Are condos cheaper than apartments? Let’s dive into the cost differences between these two living options to see.
Are Condos Cheaper than Apartments?
Costs of Living in an Apartment
Many people opt into apartment living if they’re not in a place to make a significant commitment to a home. It’s an excellent option for those who may move in the near future or desire more time to save up.
Leasing an apartment certainly comes with less up-front costs than purchasing a home. Once you find the apartment of your choice and receive approval, all you usually have to pay is the first month’s rent along with a security deposit.
From there, tenants only have to pay the agreed-upon monthly rental cost, utilities, and sometimes renter’s insurance depending on the lease.
The owner of the property covers all the maintenance and major insurance costs. This financial setup takes the burden off the renter, which is another reason some people appreciate the ease of apartment living.
Costs of Living in a Condo
Purchasing a condo will likely cost you more up-front, but this option can also make a wise investment and reap a greater reward.
A home buyer can expect to put down a sizable downpayment when they close on the property. They also may be responsible for additional expenses, such as closing costs.
If the buyer takes out a loan, they must also pay the monthly mortgage, depending on the property price and the determined interest rate.
On top of these initial costs, condos require insurance costs and monthly or annual homeowner association (HOA) dues. While HOA membership may increase owners’ out-of-pocket expenses, the HOA helps maintain the community and improve the value of the properties.
Weighing the Costs Over the Long-Run
Despite the higher costs that come at the beginning of a condo purchase, owning a condo is a wise choice that can bring about a return on investment.
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.
Additionally, the monthly mortgage costs halt once you pay off your condo. Regardless of how long you live in an apartment, those monthly rental costs are perpetual.
Appreciation and tax benefits can also incentivize folks to make 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 on your down payment cash invested. Also, homeowners can deduct mortgage interest and property taxes when they file tax returns each year.
While the answer to “are condos cheaper than apartments?” isn’t black-and-white, you can rest assured that purchasing a condo can be a smart and strategic investment, especially if you have an experienced broker guiding you through the process.
Are you ready for condo living? Reach out to Luxury Living Chicago Realty to get started on your condo search today.
