Condo vs. Apartment: What’s the Difference?

The major downside of renting an apartment is that the monthly payments you’re making aren’t going toward paying off the mortgage on a place that becomes a major asset for you—they’re going into your landlord’s (or property management company’s) bank account.

“Perhaps you’ll be spending less per month, but it is money/value which you will never retrieve: It goes in your landlord’s pocket,” says Tom McCormack, senior partner and broker at Resources Real Estate in New Jersey. “And you gain nothing in an appreciating market. And you have no tax deductions. Moral of the story: If you can afford it, buy, don’t rent.”

And you’re not necessarily avoiding property taxes either: Renters will typically find that the owner will offset their property taxes on the apartment by raising the monthly rent when they can (and, by extension, the security deposit).

Pros and cons of a condominium

The number one pro to owning a condominium is just that: You own your own place, and if even if you’re paying off your mortgage in monthly payments, you’re still building equity.

“Home ownership in a condo is very different than renting an apartment, and it is important to understand the differences are not simply about the monthly expenses,” McCormack says. “First, owning a condo means you have equity—there’s value that is directly attributable to you, even if you used mortgage financing. And in an appreciating market, this means your value is increasing through no effort or further investment. It’s not guaranteed, of course, but holding real estate historically is a winning proposition.”

Other benefits include being able to take mortgage interest deductions at tax time and being able to use whatever paint colors you want for your living room: Hello, lilac and puce!

However, the buck stops with you when it comes to the responsibilities of homeownership. Got a maintenance issue like a leaking pipe or broken window? You can’t just call the property management company or landlord to take care of it—because that’s you!

Furthermore, you likely have to deal with some sort of condo association (basically a homeowners association, including their HOA fees, of course). After all, someone’s got to take care of the maintenance costs of that fitness center and pay the salary of the condo building’s 24-hour concierge!

“Condo associations make and enforce rules that residents of the condominiums must abide by,” Ludwinek says. “They collect dues to pay for upkeep of common areas and to fund operating expenses.”

Another con is that you’re going to have to be able to put up an upfront downpayment and closing costs and arrange financing. Compare that to an apartment, where you can usually move in with just a security deposit and first month’s rent.

Buying a condominium vs. renting an apartment

So which is better, an apartment or a condo? That, as is always the case with real estate, comes down to your specific circumstances. “If the homebuyer is considering whether to rent an apartment or buy a condo, I would encourage them to consider if they want to own a property and take on the associated responsibilities,” Ludwinek says. “Additionally, there is a larger barrier to entry in purchasing a condo, as they must either have the funds in cash or be able to obtain financing to buy it.”

The long-term and most substantial benefit is that condo owners are building equity with their mortgage payments. “This likely will vary according to the market, but a condo is a great first-time-buyer option because typically the price will be more affordable, and if it is a desirable community, will still command a good resale price,” McCormack says.

FAQs:

Is a flat a condo or apartment?

“Flat” is simply a British term for a one-level apartment.

What are the benefits of living in a condo?

You’re the owner of a condominium, so you get to make the renovations you want and use the paint colors you want without having to ask permission—and the mortgage payments you make go toward building equity.

What are the downsides to living in a condo?

As the owner, you’re responsible for maintenance costs and property taxes, fixing the things that break, and paying the condo fees that condo communities charge individual units for maintaining common areas—all things you don’t usually have to deal with directly when you live in a rental property. You also have to take care of all the financing and legal issues you do with any sort of new home, such as arranging a mortgage and hiring a real estate lawyer.

Are condos quieter than apartments?

Physically, condos are the same as apartments, meaning they could be a unit in what’s basically an apartment complex or more of a townhouse-style single-family home in a condo community. The physical issues that may affect an apartment or townhouse will also affect a condo, including noise.