investing in real estate.
It is, by definition, a private residence even though you may well share walls with your neighbors.
Types of Condos
As with apartments, condos come in a few different flavors. Let’s take a look at some of the more common options.
A condo building is what most people think of when they think of condos. It’s a building with a number of individual units. You buy the individual unit and assume responsibility for all interior upkeep and maintenance.
A condo development starts out with a property development company owning everything. You buy a unit, typically freestanding, from the company. At that point, you assume responsibility for all interior and exterior upkeep and maintenance.
A detached condo typically resembles a single-family home in that you don’t share walls with anyone else. The key difference is that the homeowner’s association takes a much bigger hand in things like maintenance for communal areas.
You may end up buying a detached condo that started life in a condo development.
It is possible to rent a condo, although condo rentals are far less common. In some cases, you rent the condo directly from the condo owner.
The owner acts as your landlord and sets most of the rules of living in the condo. In some instances, the condo homeowner’s association handles renting out unowned or unoccupied condos in the building or the community. In those cases, the HOA acts as your landlord and sets the rules in the lease.
How Do Condos Work?
The way that condos work is both similar to and different from apartments. Let’s start with the financial end.
You don’t lease condos. Instead, you must purchase the condo. A condo can cost as much as a single-family home and will likely require that you get a condo loan.
Since the loan falls in the same general range as a home, expect similar income and credit requirements to get both pre-approved and approved for the loan. You should also prepare all of the necessary documentation in advance to keep the process moving smoothly.
There is also a condo board or homeowner’s association. These boards set and enforce rules for all condo owners in the building, community, or complex. Common rules include:
- Noise rules
- Pet rules, such as the number of pets
- Vehicle rules, such as the number of vehicles
- Holiday decoration rules
- Rental rules, such as whether you can rent your condo
They also keep an eye on maintenance for common areas.
Condo boards set the monthly or annual fees that all owners must pay toward upkeep and improvements of common areas and amenities. They also help plan for future projects related to the building or community.
It’s important to note that condo HOA fees are not fixed in the same way as your condo loan payments. The condo board can raise those fees to reflect inflation or the need to move to a more expensive service.
For example, rising fuel costs can drive up the costs for things like lawn maintenance. If the lawn service raises its prices, it’s likely that your HOA fees will increase to offset the higher prices.
While the HOA will purchase condo association insurance, that doesn’t cover your specific unit. You’ll want an individual condo insurance policy for your unit. These policies provide coverage for personal property, some liability coverage, and often some coverage for repairs.
Benefits of Condos
Buying a condo does offer you some benefits. Since you own the condo, you can potentially sell it down the road if property values go up. Other benefits include:
- Exterior maintenance provided
- Enhanced community
- Lower insurance costs
- Better amenities
- Improved security
While condo ownership may cost more in some respects, it’s often a much better deal than apartment living.
Condo vs Apartment and You
In the condo vs apartment debate, the decision is often specific to what you need in the short term and long term. For someone who expects they’ll switch cities in a couple of years for their career, a condo makes no sense.
For someone who is settled into an area but doesn’t love the idea of all the exterior work that goes into a house, a condo provides a reasonable alternative.
Looking for more housing tips and ideas? Check out the posts over in our Lifestyle section.