How do you know if you should buy a house or a condo?

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When you decide to enter the housing market, there are many decisions to be made. One of the first decisions is always deciding on what type of residential real estate you want to call home. There are two basic choices – a house or a condo. There are benefits and downsides to each, and the ultimate experience of living in either can vary greatly.

While the appeal of a single-family home for most families is rather obvious, it is important to understand the basic difference between a single-family home and a condo before the decision is made and one or the other is ruled out completely. You just may find that depending on your situation that a condo or a home is the only real reasonable option for you.

Follow along as I examine the pros and cons of owning and living in a condo and a single-family home.

Condo versus home, the pros and cons

The size differences matter. In most cases, a single-family home will have more square footage than a condo. This given is not always the case as there are some small two bedroom houses and some very large three and four bedroom condos out there. Typically though, you can expect to find smaller spaces in a condo. Depending on your particular needs, you may find a smaller living space to be more ideal. You’ll have less to decorate and hopefully less clutter, to clean and to heat or cool.

With a house, you’ll typically have the option of adding additional space and repurposing space; while in a condo, it will be impossible to add on to your home.

Consider the maintenance needs. Many who choose the condo lifestyle do it because of the lack of required maintenance. This issue is especially true with older homeowners who do not want to take care of the exterior maintenance of the structure or a landscaped yard.

It is important to investigate and find out exactly what maintenance the condo association provides for the monthly homeowner’s association dues you’ll be paying every month. Typically, the HOA will pay to have the complex grounds professionally maintained, and you take care of the interior of your unit. Collectively, every condo owner shares in the cost for this service as part of the monthly HOA dues.

A single-family home is generally much more private than a condo. As a single-family home, it is self-contained on its own land with at least some space and a fence or wall between houses. On the other hand, condos typically share at least one wall.

Privacy is perhaps the biggest differentiation point between owning a single-family home and a condo, and it is a personal decision that you must make on your own. If distance between you and your neighbors is a high priority, you’ll likely opt for the privacy that a single-family home offers.

On the other hand, owning a condo typically offers some unique advantages that could be cost prohibitive if purchased individually and added to a single-family home. Most condos offer a variety of amenities that may include a swimming pool, a jetted hot tub, sauna, fitness center or a children’s playground, depending on the community. Many people like the closeness of the condo community, as it is typically much easier to meet your neighbors and find new friends.

Your financial health may determine your choice. While some single-family homes are in a community that has a homeowner association, nearly every condo has an association that is responsible for managing the financial affairs and community property of the neighborhood. Typically, each owner is assessed a monthly or quarterly fee, called dues that cover the common-use expenses such as the insurance, maintaining the landscape, trash service, general maintenance of the building exteriors, pool maintenance and taking care of other amenities and equipment owned by the association for use by association members.

If you own a free-standing, single-family home, without an HOA, typically you won’t be concerned if your neighbors fall behind on their HOA dues or other obligations.

The purchase financing will be different for each type of property. The process of obtaining financing for a condominium can be very different for financing a single-family home. With the purchase of a single-family home, you can use any home loan that you qualify for – whether it’s a conventional, Federal Housing Administration or Veteran’s Affairs loan. With a condominium, it’s important to verify that the specific condo will qualify for a specific loan – this step can be tricky at best.

There are many condo developments that are not FHA approved. One reason for that might be that the condo association does not want to spend the money to be approved by the FHA. While it is not terribly expensive, there are some associations that are penny-wise and pound or dollar foolish; locking out the large pool of first-time homebuyers, and thus reducing the salability of individual units, which in turn holds property values down. Another common reason that a condominium complex does not qualify for an FHA loan is that the ratio of owner-occupied and rental units disqualifies it.

The advantage of FHA financing, particularly with first-time buyers is that the buyer only needs a 3.5 percent down payment. When you decide to pursue the purchase for a condo, have your real estate agent identify those condo complexes that are FHA approved.

Consider the issue of a HOA versus personal control. When buying a single-family home outside of an HOA, you are buying a home that you can pretty much do what you want with – inside and out. On the other hand, when you buy a home – either single family or condominium – with an HOA, you are subjecting yourself to the rules and regulations of the HOA.

For anyone who wants total control over their home and property, an HOA is probably not going to work. With control of your property, you do not have the safety net that an HOA provides by maintaining the property and that all owners and occupants have to comply with the rules upon which everyone has been agreed.

Of course, because it’s yours, you can do anything you want that the city and county will allow you to do. This freedom could include painting your home purple, building a new structure, parking cars anywhere you want on your property or filling your yard with plastic pink flamingos.

In an HOA home, you will not be able to indulge in any of the above actions rather you’ll be limited in what you can do. Like all of your neighbors, you’ll have to observe the rules of the HOA. There will be restrictions as to what you can do with your home’s exterior and even where you can park your car. These types of restrictions are intended to maintain the integrity and value of your neighborhood.

The purchase price reflects these differences. Typically, a single-family home will be more expensive than a condo, for a number of different reasons that we’ve already discussed above. While a single-family home may be more desirable on many different levels, purchasing a condominium may make financial sense for the first-time homebuyer with a more limited budget and less cash available for a down payment. Condo’s also make perfect sense for empty nesters or anyone on a fixed income budget and wanting to make the dollar stretch further.

What is right for you? There is no right answer for everyone. You must decide for yourself if buying a condo or a single-family home makes sense for you. Let’s take a look at the pros and cons of buying a house versus a condo.

The single-family home pros and cons area private yard; maintenance and landscape is always the homeowners expense; no restrictions typically – unless imposed by the city or county on what color you paint your home or what style mailbox you install or anything else you want to do to the property – inside or out; all costs for insurance, trash, maintenance are the homeowners to pay and select; no condo fees and all control of the property is the homeowners.

For condominiums, the pros and cons are restrictions such as age, pet and ratability may be in place – depending on the buyer, this can either be a good thing or a bad one; if you want to change anything on the exterior of your unit like landscaping, raising a flag or changing any aspect of the unit, you must ask permission from the HOA; condos may offer amenities that otherwise could not be afforded – pool, gym, craft room, clubhouse or other frills and maintenance expenses cannot be paid on you schedule but are subject to the HOA.

The advantages and disadvantages of single-family homes and condominiums are numerous. While we can’t cover every aspect of the decision making process, hopefully, this discussion will allow you to grasp some of the differences and allow you to explore the options that fit your personality, your lifestyle and your budget further. From both a financial and an emotional standpoint, give yourself ample time to decide which is right for you and your own unique situation.

Call and get the information you need to make the right decision. The info is free, call now at (951) 296-8887.

For questions regarding available inventory or other real estate matters, contact me, [email protected] Mike Mason, Broker/Owner of MASON Real Estate Cal. BRE: 01483044, Board of Director, Southwest Riverside County Association of Realtors® (SRCAR).

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