If you are looking into whether condos are cheaper than apartments, the answer may not be as simple as yes or no.
To determine which property makes the most sense for you, let’s examine the financial differences between owning a condo and renting an apartment.
Is a Condo or Apartment a Better Financial Choice?
If you are considering purchasing your own condo, expect to pay much higher up-front costs than if you choose to rent an apartment. However, don’t let these expenses scare you away.
When first renting an apartment, residents are often required to cover the first month’s rent along with a security deposit. Purchasing a condo, on the other hand, generally requires a sizeable downpayment. It may also require additional expenses, such as closing costs or lawyer fees.
On top of these up-front costs, condos also require monthly or annual homeowner association (HOA) dues. While HOA membership may increase owners’ out-of-pocket expenses, HOA helps to maintain the community and improve the value of the properties.
Weighing Costs Over the Long Run
When examining the costs of renting an apartment versus owning a condo over the long run, it is evident that a condo purchase is a wiser financial move.
While monthly rental costs are subject to increase over time, a fixed mortgage rate will ensure that your mortgage stays the same over time, regardless of fluctuation in the housing market.
Also, once you pay off your condo, the monthly mortgage costs halt, and the property is officially yours. However, regardless of how long you live in an apartment, those monthly rental costs are perpetual.
Appreciation and tax benefits are two additional incentives to a condo purchase. As a home appreciates, it accrues faster than a stock might because you get the appreciation on the entire home’s value, not just the gain your down payment cash invested. Also, homeowners are allowed to deduct mortgage interest and property taxes when they file tax returns each year.
Which is the Better Investment
If you have the credit or money-up-front to purchase a condo, then you have an opportunity to make a better investment than renting an apartment.
Unlike apartment rental payments, condo mortgage payments and initial costs are going towards a personal investment. So in the long-run, condo owners will have accumulated equity to show for the expenses.
As an apartment renter, when you write that monthly check to your landlord, you are paying for temporary occupancy without any ownership. While renting may make sense for someone who cannot afford to buy or in need of a temporary place to live, it’s not the wisest move for the long-run.
While it may be difficult to answer whether condos are cheaper than apartments, it is clear that condos are a better financial move for those seeking a long-term investment. If you are ready to take the financial plunge and find the perfect condo then contact an experienced broker today!