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House or Condo? What’s Best for You?

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When you are thinking about buying a place to live or a vacation home, it can be hard to decide what to buy—a house or a condo. Your decision depends on your DIY skills and willingness to do things yourself versus paying to have them done, your stage of life and your comfort level with various other factors of owning a condo. Another factor is insurance. You don't always need homeowners insurance if you buy a condo, but you should consider condominium insurance.

Why Buy a Condo?
If you are a first-time home buyer, a condo can be appealing. You may be living alone or with a roommate and you want to build equity instead of paying rent. Later in life, you might be in the financial position to buy a vacation home. In retirement, you may be ready to downsize and stop taking care of the yard, a fence and other exterior maintenance necessities. In all of these situations, a condo might be an appealing choice for a variety of reasons.

  • If you buy a condo, you can potentially get a newer, more updated place to live for the same amount of money you would spend on an older house that requires updates such as a new roof, HVAC system or other big ticket items.
  • Buying a stand-alone home means you'll have to buy lawn equipment and know how to use and maintain it, as well as how to do other exterior maintenance.
  • Most stand-alone homes don’t have a pool or other such amenities and, if they do, that's just more maintenance. If you buy a condo, however, exterior maintenance is provided and oftentimes you will have amenities like a pool.

Why Not?
All the convenience, ease of lifestyle and amenities that condo living offers comes with a cost in the form of homeowners association (HOA) dues. HOA dues can be high, depending on where you buy your condo and what amenities are offered. In fact, they can run anywhere between $100 and $700 a month, but $200 a month is the average. The dues are used to maintain common areas and amenities and make repairs to the exterior of the property. If you buy a condo in a hurricane-prone area, it often includes your hurricane insurance. HOAs can be a good thing for a community, but you are bound by the HOA's covenants. That means if you want to make changes to your condo, those changes might have to be approved by the HOA board, and you cannot make changes to the exterior of the building. Some HOAs dictate what you can and cannot have on your balcony. For example, a high-rise condo on the water may restrict you from hanging beach towels or any other clothing outside to dry. They may also say you can't have a grill or rent your unit out as a vacation rental. If you don’t want to be bound by those rules, you may be better off buying a house.

Another tradeoff is that in a condo or townhouse, you share at least one wall with your neighbor—two if you don't have an end unit. In addition, the space may be smaller or have fewer bedrooms, you might not have much of a yard, and your garage might be smaller (if you even have a garage).

Buying a House Instead
There are plenty of reasons you may prefer home ownership to condo ownership. No wall-sharing, fewer rules about what you can and can’t do with your property, and possibly no HOA dues (although some subdivisions do have those too). The money you spend on HOA dues could be used towards a house payment instead, and you could get a nicer house. HOA dues don’t go towards building equity either. You will have to buy homeowner's insurance, which is generally more than condominium insurance, but depending on the condo you have your eye on, it probably costs less than your HOA dues.

If you want a house but don’t want to do yard work, it may be a better use of your money to pay someone to do your yard work for you. If you live in a climate that has four seasons, paying someone—even a neighbor kid—to mow for you could still end up being cheaper than HOA dues.

If you think you’d miss the amenities, there are subdivisions that have community pools and similar amenities, but that will mean you have to pay HOA dues. Some subdivisions have HOAs with rules about the type of fence you can have, the colors you can paint your house, etc. so you may not always be able to escape HOAs.

If you don't want to do exterior maintenance, don't mind sharing a wall or two with neighbors, don't mind a smaller living space, you enjoy the amenities a condo can offer and don't mind paying HOA dues for the convenience a luxury, a condo might just be the place for you.

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