Condos serve as phenomenal starter homes. They are a great opportunity for you to build your home without breaking the bank or having to deal with excruciating maintenance.
While you choose between renting vs buying a condo, you need to consider your personal and financial situation. If you are looking around your neighborhood at condos and are deciding whether you should buy or rent your unit, keep reading this article.
Looking to Get a Condo?
Condos are an affordable living solution that offers top-notch amenities and maintenance in a simple monthly payment. These features are covered by your complex’s monthly HOA or condo fees. These overall features of condos reign true if you opt to be a buyer or renter.
There is not a one-size-fits-all recommendation when it comes to buying vs renting a unit. Before you connect with a realtor, you need to do some independent research to decide what kind of location and monthly payment you would be comfortable making. This information can allow your lender and realtor to narrow a pool of potential condominiums based on your price range.
When it comes to buying a condo, there are many hidden fees when it comes to inspections and closing costs. However, if the real estate prices are below the national average, you may be making a more financially conscious decision to buy. Because the market can easily fluctuate, it is important to assess whether or not buying is a smart choice based on your personal profile.
Benefits of Renting a Condo
Renting a property allows you to have flexibility while settling into a leased-out unit. There are many benefits to opting into a rental contract when you are transitioning into a new phase of life.
Flexibility to Move
One of the best benefits of renting is the short-term commitment. Although some condo associations offer two-year leases, they are relatively short-term contracts.
Because renters are only tied to the property for a year or so, they are able to quickly relocate if they are in a transitional phase of life. Many people choose to rent when they first move so they can familiarize themselves with an area without making the financial commitment of purchasing.
No State or Local Taxes
Property taxes are charged at the state and local level; as a renter, you are exempt from paying these annual fees. These taxes are handled by your condo association or property manager.
Some states and regions have hefty taxes that can be hard to manage, so having all of these extra expenses tied into your condo fee can make it much easier for you to budget.
Accountability for Damage on Property Manager
If you are renting a property, and an appliance such as the HVAC system or hot water heater breaks, you are not liable for the damage. These are costly to repair and replace so having limited responsibility for your unit is a major benefit.
Being able to rely on your landlord to finance and manage the larger maintenance aspects of your unit can be a major relief for first-time and long-term renters.
Downside of Renting
Renting is designed for the short-term, not for a forever home. When you rent, it can often seem as if you are paying a huge monthly expense and aren’t gaining anything from it in the long term.
Limitations on Your Home Decorating
Rental properties heavily limit a resident’s ability to alter the unit. This includes any potential home remodels, painting the walls, or even mandating how you hang the decor.
These limitations may make it difficult for you to feel as if you can make your rental space your own.
Each monthly payment only permits you to temporarily reside in a rental property. You can almost view renting as the same as getting a hotel room, although you pay to sleep there, you don’t get an added benefit later. The money doesn’t gain equity as you spend it.
Condo associations are able to re-evaluate their amenities and prices every year. If your condo is in a desirable area, your landlord can raise the rental cost every year when your contract is up.
Because rental properties run off of short-term leases, they are able to reassess their self-deemed value each cycle. This means your rental property could go from affordable to the outside of your price range in a single year.
Benefits of Buying a Condo
When you buy a condo you are able to get full ownership of your unit. This ownership grants you the freedom to alter its internal composition. As a full owner, you can even rent out your unit if you ever need to make an additional channel of income.
Inexpensive Homeowners Insurance
Compared to traditional homes, condo homeowners insurance is drastically cheaper. Condo insurance only covers the internal contents of the condo. Your condo association is still liable for the external structure’s care and maintenance.
Stability in Payment Structure
When purchasing a condo, you will either fully purchase your condo upfront or meet with a lender to set up a payment structure. These payment structures build out a mortgage to be paid out over 30 years.
This allows you to keep a low monthly cost and maintain a payment plan, rather than fall victim to a landlord’s annual changes.
The best benefit of buying is that you can gain equity with each house payment you make. This value you accumulate is functional and carried with you when you go to sell.
Home equity increases and the property value increases. When you purchase a property, you are able to ensure that you can build equity that can be converted to cash if you ever need it.
Downside of Buying
Buying is not a possibility for everyone; based on an individual’s savings and ability to obtain a strong line of credit, it may not be a financially savvy choice. There are additional downsides that come with full ownership as well.
Although you may be a full owner in a condo unit, you are still responsible for the monthly HOA and condo fees. These fees are reassessed annually by the condo association. Even if you have fully paid off your unit, you will have to continue to pay these pesky fees.
Need for Emergency Funds
Unlike a renter, as a homeowner, you are responsible for everything inside of your unit. If your hot water heater, pipes, or HVAC break, you will need to have the funds to cover the emergency expenses.
As a buyer, you can reduce your potential need for emergency funds by looking into new developments in this area. This can help you ensure that your HVAC and water heater are not old and on their last leg when you go to buy.
Your Choice: Renting vs Buying a Condo
Deciding between renting vs buying a condo really depends on your lifestyle and how you see that changing in the near future. Investing in your home is a really big decision to make, so be sure to look into your options with an open mind.
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