An Introduction to Buying a Condominium

When you buy a home, there are plenty of choices. One is a condominium, a multiunit property that is divided and sold into individual units. Compared with single-family dwellings, owning a condominium includes partial ownership of a shared common property. This aspect of owning a condo can represent unique challenges for buyers. If you’re considering buying a condo, read on to learn more about this type of property and what ownership entails.

In a condominium, commonly called a condo, you own your residence. Other parts of the building or complex, such as common areas, are owned collectively by all the condominium’s owners. These community areas—called limited common elements—include patios, parking lots, garages, and other shared spaces.

A loose way to say this is that a condo is an apartment you own. In practice, condos ordinarily take the form of an apartment or a similar shared complex, such as row townhouses. Theoretically, though, a condo could physically be any shared building.

Condos are often found in places with high property values, like vacation hot spots and urban settings. This is because buying a single-family home can be prohibitively expensive in cities and towns where additional building space may be scarce. As such, condos can open homeownership to new groups of people.

Searching for the Right Condo

Looking for a condo involves a similar process as when you shop for a single-family home. If you have a general idea of what kinds of properties interest you, working with a real estate agent can be a great way to discover properties you might otherwise have missed out on.

If you’re more of a do-it-yourself person, you can search real estate websites and listings for condos in the locations that interest you. If you have a specific building or complex in mind, many have on-site sales offices where you can learn more about the condominium and view a show suite.

What to Know Before Buying a Condo

It’s not just the sales contract you have to think about when buying a condo. There is also an agreement or declaration that details how the condominium operates and is governed. Before buying your condo, you should request and read the documents that apply to the management of the complex.

Here’s what to look for: What are the major issues facing this complex? How large is the condominium’s reserve fund? How does management deal with owners’ requests and complaints? Does the condo board impose strict rules and guidelines that would make you unhappy?

When you buy a condo as an investment, vacation home, or year-round abode, it’s important to read all the condo rules via the agreement. Ensure you understand how the condo’s management team conducts itself and how the condominium complex is governed. You should check if the condominium you’re considering is well run and the rules and restrictions allow you to live the way you wish in the condo community. It’s also crucial to see if the condo building or complex has been experiencing problems that could hurt the value of your ownership stake.

Ask about homeowners association (HOA) fees, as well, because when you buy a condo, you must pay for the collective amenities (and their upkeep) such as a pool, clubhouse, or tennis courts. HOA fees cover reserve funds and regular maintenance and repairs, and you should be aware of separate assessed fees that could occur down the line.

Condo vs. Apartment or House

There are many reasons why a condo might be a better fit than an apartment or a single home, and money is undoubtedly one of them. The National Association of Realtors reported a seasonally adjusted annual rate of 410,000 units in October 2023, down 14.6% from the year before, with a median price of $356,000, up 7.6% from the previous year. Condo sales thus make up 11% of the housing market. The median price for all homes sold in October 2023 was $391,800.

This means condos are more affordable in many markets. Compared with renting an apartment, paying monthly toward the mortgage, if you have one, goes right into your equity, not the landlord’s pocket, and you can take advantage of the home mortgage interest deduction on your taxes.

Condos also provide attractive lifestyle choices for many prospective buyers. They are also popular with older adults looking to downsize their homes after their children leave the nest. Living in a condominium may also free you from typical homeownership chores like yard and exterior maintenance. They may also have desirable shared amenities like pools, fitness rooms, or tennis courts.

Buying a condominium, a house, or an apartment has different characteristics. Here are some further differences:

Ownership rights: When you buy a condominium, you own your unit and share ownership of common areas (like lobbies, gyms, and pools) with other unit owners. Buying a house typically means owning the structure and land on which it sits. If you buy an apartment, it can be difficult to make out the difference from buying a condo, which depends on the legal structure of the ownership. More typically, the word apartment is used for rental units.

Maintenance and fees: Condo owners are usually responsible for the interior of their units. An HOA maintains common areas, and you pay monthly or annual fees. Of course, you’re responsible for all maintenance in a house, including interior, exterior, and landscaping. When renting an apartment, major maintenance issues are the responsibility of the landlord or property manager.

Rules and regulations: Condos typically have HOAs whose rules must be followed. These can include restrictions on the kinds of renovations you can make, how many and what kinds of pets you can have, whether you can rent out all or part of your unit, and far more if the HOA feels inclined to regulate parking spaces, the types of barbecues and such allowed on patios, and so on. Some homes, too, have an HOA, but generally, they come with greater freedom for what one does with the property. Renting an apartment means following the terms of your lease agreement, which can include numerous rules the landlord sets.

Lifestyle and community: Condos can provide a sense of community and access to shared amenities like pools, fitness centers, and security services you might not otherwise be able to afford. Houses are typically better suited to families or those seeking more privacy. Renting an apartment can offer the flexibility of leaving the property once a lease ends. While many apartment buildings are mini-communities, others lack this since renters frequently come and go.

Condos as Vacation Homes

Condominiums can make owning a vacation home more affordable. In the U.S., condos became popular as a more reasonable way to buy a little piece of paradise in places such as Florida and Hawaii. If you want to relax at the beach but blanch at the prices of beachfront homes in the Sunshine State, condos offer a somewhat less expensive alternative.

A condo also has the benefit of having someone else watch your property when you're at work and miles away from the beach. Depending on the rules and location, you may also be able to help pay for that vacation condo by renting it out when you're not there.

The Downsides of Owning a Condo

There are some potential downsides to owning a condo. For example, even if you don't use your condominium's amenities, you still have to pay for them. You also pay for the maintenance on the grounds and any communal spaces in the complex. Condominiums have HOA fees and assessments to cover these costs, and these charges can rise annually. Over time, this will impact your long-term budget.

If you don't like to follow a specific set of rules for yourself or your guests, a condo complex with a long list of regulations for its homeowners can only be a recipe for frustration.

Lastly, a condo isn't always as easy to sell as a house, especially if yours has higher-than-average HOA fees or if your condo board has stringent rules for its condo community. For example, if your complex doesn't allow young children, you would lose some potential buyers.

The Bottom Line

If you’re considering buying real estate—whether as an investor, a vacationer, or a year-round resident—condos will likely be on your radar. This is especially true if you’re looking at an area where real estate is expensive. Condos aren’t inherently better or worse than any other type of residence, but depending on your situation, a condo could be the right choice for your next home.