Top 4 Differences Between a Condominium and a Single-Family Home
Purchasing a home is often the single largest transaction for a person or family. It is a big financial decision and commitment, and one decision is the type of home. The most popular is the single-family home. However, another option is the condominium. There are pros and cons for each home type, and there are four main differences when comparing condominium to single family homeownership.
What You Own
The typical single-family home is a free-standing structure with a yard, and you purchase ownership of the structure and the land on which it sits. When you purchase a condominium, you own your unit, but do not own the common structure, nor do you own the land beneath it. The common areas of the condominium project, such as pools, landscaping, workout areas, and parking areas, are collectively owned by all the residents.
What You Can Do – Rules and Restrictions
There will be restrictions on what you can do with your single-family home, mostly those imposed by homeowner associations. Some will be imposed in zoning codes, possibly limiting your use of your home for a business. Generally, though, you can within reason remodel your home’s exterior or interior, change textures, colors, and even your floorplan in a single-family home. The homeowner association will often have rules for exterior care and appearance to keep up the look and quality of the neighborhood.
The single-family homeowner, again within reason, can enjoy their property the way they want. Of course, extreme behavior that gets complaints from neighbors or calls to the police will result in problems. However, usually you can enjoy your indoor and outdoor spaces the way you want.
The rules are much more restrictive in a condominium project. First, you are closer together than in the single-family neighborhood. This results in more stringent rules about behavior, as it is easier to upset neighbors only a wall or so away. Noise restrictions are tougher.
In the condominium project, you will be much more limited in what you can do or changes you can make to the exterior of your unit. Usually, you cannot change anything about the exterior structure, such as colors, finishes, etc. You may even be limited in what type of furniture or ornamentation you can have on your front porch or a patio.
Many condominium associations will also have some limitations as to what you can do to change the appearance or layout of your unit’s interior. This is due to a desire to maintain a common look and layout for all units to maintain property values.
Maintenance & Ownership Costs
With the single-family home, your maintenance and repair costs are all your responsibility. Other costs you will incur in ownership include:
- Real estate taxes
- HOA dues
- All utilities
You have more control owning a single-family home, and along with that comes expenses.
Owning a condominium, you have a different structure for your costs. The condominium association pays for all exterior maintenance, landscaping, and common area costs of maintenance and operation. You will still pay for property taxes and insurance for your possessions and interior, while the condo association pays for insurance for the exterior and common areas.
The condo association also pays for some or all the utilities depending on how the association is set up and separate metering of units. You will pay a condominium association fee, often a considerable monthly or quarterly amount. Often, those who think their fees are too high may not be considering the many expense items paid for out of that fee. You will also be subject to special assessments at times to cover major repairs or remodeling costs, such as a new roof or pool major repairs.
As an owner, you have one vote in the association. Decisions about dues, management, and rehab work are made with voting input. Excessively high condominium dues could be a sign of poor management of the association. Seemingly attractive and low dues could signal future high special assessments when dues cannot cover problems.
Possible Resale Issues
Reselling a single-family home is straight-forward. If you have taken good care of it, you will enjoy a higher price than if you have deferred maintenance problems. In practice, you have a bit more control of the salability and value of your home based on your care and renovation of it.
With condominiums, your unit does not stand alone for sale. The condominium project is also part of the sale. If the project has not been maintained well, all units lose value, even though the individual owners only have one vote in control of the maintenance. If multiple remarkably similar units are for sale at the same time, your unit may suffer in competition.
Investors often avoid condos because their associations can and often do prohibit leasing of the units or limit the number that can be owned by one person or be rented out at the same time.
Whether you buy a single-family home, or a condominium is a personal decision with lifestyle and financial components. There are benefits and drawbacks of both, so choose the one best for your lifestyle.