Should I Buy a Condo or a House?

Home ownership comes with a long list of financial benefits, but before jumping into any type of real estate purchase, it’s important to understand the cost and expenses related to your investment as well.

A common question I hear from buyers is regarding the pros and cons of buying a condo vs a single family home (freestanding house). The way I like to think of it is that a condo can take care of maintenance and repairs for you so you don’t need to worry about them, but the decision process is mostly out of your hands. A single family home can offer you autonomy in what, how, and when you do repairs and maintenance, but you're ultimately responsible for it all on your own. To understand this further, let’s break down how an HOA (Homeowners Association) operates.

Most condos, and some townhomes and individual houses, are governed by an HOA. When you purchase a property in an HOA, you automatically become a member and will need to pay monthly dues. The amount generally depends on the size of the community and the amenities offered.

Monthly dues can include:

  • Garbage collection
  • Sewer/water charges
  • Water, electricity, and natural gas for common areas
  • Professional and legal expenses
  • Building insurance
  • Professional property management
  • Landscaping/gardening
  • Common area maintenance
  • Snow removal
  • And more...

Additionally, a small portion of your monthly dues will be set aside in the HOA’s Reserve Fund. This is the “Rainy Day Fund” that can be used to cover major repairs or unexpected expenses. It’s important that the HOA manages their Reserve Fund responsibly, or the cost of major repairs can be passed along to the owners of the units in the way of a “Special Assessment”.

How do I know if the HOA manages their Reserve Fund responsibly?

The HOA should be able to provide documentation on how they have been managing the community, including financial statements, board meeting minutes, ByLaws, Declarations, Rules & Regulations, and a Reserve Study. This is where a good Real Estate Agent comes in. Your agent should be acting in your best interest, and with that comes the responsibility of educating you on what these documents mean so you can review them properly and make a good decision for your investment.

When deciding between a Condo and Single Family home, consider the following:

  • A condo building exterior and landscaping will be well maintained with little effort on your end, but they don't usually provide private outdoor space
  • For those who want to live in a more dense neighborhood, within walking distance of restaurants, shopping, etc., a condo can be an affordable option
  • You may have access to amenities in a condo that you wouldn’t otherwise have in a single family home, such as a pool, clubhouse, gym, or on-site security
  • HOA monthly dues associated with a condo will add cost to your monthly financial obligations
  • The monthly dues will be factored in to your monthly mortgage payment, so your maximum loan amount will be higher when shopping for a single family home
  • An HOA may have strict rules around renting your condo unit, remodeling, owning a pet, and more

Bottom Line

Living in a condo may have some trade-offs, but if you work with a good agent and do your due diligence, they can be an excellent investment for those who want a little less responsibility in their role as a homeowner, or for those who have location at the top of their list and a limited budget.

Have a question about living in or buying a condo? Let’s chat.

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