Regardless of your budget or location, there are three choices when searching for a new home: buying a house, buying a condo, or renting. Each option comes with its own benefits, drawbacks, and price points.
And though this choice largely comes down to preference, it’s good to know what to expect in each scenario, especially in terms of cost. Because no matter which route you take, moving is expensive.
To help you choose between a house, apartment and condo, we’ve put together a guide explaining the differences in price. So whether you’re saving for an apartment or buying a home, you’ll be prepared for the process.
The Difference Between an Apartment and Condo
Before we get into the prices, let’s quickly go over the difference between an apartment and a condo. It’s very simple: both condos and apartments are part of buildings containing multiple rental units.
However, apartments are owned and managed by a professional company and are rented out. Condos, such as those in this residential project, are individually owned.
It’s possible to rent a condo from an individual owner, of course, but more often than not, if you’re renting a home in a multi-unit building, it’s an apartment.
Saving for an Apartment
Renting an apartment is often a more affordable option, as you have less maintenance to worry about. In a house or condo, if your refrigerator breaks, you’re responsible for replacing it yourself, whereas in an apartment, your rental company should cover the cost.
You also don’t have to worry about property taxes, landscaping, or miscellaneous costs such as pest control (in most situations). That said, your first month in an apartment is going to be expensive, as there are quite a few fees involved with apartment rental.
Listed below are the typical costs you need to be prepared for:
- Application fee
- First and last month’s rent
- Securty deposit (refundable)
- Pet deposit (refundable)
- Pet fee
- Pet rent
- Renters insurance
- Parking*
- Storage*
*Parking and storage aren’t definite costs. You only need to pay for a parking space if one isn’t provided by your apartment complex, which it typically is. Likewise, you only need to rent a storage unit if you’re downsizing and your belongings won’t fit into your new space.
You’ll be able to get your pet deposit and security deposit back at the end of your lease, provided that you leave the apartment in the same condition in which you found it.
Pro tip: it’s a good idea to document everything when you move into an apartment, preferably before you move your belongings in. Write down any imperfections or damages on your move-in checklist but take pictures as well. These will come in handy if your rental company tries to dispute the return of your deposit.
Saving for a Condo
Unlike an apartment, you don’t have the various deposits and fees to worry about when purchasing a condo. However, because you’re buying and not renting, you have an entirely new set of costs to contend with.
In addition, you should have an extra portion of savings set aside for incidentals after move-in. Though your condo should be in excellent condition when you move in, you should be prepared for a worst-case scenario.
Here are the common costs associated with buying a condo, including some you might not have considered:
- Down payment (at least 20%)
- Closing costs
- HOA/POA dues (monthly, quarterly, or annual charge)
- Loan payment
- Principal and interest payment
- Property taxes
- Homeowner’s insurance
- Additional insurance (flood, hurricane, etc.)
- Cushion for repairs/upgrades
Now, in a home, you’re purchasing a space that’s entirely your own. But in a condo, you share walls with other homeowners. Because of this, condos are often far less expensive than a single-family home.
If you’re leaning toward purchasing a condo over a single-family home, do your research beforehand. Some condos developments don’t qualify for FHA loans, which can be a deciding factor for some house hunters.
Also, depending on the amenities offered by your condo community, your HOA dues (or association fees) might be quite a bit higher than they would be in a house.
Saving for a House
The costs associated with purchasing a single-family home are similar to a condo. The primary difference is that you’ll need to be more concerned about repair and maintenance costs.
Because you own your own space, you’re responsible for absolutely everything on your property. This includes both interior and exterior upkeep and repairs.
As with renting an apartment and buying a condo, your first month or so is going to be the most expensive by far because you’re hit with both one-time and recurring costs. Here’s what to expect:
- Down payment (at least 20%)
- Closing costs
- Mortgage payments
- Property taxes
- Homeowners insurance
- Hazard insurance
- HOA fees
- Miscellaneous fees and costs
- Cushion for repairs/upgrades
Now, keep in mind that you have the option of paying less than 20% down on both a house and a condo. However, this will lead to an additional monthly fee in the form of mortgage insurance. This is designed to protect your lender in case of a default on your loan.
Start Saving for Your New Home Today
When you’re moving into a new home, you have three choices: house, apartment and condo. But no matter which you choose, there’s some level of saving involved beforehand.
By using this guide, you’ll have a good idea of how much you need and when to start saving. Planning and saving for your move well in advance will save you a major headache in the long run!
In need of further house or apartment hunting advice? Take a look at our blog.
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