Should I Buy a Condo or Rent?
Condo living is on the rise across the country, providing no-fuss, centrally located housing. Particularly for adults on the cusp of retirement, condo living offers many attractive benefits, including community, reliability and affordability. With this in mind and assuming condo life is attractive to you, the question to buy or rent becomes more the focus of the issue.
We’ve put together some pros, cons, and comparisons for both renting and buying a condo, and how the two options differ.
First Things First – How Do Condos and Apartments Differ?
You might think renting is renting no matter the domicile, but that’s not the case. Condos are a residence the same as an apartment, and you can buy or rent them, but that’s about where the similarities end. Apart from the fact that both types of living situations put you very close to neighbors, condos differ from apartments pretty dramatically.
A condo community can be individual units within a larger building, which is similar to an apartment, but they can also be standalone properties in a larger complex. Condos offer amenities as well, such as community pools, common areas or gyms. When you’re choosing a condo over an apartment, you’re buying into a more unified community and typically a lot of extra benefits that house or apartment living don’t provide.
Renting an apartment generally does not provide you with these benefits. Moreover, it’s often perceived that condos are more expensive than apartments, but pricing is usually similar in the same location.
Additionally, whether you want to buy a condo or rent, there are some variables that are specific to condominium living:
- Condos are usually a part of a homeowner’s association. This is the governing body of the community in which you will live, and they make sure the condos are well-kept and decorated tastefully. They also moderate disputes between tenants. Most condo communities have a yearly HOA fee in addition to your rent or mortgage, and this covers maintenance and upkeep on the community and amenities.
- The HOA fee can add a pretty hefty additional price to your monthly costs, but expect to pay $100 and up depending on location. While this might include trash pickup, some utilities, and amenities, it also might not. You’ll need to figure out just what perks your HOA fee goes towards and how likely you are to use them to determine if you’re getting value.
Benefits of Renting a Condo
Renting a residence offers a lot of benefits that ultimately amount to convenience. If something breaks, it’s not on you to fix it – your landlord’s job is to keep everything running smoothly. Your homeowner’s association will also usually take care of lawn work and snow removal. This would be exceptionally attractive to an older or disabled tenant, or someone who simply dislikes yard work.
When you’re renting a condo, you still have access to the amenities without being locked into that home for years upon years. If you want to pack up and move someplace else when your lease is up, you absolutely can with no repercussions or the additional stress of trying to sell your condo.
Renting allows you to move in immediately as well. The process of buying a condo can take months, with inspections, negotiations and closing.
The Pros of Renting Are Again All about Flexibility:
- No repairs or maintenance falls on you, and often trash pickup and some basic utilities might be included in your HOA fees
- You still have access to the community amenities
- Renting is faster and easier than buying
The Cons of Renting a Condo Are:
- Rent is quickly going up, particularly in exceptionally popular cities like San Francisco or New York. Renting doesn’t lock in your price and you can see your home dramatically increase in cost year after year as rental fees rise.
- The same flexibility that renting allows also makes it potentially precarious. Your HOA can request that you leave if they deem that you’re not fitting in within the community.
- Renting provides no equity and isn’t an investment. While selling a condo can be cumbersome, it does still provide you with property in the end. This is especially important in cities where property scarcity is on the rise.
Benefits of Buying a Condo
When purchasing a condo, you again will have access to the same amenities that a renter enjoys. You’ll still also be accountable to the HOA, its fees and its bylaws. The same sense of community, access to city centers and stress-free maintenance are a part of the buying experience as well.
Buying a condo can protect you against inflation – a fixed mortgage in an expensive city is preferable to rent which can fluctuate, particularly in a market downturn. With that said, some premium locations might make getting a fixed-rate loan significantly less likely. A variable rate loan, however, can be lower than a fixed rate, as the associated risk is higher as the market can fluctuate. A popular variable-rate loan choice is a 5/1 adjustable-rate mortgage, which is fixed for 5 years, after which it can change. Variable-rate loans are popular for luxury condos in highly exclusive areas like San Francisco or Silicon Valley, where condos can fetch prices into the millions.
Condos make a great first home for small families or single people, providing an investment, fixed monthly housing cost and all the benefits of renting within a condo community.
The Pros of Buying a Condo Are:
- Property is a secured debt and an investment, something renters do not get.
- If the location is in a financially thriving part of your city, your investment can actually pay off when you go to sell.
- You still enjoy all the benefits of the HOA that a renter does.
- Owning provides tax breaks that renting does not.
The Cons of Buying a Condo Are:
- Buying is time-consuming; it’s no different from buying a house with the same hoops to jump through. Additionally, getting a home loan for a condo can be more difficult than a house.
- Purchasing a condo locks you into place, which is good if you don’t expect any life changes that would necessitate you moving. If you don’t have that certainty, though, it can be a potentially negative thing to be pinned down to a mortgage.
- Selling any property usually takes a lot of time and effort. In the event you want to move, a condo in a subprime location can take months or even years to sell.
Consider Your Options Carefully
A person who wants to have a nice home in a central location in a thriving city would find renting a condo to be a good bet. You don’t need to worry about maintenance or upkeep, and often condos are very modern and the perfect size for a single person or small family. Renting avoids being trapped by a mortgage and the rigors of selling a property.
Buying a condo, on the other hand, is a good investment for a financially stable person looking to establish roots. It offers an investment that renting does not, while still providing the benefits of the HOA community. If you can get it, a fixed-rate mortgage also protects you against the rising cost of rent.
Ultimately it’s up to you, but a condo provides quality housing that can fit your exact needs regardless of whether you rent or buy.