Condo vs. Apartment: Understanding the Differences

Should You Own a Condo as an Investment?

Owning a condo is a smart move for a young adult if the property continues to appreciate in value as well as produce positive cash returns on your investment. These investments can prove the best passive income ideas because of the money you make while you sleep.

Further, they offer tax-advantaged benefits like MACRS depreciation and the ability to write off several other related expenses against the earnings generated from rental income.

Learn more about the best investments for young adults and start building your wealth.

not owned by the occupant.  A tenant rents the apartment from a landlord.

Where most people run into confusion telling the difference between apartments and condos is the latter can be rented and appear like an apartment.

Condo vs. Apartment YouTube Video

In this short YouTube video, the narrator speaks about the main differences between condos and apartments.  Notice he focuses primarily on the different ownership situations.

Comparing a Co-Op vs. Condo

Another housing arrangement mentioned as an alternative to condos are co-ops, or cooperatives.  According to the New York Times, co-ops are commonly found in New York City but are seen elsewhere as well.

In general terms, they tend to be less expensive, though more exclusive, than condos.  The purchase approval process and building rules tend to be stricter with a co-op, and they make up a larger percentage of New York City’s housing stock.

In a co-op, you do not own your unit.  The entire building is owned by a corporation and when you buy in, you purchase shares in the corporation.  These shares come with the privilege of using a designated unit along with the common areas of the building.

Unlike a condo, but like a privately-held startup company, the current co-op shareholders usually have the right to veto any sale of shares from one owner to another interested buyer.

This differs from a condo where unit owners may sell their condo to another without a vote being taken by the HOA.

Amenities for Condo-Living and Apartment-Living

Depending on the condo or apartment, amenities can vary.  Upscale condos offer numerous on-site amenities like a fitness center, pool, hot tub, grill, gated parking and more.

However, these amenities are not exclusive to condos.  Apartment buildings can offer similar benefits.  Both can offer a la carte services like dry cleaning pick-up and delivery, on-site laundry, community rooms for hosting events, or even a business office with printing and WiFi access.

If an apartment building offers these features, they are offered to everyone.  Within the same building, these features have little variation apartment by apartment.

In condos, however, because the units can be customized by the unit owners, you can find additional features not always seen uniformly as you would in apartment buildings with standard floorplans.

This means variations in design such as hardwood flooring, marble countertops, upscale bathroom design, vaulted ceilings, etc.

These are investments made by the condo owner to improve the experience of owning the unit, the property value, or both.  Because of this customization, you can expect to see a wider variety of property values for similar floorplans.

For apartments, you are generally not allowed to renovate the space.  Commonly, a tenant cannot make changes without the owner’s express permission.

Maintenance Responsibilities

home renovation rendering

The term condo denotes ownership over one unit of the overall structure (most commonly the interior parts like walls, floors, ceiling, and space contained within the unit confines) and shared ownership of the rest of the complex (e.g., exterior walls, land, yard, roof, parking lot, driveways, etc.).

For a condo, it is the owner’s responsibility for handling all maintenance, renovations, and overall unit status.  The condo association handles repairs over common areas.

In apartments or rented condos, the repairs, upgrades and maintenance are the responsibility of the apartment or condo owner, not the tenant.  This benefit attracts many people to rent.

Having the knowledge the responsibility for maintenance and repairs resides with someone else can be freeing.  If something breaks, contact the landlord.  If the plumbing backs up, call the front office.  If the heater quits working, text the property manager.

Some apartment complexes offer services which allow tenants to submit work orders online or have someone on-call 24 hours a day in case an emergency presents.  Depending on the quality of the apartment management, the issue could be resolved in a timely manner or not.

With apartments, most are generally managed by professional companies, which offers peace of mind to tenants.  They know potential issues will be handled in a timely and professional manner.

Whereas with a condo, if the unit owner is unavailable or lives out of town, it may be more difficult to contact them when needed maintenance arises.

Do I Need Special Insurance for a Condo or Apartment?

→ If You Owner-Occupy: Condo Insurance

If you own a condo and occupy the unit, you will need to purchase a condo insurance policy through a provider like Liberty Mutual.  These policies will provide coverage for what your condo’s HOA policy doesn’t cover, primarily those events within the walls of your unit.

Specifically, condo insurance, also called HO6 insurance, often includes coverage for:

  1. Personal Property – Property you own within your unit.
  2. Dwelling – Coverage for the dwelling itself, including walls, fixtures, flooring, etc.
  3. Liability – If something happens on your property and you are found liable, HO6 insurance might help to cover these costs.

To look into these items more, consider starting your search with Liberty Mutual.

→ If You Own and Rent Your Condo: Landlord’s Insurance

If you own a condo and rent it to tenants while not living on the property as an alternative investment to the stock market, you will instead need to look into landlord insurance.

This runs higher than standard condo insurance but provides coverage for your condo-turned-rental real estate.  These special policies are necessary for covering against mishaps or loss events which can occur while renting your property.

→ If You Rent a Condo or Apartment: Renter’s Insurance

Finally, if you rent a condo or apartment, you might consider carrying renter’s insurance coverage.

My wife and I lived in an apartment after we moved across the country and carried renters insurance coverage through Liberty Mutual because our apartment complex required coverage with them listed as an interested party.

We bundled this coverage with our auto insurance and saved by insuring multiple items under one policy.  Looking into renters insurance coverage through a company like Liberty Mutual could save you money through bundling and be what you need.

Once you enroll, check your insurance declaration page to ensure the information included about you, the covered property and the plan all reflect your desired policy details.

Apartment vs. Condo Infographic

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