What is the Difference Between an Apartment, Condo, and Townhouse?
What is the difference between an apartment, condo, and townhouse? You may be thinking this way while you search for the next place to live. They all seem similar as far as the physical structure is concerned, but it is imperative that you know the differences between them. The main feature that set these properties apart is ownership. For example, you don’t own an apartment, but you do own a condo or a townhouse. According to the 2017 survey noted by Price2Homes, 19.33% of Boston residents rent while 80.67% own their homes. You will learn more about the similarities and the differences between the property verbiage by reviewing our outline below.
Armed with this knowledge, you can choose the best path for you based on your lifestyle, budget, and the conveniences provided to you.
An apartment is a rental property that is owned by a landlord and/or managed by a property management company. You will not have ownership of the unit itself and you will be limited by covenants contained within a lease. Apartments are mostly located in: small multifamily buildings, large residential buildings or sprawling complexes, but you can also find single family rentals although those are probably the rarest type. Apartments offer the flexibility of leasing, so it is ideal solution if you do not plan to stay in one area for long. Apartments also offer you the time to check out an area, and see if you living in that town, or a specific part of a city that intrigues you, or is close to work.
Sometimes, the rent is not as high as the monthly mortgage payments you have to make when owning a home. However, in very competitive housing cities such as Boston, the rent can often be higher than the mortgages of like kind properties. Generally speaking, you will usually have to put down a larger purchasing deposit than a rental deposit, so it really makes sense to study both the rental and sales market and see which one gives you the best bang for the buck. Not all real estate markets are created equal. Some areas of Greater Boston it often makes sense to rent; and other areas it makes sense to buy. Having a trusty mortgage calculator to compare prevailing rents to can give you the edge.
Another big reason why people rent apartments is that if there is deferred maintenance on a property, or something breaks or needs repair; the landlord has to come out of pocket to fix these things in an immediate manner. Most of the time when you buy a property some of the fixtures, appliances and heating and cooling systems will have years of use on them and can go at any time. It’s just not mathematically reasonable to assume that you will buy new construction or recently renovated because much of the housing stock in Boston has been around for many years. Therefore, beyond your down payment you want to think about emergency financial reserves just in case a few things require attention. So if you are on outer edge financial stability of that purchase and you don’t think you are going to be in an area all that long; you should consider leasing as a main target.
When you rent an apartment, you are paying for the convenience of not having spend a lot of time getting quotes and chasing down vendors to fix any maintenance issues affecting the apartment unit. If your dishwasher is not working properly, for example, you place a maintenance request and the maintenance team will fix it for you. You don’t need to repair anything nor hire a repairman to do it for you. The property management or landlord also takes on miscellaneous maintenance such as pest control and lawn care. In essence, when you rent, you have a lot more free time over the course of a year to pursue other activities. Renting is a great option if you are a busy professional working vast amounts of hours, or a student with a huge course load, and just don’t have the time to devote to property management issues.
Once you sign the lease for certain number of months, you will need to stay during the whole leasing period; unless you work out something with your landlord that either allows you to sublet or break you lease. Some landlords have been known to put in clauses that create financially penalties for the tenant breaking the lease. It’s important that you know what you are signing, and always study the addendum and perform your due diligence. Many Greater Boston landlords will try to work with you to achieve the best outcome for both parties involved. The main key is to give the landlord as much notice as possible so that you can both develop a plan that works. Now you may still be responsible for any late payments or falling behind in rent; but if you work diligently you can win. As long as there is no financial harm caused to the landlord or loss of rent, most landlords just want to work it so that everyone is happy.
Once you agree and sign a lease, the rent usually is fixed for a specific amount of time. When it comes to renewing your lease, there are often rent escalators that landlords observe to keep pace with inflation and or any tax increases. Nearly all landlords will raise their rent to match any increases in city assessments or related state or federal tax increases. In most apartment leases, you will pay the rent plus various utilities. Some landlords include heat and hot water but that has become increasingly rare in the Greater Boston area.
According to the November 2018 rental report, the average rent in Boston is $2,480 making the city the second most expensive city to rent. The rent in Boston rose at 10.2%, making it one of the top cities with the fastest growing rent. And that is for one bedroom apartment.
A condo can be similar to an apartment as far as the exterior structure is concerned. When you purchase a condo, you become the owner. You can build your investment with the condo like you do with a regular house. The condo is generally managed in a hybrid way by the owner and/or a homeowners association (HOA). Essentially the condo owner has a significant degree of control of their unit so they handle most of the interior decisions and some maintenance. However the exterior and common areas of the building are usually handled through a pre-determined agreement whereby condo management fees are created. Condominium fees can vary widely depending on amenities and numerous other factors.
You can also rent a condo. In this case, the condo owner is your landlord. They are the only person of contact that handles nearly everything from collecting rental payments to responding to maintenance request. The condominium owner will also address requests and forward letters and correspondence to you from the condo associations should new rules or updates occur. You are expected to have a timely and consistent communication with your landlord, so it serves your best interest to be on good terms with them. Condos tend to have more updated features and personal touches because their owners take care of them and renovate them hoping to increase the value. For the most part there are more amenities offered by condos than by apartments. The HOA board allows the owners to provide their input on how the condo should be operated and managed.
A townhouse looks similar to single-family homes except they are part of a multi-unit complex and they share walls. There are usually two floors occupying the townhome. The first floor accommodates living room, dining room, and kitchen. The second floor accommodates the bedrooms. Some townhomes have three floors or more. Townhomes also tend to have large full basements not shared with other tenants which is attractive for storage and other uses. Like condos, a resident can either rent or own the townhome. Owning a townhouse is different from a condo because you generally own the land on which it is situated and the property itself.
Townhouses can also have an HOA board. The HOA board also manages townhouses, but the fees tend to be less expensive than the ones for the condos because there is not as much common maintenance required. Whoever is responsible for the maintenance depends on whether the resident owns or rents. If they rent, the property management or landlord will resolve the issues. If they own the townhouse, they are responsible for the maintenance. Townhouses are generally slightly less overall maintenance than single family residences that are rented or owned.
Now that you know the key differences between apartments, condos, and townhomes, you may have to figure out if which style of living is right for you. You may decide you want to rent a place, but the inconveniences and strict rules of apartment living does not sit well with you. This scenario can often be nerve wracking. If you rent too long you will not be building any equity into a property for the future use or upgrade opportunities. Perhaps purchasing a smaller condo or townhouse is the way to go for you and rent it out later if you move? You really have to come up with clarity of what is most important to you and what you can afford. You should also consider if you are buying at the top of a market or buying in an upcoming neighborhood. Details Matter. So you have got to write down all your important must haves and work them against your wants. Ask yourself what is your best overall strategy. Rents and property prices will vary widely from location to location so it is imperative you scan for bargains and rate that against your time commute to key locations you spend most of your time going back and forth to. In the end, it never hurts to seek out a real estate professional that has great data and years of experience so they can give you their insight. Some real estate agents will actually help you stay organized and ask you questions that you never even thought of and how renting in an apartment vs buying a condo or townhouse looks based on the market. A broker can often know about future supply that is coming in 6-12 months that may not be listed anywhere yet.
So it’s clear we have given you a lot to think about. But do not stress! Make the process fun. It’s great to explore new neighborhoods and styles of properties and owning and leasing options. If your gut is pulling you in one direction; keep listening to that instinct — chances are it is going to be correct. At the end of the day real estate still comes down to a huge mixture of preferences and lifestyle choices coupled with your budget. Keep looking – the prize is in the process!