Wondering which kind of property investment is best for you?
Deciding on a condo vs house investment is an important choice. Both options have their pros and cons, and the best one for you depends on your area, personal preference, and more.
If you’ve been wondering about things like condo vs house appreciation, we’ve got all the answers you need right here. Keep reading to find out what kind of investment is best for you!
Condo vs House Investment: Pros and Cons
When you’re whether or not to invest in condominiums or a house, the decision can seem overwhelming. Even if it’s not your first time buying, there are a lot of moving parts to take into account.
Are condos a good investment? In today’s real estate market, a lot of people are choosing them over houses for a number of reasons. Condos tend to be smaller, newer, and typically have associations to help with maintenance.
When it comes to choosing a condo vs house investment, there are a number of pros and cons to consider. Let’s take a look at when you should choose a condo over a house, and when you shouldn’t.
Pro: Less Expensive
A condo is typically cheaper than a house of the same size when you first buy it. Of course, the exact area you’re buying in will dictate exactly what the cost difference is, but as the market goes up, the savings you’ll get with a condo tend to grow.
However, it’s important to consider that some condo developments aren’t approved for FHA loans. If you want an FHA-insured loan, the condo development has to have at least half of its units occupied by the owners. New developments have to be at least 30 percent owner-occupied.
Con: Difficult to Sell
When it comes time to sell, you’ll often have a harder time selling a condo than a house. When it comes to condo vs house appreciation, houses almost always win. In fact, when you sell your condo, you can actually lose money.
If other people in the condo development are also selling, things get even harder. Since all the units are basically the same, you don’t have any advantage over neighbors who are selling too.
If you want to keep an advantage when you sell, try to buy the nicest unit in the building that you can. The more bedrooms are condo has, the faster it tends to sell.
Sometimes, you can rent out a condo if you aren’t able to sell it. However, keep in mind that many condo associations have restrictions on renting out the units. You should find out what the association’s rental policy is before you buy.
Pro: Easy to Maintain
From roof repair to lawnmowing to snowplowing, maintaining a home can be a real challenge. Not only do these maintenance tasks take time, but they also cost money: you either need to buy the equipment to do it yourself, or pay someone to do it for you.
Since houses are typically larger than condos, you’ll also have higher utility bills in a house.
However, in a condo, your utilities are low, and most of the maintenance can be outsourced. You’ll pay a fee to the condo association, but you won’t be out there shoveling snow yourself.
You’ll probably have to take care of most minor repairs in the unit on your own, though. Make sure to find out from the association exactly what you’re responsible for.
One thing to look for in a condo investment is that the monthly maintenance fees don’t increase faster than the standard rate of inflation. Otherwise, your condo repairs can quickly become too expensive.
Con: Fees to Pay
Those association fees can quickly become a drawback if you’re not careful. Outsourcing the building maintenance saves your time and energy, but it does cost money.
The association fee you pay is separate from your mortgage payment. The fee is like a membership due for being a part of the development’s community. These fees tend to land anywhere in the range of $100 to $1,000 per month.
The fees cover things like security in some buildings, as well as major repairs. However, the bad news is that if other members of the community don’t make payments on time, you’ll be asked to pay more.
Make sure to find out how many condos the association is in charge of, and how many of the residents pay their dues on time. Aim to buy from an association that has at least 97 percent of its residents making current payments. The more condos there are, the more people there are to split the share with, which benefits you.
You should also find out how much the association has in its reserve or repair fund. It’s important to buy from an association that plans ahead and sets money aside for unexpected expenses.
A good reserve fund should be at least 10 percent of the annual revenue budget. If the development is older, repairs will be needed more often, and a fund of up to 25 percent is ideal.
Pro: Urban Living
Many condos offer easy access to everything a city has to offer. If you want to keep your commute short, or prefer living close to restaurants, shops, and clubs, you’re more likely to find a condo that meets your needs.
As more and more people move to cities, condos make a good long-term investment, especially in a growing city.
However, one issue that you might find with a condo is the parking. You should find out if the development has parking for residents, and if it costs more.
Con: Limited Privacy and Space
With a house, you have plenty of storage, and even room for an expansion if you choose. Condos don’t offer that kind of flexibility.
There are also more rules to follow in a condo, since it’s shared property, and less privacy to use the space as you please.
House or Condo: Which is the Right Choice?
When it comes to choosing a condo vs house investment, it all comes down to what you really want to do with the space.
As long as you look for a good condo association, condos can be a great choice. But if you prefer a lot of space, a big yard, and your own basement, you’ll be much happier with a house.
To make the right decision, you’ll need to do your research and chose the unit or property that meets your needs best. Ready to start investing in your future? Check out our current listings here!