Real estate investors on the hunt for the first investment property are faced with many decisions. Location, size, price, market opportunity, architecture, and even living style all come into play. If you're leaning towards a multifamily building, you will then have to choose whether you want an apartment vs. condo. The distinction between the two may not be noticeable for the tenant, but there are major differences for the investor buying to consider. This article will compare the two types of real estate so you can decide which is best for you.
What is the difference between an apartment and a condo?
While the physical building can appear nearly identical from the street, the two styles will have a big impact on the process of living in or renting the unit. An apartment is a building with five or more rental units all owned, managed, and operated by the same property owner. Each unit is rented from the landlord or from a third-party property manager who manages the building on behalf of the owner.
A condo, on the other hand, is a privately owned unit that is in a shared property development. The shared or communal areas of the property are maintained by a condo board and paid for through monthly homeowners association (HOA) fees. The HOA or condo board can designate if the condo can be rented or not, among establishing other rules and regulations. If rentals are allowed, the unit is rented to the tenant from the individual condo owner directly.
What are the features and amenities?
Both a condo complex and apartment complex almost always have shared amenities somewhere on site. The amenities will vary according to the individual property but could include pools, gyms, work spaces, and more. There's a perception that a condo building is going to be higher quality than an apartment building. However, there are rundown condos as well as fancy apartments, so don't assume that just because it is an apartment building the associated amenities will be of lower quality. These amenities may include parking, gyms, pools, laundry, dog parks, and lounges.
The interior amenities can be higher quality for a condominium due to the fact that the owner not only has the ability to make modifications but also the incentive to as well. If the unit owner does any remodeling, that will help them maintain or increase the value of the property. With an apartment, the landlord has the incentive to keep costs as low as possible to maximize their return on investment. You can expect more of a personalized feel with a condo than you will find in an apartment.
Pros and cons of apartment vs. condo