Are you a property owner or potential investor looking to get your hands on your next property? Did you know that a condo and apartment are not the same things, despite the fact that they have numerous similarities?
The distinctions between condos and apartments are substantial (resulting from ownership). Whilst a landlord owns and manages a condo, an apartment is usually managed and owned by a property manager or property management company.
Let's delve into the specifics of each option to find out more about what the perfect choice for your next investment property is. Pro tip: if you're interested in learning more about the investment benefits of an apartment vs. a condo, consider joining apartment associations in your area.
Defining a Condo
A condominium (also known as a "condo" by the majority of us) is a private residency you can rent out tenants. A condo is usually found in a residential structure or community; however, the unit is privately held by a person who then becomes the property's landlord. Owning a condo is more of a personal, one-on-one approach than getting an apartment because the condo owner has complete control over who gets approval to rent their condo unit. However, unless condo owners live in another unit they possess in the same building, the landlord is not on site.
The Benefits of Buying a Condo
Property ownership with enhanced amenities, reduced upkeep, and affordability are all advantages of buying a condo (especially over owning a single-family home). Condos are ideal for empty nesters wishing to downsize, retirees searching for a low-maintenance property, first-time homebuyers looking for a beginning home in a city setting, or someone looking for an investment property to rent out.
Let's take a closer look at each of these advantages:
- Additional amenities. You might have access to amenities such as a pool, fitness centers, or parking garages, based on the complex. The homeowners association (HOA) often maintains these common amenities, so you may enjoy them without having to maintain them yourself.
- There is less upkeep. Condos are popular among people who desire the flexibility of owning a house but don't want to deal with the maintenance that comes with a single-family home. A condo may be a good option for you if you want to own a home without having to maintain the grass or fix the roof.
- More cost-effective. Condos are typically less expensive than regular homes, making them ideal for first-time homeowners with limited incomes. While condo association costs must be considered, a condo can be less expensive than a single-family home. If the high cost of entry has previously deterred you from becoming a property owner, a condo may be more affordable.
The Disadvantages of Buying a Condo
When looking to purchase a condo, there are a few things to keep in mind, just like when buying a house. Condo living may not be ideal for you if you don't want to pay extra charges on top of your mortgage or follow community regulations.
Let's go over the disadvantages in more detail:
- Fees and limitations imposed by the homeowners' association. When you purchase in a complex development, you are also purchasing the HOA's set of rules. Rental restrictions and animal restrictions are examples of these policies. You also have to pay monthly HOA fees to cover the upkeep of the shared facilities and the building. These costs can vary greatly based on the condo's size and location.
- There are fewer square feet. In a condo, large families or persons who benefit from outside space at home may feel crowded. The majority of condo units lack private outside space and finding a park might entail a long walk.
- There is less privacy. Condos share walls and common rooms. This shared area creates a sense of togetherness, but it also creates a lack of privacy. Noise can be an issue in shared spaces, and the HOA may have rules on how long visitors can stay.
The advantages and disadvantages of purchasing a condo differ based on the type of unit and its location, the size of the complex, and the types of tenants you rent to.
Defining an Apartment
An apartment is generally a rental building that is typically owned (rather than only managed) by a property management firm and is situated in a residential building, community, or complex, depending on the circumstances. All of the units inside an apartment building are identical, they have the same owner, and the renters all have to adhere to the same rules for renting out one of the units in the apartment complex. Each renter reports to you as the property manager.
The Differences Between Condos and Apartments
Now, what distinguishes a condo from an apartment? Nothing at all with respect to physical characteristics. The distinction between the two is due to ownership. Thus, you now understand that an apartment is located in a complex (comprising several other apartments) and it is owned by one entity, usually a company, and then rented to separate tenants.
A condo, on the other hand, is owned by a single person and is often maintained by you, as the owner, or by the condo community's Homeowner Association (HOA), which commonly enlists the help of a property management company. This can be a little complicated – we know – but stick with us! When you buy a condo, you become the landlord if you decide to rent it out; however, when you purchase an apartment, the property manager, who is employed by the owner, becomes the landlord in a sense. As a property manager, you don’t experience as much direct contact with the tenants as a landlord does. However, this is because when you're a property manager of an apartment building, there is a leasing office that assists all the residents.
Features of a Condo vs. Apartment
We've already discussed the most crucial issue that influences the experience when deciding between a condo and an apartment – ownership. However, you might wonder, what other factors distinguish a condo from an apartment. There are a number of other differences (even if they are minor) between these two.
The Available Amenities
There's a wide range of amenities that come with owning, whether it's a condo or an apartment, from fireplaces to fitness facilities. Well, what are the varied amenities available in them?
Since, as the condo's owner you are also the landlord, the condo is more likely to have a personalized touch. Stainless steel objects, marble countertops, and improved flooring are likely to be found, as well as unique features like the wallpaper on your walls or the cupboards in your kitchen. It adds a little diversity to every condo in the complex. All the details in a condo are handled by the separate owner (unless they haven't updated anything since purchasing or acquiring the unit, which is rare).
It's probably renovated and well-maintained since condo owners have a vested interest in keeping it that way — perhaps you might leave it as is because it has a high property value. If the condo is in good shape, it is easier to rent out, and you are able to charge higher prices for an upgraded unit than for one that is in poor condition. Luxury amenities including garage parking, concierge services, outdoor spaces, a gym, and an outdoor or indoor pool are likely to be found within the condo community itself.
With regard to an apartment, the color palette of the kitchen and the flooring do not have a unique, personal touch. Unless several units are more renovated than others, all of the units in apartment complexes are alike. Despite the fact that various apartment communities now provide luxurious apartment amenities, most units still include more basic features like a laundry facility, a gym, and a pool outside. A few other apartment buildings include tennis courts, a pet park, valet waste, and a mailroom. It is dependent on the location and the condition of the apartment.
"Do I receive more for a condo than I do for an apartment?" is probably the question you're thinking about now. My fellow landlord, the answer to your inquiry is no. In terms of receiving rent, a condo is not more expensive than an apartment. Moreover, if an apartment and a condo are located in a similar area of town, they are most likely similar in price. It is, however, contingent on the rental quality. If one is more improved and has more features than the other, the price difference is reflected. Both condo landlords and apartment property managers price the units according to the area's average rent, comparing their rates to that of neighboring condos and flats. It's called competitive pricing; have you heard of it before? It's time to start reading up on how to price your unit if you want to attract tenants!
Renting Out a Condo
The method in which you receive rent and other fees are the most significant cost differences between a condo and an apartment. Your tenants are most certainly going to be members of the condo community's homeowners association if they live in your condo (HOA). Condo residents are responsible for paying regular HOA fees for the maintenance of the community's communal areas and the outside of the condo complex, as well as any amenity costs, such as concierge services. When the tenant pays rent to you, as the landlord, they don't have the option of making payments online. Therefore, with regard to renting out your condo, receiving payments by check is a popular choice. However, it is all based on the landlord, so when the tenant signs the lease, do not forget to tell them about your preferred mode of receiving the rent payment.
Renting Out an Apartment
When it comes to an apartment, tenants generally pay their monthly rent (together with any available utilities) online using the apartment community's portal or by checks if that's what they prefer. Any additional utilities (such as electricity, gas, and internet) that are not a part of the rent are normally paid individually to the external service providers on a monthly basis. Since utilities are administered by the landlord in a condo, the monthly rent might consist of a flat (or by consumption) rate for the utilities. The landlord makes this decision.
Irrespective of whether you own a condo or an apartment, you are going to experience maintenance concerns. Whether it's a leaking faucet or an overflowing toilet, the issue must be resolved. The sort of property you choose determines whether this is done by the owner (you), the tenant, or a maintenance crew.
In a condo, you, the tenant, or both are in charge of the unit's upkeep. Overall, this may result in higher possible personal expenses for renters, but most issues are normally covered by the landlord's property management team or outsourced maintenance. Irrespective of the fact that the HOA is responsible for the upkeep of communal spaces such as shared utilities and the property itself, they are not responsible for fixing a leaking toilet; the tenant must either fix it themself or wait for you, as the landlord, to contact your recommended maintenance company.
Remember that if you are not in the country or in a different state, contacting your management team to get problems rectified in the property may take longer, which might cause issues between you and your tenants. Therefore, make sure you are always ready for the unexpected.
People often discover that the apartment community management provides free, 24-hour maintenance, which means that renters are not responsible for the majority of repairs in an apartment building. Normally, the tenant submits service requests for things that need to be repaired in their apartment via the apartment community's online site — simple as that! One of the best aspects of apartment living for tenants is the 24-hour (and free) upkeep, which is not always an advantage for the property management company.
Rules, Laws, and Regulations
Rules are disliked by most people (except those who put them in place), so make sure your tenants know they must be followed if they wish to maintain good relations with you as their property manager or landlord.
The HOA most likely sets the residential norms for the condo building. There might be restrictions, for example, prohibiting tenants from leaving trash outside the front door, scooping up pet droppings, and leaving personal belongings lying around the condo units. When it comes to pets, just because the condo complex is pet-friendly doesn't imply that your condo needs to be pet-friendly. Ultimately, as the individual condo owner, you can choose the specific rules and regulations that apply to your condo unit.
People might find restrictions about pet waste and trash in their community with an apartment's property management firm, but every renter needs to adhere to the same laws when considering the inside of their apartment building as well. Tenants are prohibited from painting any walls, hanging decorative objects that may ruin the walls, or performing any kind of permanent changes in your apartment without your permission. Condo owners frequently have more permissive rules. It all depends on how you want to handle your property ownership!
Condo vs. Apartment: What's the Verdict?
As condo owners, prepare yourself to have personal, direct interaction with your tenants while renting your condo to them. You are their landlord, and you want to have a positive relationship with them, so you don't have issues when it comes to them paying rent or damaging the property at all. Your tenant needs to contact you regarding repairs, rent payments, or any other questions they might have. Don't forget the condo is your property, and if they're not an ideal tenant, you may refuse to renew their lease.
When it comes to an apartment, the tenant is probably going to deal with multiple personnel of the property management firm. This includes the property manager, numerous leasing agents, and the assistant manager. All these parties assist the tenant in processing their rent, assigning the upkeep team to the renter's requests, sending out community notices and reminders, and maintaining the community's pristine condition through employed persons and announcements to people about the responsibilities to the community's upkeep. It's evident that the ownership side of an apartment isn't really a piece of cake.
Deciding between an apartment and a condo is ultimately up to you; however, with a greater grasp of the factors that make each distinct, your investment trip should be easy going from here!