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Blog > Should You Buy a Condo or Rent an Apartment? Pros and Cons to Consider?
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If you are planning to move into your own place, one of the first questions you might be asking yourself is should I rent or buy a condo? There are pros and cons to both options, so there is no right or wrong answer. Whether you choose to buy or rent your own place depends on where you are in life and what your immediate and long-term plans are.
Both condos and apartments are living units housed in larger buildings. The biggest difference between a condo vs apartment is ownership. Apartment buildings are owned by someone else, usually a corporation or developer. Tenants pay rent to live in their unit, which also covers the maintenance and upkeep of the building and grounds.
Condos are bought by individuals. Condominiums are run by Homeowner’s Associations (HOA) so owners are responsible for paying HOA fees. The fees go towards maintenance and repair bills to the building and exterior grounds. If you rent a condo, you are paying the owner, not a corporation.
When answering should I rent or buy a condo, you should consider:
If you want to buy or rent a condo, the first thing to consider is income. Do you have a steady income and how much can you afford to pay monthly on mortgage and HOA or rental fees?
If you want to buy a condo, you will need to have enough money saved for a down payment. This is usually 5% of the total price of your mortgage costs under $500,000. You will also need money to pay the legal fees, closing costs, insurance, and other expenses, such as HOA fees associated with home purchases.
Renting an apartment is cheaper at first because you don’t have to put as much money down. Rental properties require a damage deposit which is usually half the rental price and usually the first month’s rent. There are no down payments, closing, legal, HOA, or other fees to pay.
Fluctuating interest rates and market prices should also be considered. As interest rates change, mortgage payments can also change. However, if you plan to stay in your condo for a long time, the mortgage payments will go down eventually as you pay off the loan. Rent will never go down. It will remain the same or increase over time.
When considering whether to buy or rent a condo, consider what your short and long-term plans are. If you are not planning to make your condo a long-term home, renting an apartment might be the better option. Condos are equity that increases in value. You will get a higher return on your investment if you stay in your home for at least three years or longer.
If you plan to start a family, go back to school, relocate to a different area or city, or want to upsize your property, you might find paying rent better than buying a condo.
When buying a condo, you are building equity. When renting a unit, you are building someone else’s equity. However, as a renter, you can put your money toward other investments and savings.
If you need to move, it is often harder to sell a property than it is to get out of a rental agreement.
For first-time homeowners, condos are great investments because they are typically less expensive than single-family homes, and their value increases over time.
As a condo owner, you have more say in designing or renovating your unit. As a renter, you have a minimal say in the design and renovations.
Condo owners are responsible for repairs and upkeep of the building and grounds. If you are renting an apartment, the building owners are responsible for their buildings and grounds, so it is less stressful and works for you.
Choosing to buy a condo or rent an apartment is a personal choice.
