Condos Vs. Houses: The Pros And Cons

The type of home you choose is a very personal decision. Whether you’re considering a house or condo, there are significant differences that you want to carefully contemplate. If you're a former renter in an affordable city like Minneapolis or an expensive place like New York City, the type of home you choose next is important.

Without being overly stereotypical, single-family houses with white picket fences are favored by families and people wanting an independent lifestyle. On the other hand, condominiums are preferred by renters becoming first time owners, people wanting a lower and shared cost living arrangement, and those wanting a part-time second home.

And there are other important considerations, too.

Avoiding HOA Fees And Condo Fees

HOA fees are optional. Condo fees are not. If you don’t want to pay an HOA, it’s easy to buy a house not in a homeowners association. But it’s almost impossible to find a condo without fees. And condo fees don’t always benefit the owner. Start with the condo insurance policy. Make sure it is for the replacement value of the building and not just for the market value of the building.

Understand specifics about HOA fees for either a condo or a house. Learn how many owners are delinquent and how much is in a reserve fund. The reserve fund should have enough money to replace aging equipment, mechanical systems, and maintain common areas. If it’s a condo, the roof might soon need replacing. If the reserve fund is inadequate, you can expect fees to go up.

Next, read the recent condo committee meeting minutes. Look for multiple tenants complaining about the same problems. And if it's going to be costly to correct what they're complaining about.

Another issue you want to understand is if the association is involved in any litigation. It could be the association is being sued or they are suing one or more tenants. Either way, legal costs are seldom built into the HOA fees. That means they will need to assess a special fee.

Condo CC&R’s Can Be Pro or Con

Always read the covenants, conditions and restrictions (CC&R's). These control how you can use your property. Some restrictions include no pets, no holiday decorations, or no home businesses.

Some CC&R’s limit the number of units that can be rented at a time. Another restriction can be that the HOA has to approve all new tenants.

Or you may appreciate the CC&R’s. Condo ownership includes both the living space inside your unit and the common areas of the building. You may like having a governing document that defines what others can do both in their unit and in the common areas.

Think outside the condo. Condos are most popular in urban areas and within walking distance to shops, restaurants, entertainment, and other places of interest.

Costs Can’t Be Ignored

Whether it’s a single-family house or a condo, costs are often a driving factor. Start by calculating what you get for the HOA fees versus what the services and amenities would cost if you paid for them yourself.

Pools, fitness centers, and other resort like amenities can be cost-prohibitive in a house but what you most want with your home. Ultimately, only you can decide what are really pros and cons between a condo and a house.