What Is a Condo?
A condominium, often shortened to condo, is a multi-unit property where units are individually owned.
Ownership typically includes an interest in common properties, like sidewalks, lobbies, and pools, controlled by the condominium management. Condominium management is usually made up of an elected board of unit owners plus an administrative team that sees to the day-to-day operation of the complex.
How a Condominium Works
The most common type of condominium is a residential high-rise, but any kind of residence may be developed as or converted to condominiums, and the concept is also applied to commercial properties, like an office condominium.
Unit owners pay fees to the homeowners' association (HOA). These fees generally include the cost of insuring the building, shared utilities, and a reserve of funds for future maintenance of the building. The fees also include the cost of the management company for daily operation. HOA fees are subject to increase, and if the building requires major maintenance, any costs that are not available in the reserve funds can be billed to the unit owners.
The homeowners’ association also sets the terms and conditions that govern and sometimes limit the use of the property. The conditions include rules for selecting the board for the homeowners' association, which is the board that manages the development.
Condo vs. Apartment
The main difference between a condo and an apartment is ownership.
Condos are individually owned, while apartments are usually rented. Rental apartment units in a building have one owner, most likely a corporation, and are leased to individual tenants. The apartment building is usually managed by a management company hired by the owner.
A condominium building is usually managed by a Homeowners’ Association (HOA), and each individual unit has a separate owner.
Condo vs. Townhouse
The main difference between a condo and a townhouse is the style of building.
A townhouse is an attached home owned by its residents. One or more walls are shared with an adjacent attached townhome, and the homes often have more than one story of living space. A development of townhomes resembles a rowhouse more than an apartment complex.
Townhomes may be purchased, just like condos, but owning a townhouse is more in line with owning a detached single-family home. You personally own the structure and the land it sits on -- the difference is just that the structure shares some walls with another structure.
Pros and Cons of Buying a Condo
Condominiums are often a more affordable choice for homeownership in a large city. There are advantages in having an HOA board take care of the exterior maintenance and day-to-day management. It’s often thought of as the middle ground between apartment living and buying a traditional single-family home.
Other Condo Advantages
- Affordability. Condos tend to be less expensive than their single-family home equivalents and provide homeownership possibilities for more buyers.
- Location. Many condos are built in high-demand areas in cities and within walking distance to many conveniences.
- Security. Many condos will offer security features like doormen and guard service in addition to the sense of security that comes with being close to your neighbors.
- Maintenance. Many condo complexes hire professional landscapers to maintain the exterior, and if something on the interior breaks they will have someone come fix it. This is all covered by your HOA fees.
- Amenities. Condos often include tennis courts, swimming pools, and a gym on the property.
- No land ownership. When you buy a condo, you don't own the land beneath it but share an interest in it with the other condominium residents.
- Fees. It costs money to keep up those amenities. There may also be an additional fee tacked on for any larger repairs and renovations.
- Community Association. Since you'll be living in a community with a community board or association that helps to govern it, you will have to live with the community’s rules that govern keeping pets or the use of shared facilities or even how you decorate the exterior of your home.