What Is A Condo Or Condominium | All You Need To Know

You have just started working a new job and are making good money, so you have half a mind to splurge. 

Like most new jobholders, you are thinking about buying a car or going on a much-needed vacation to Hawaii with friends. Maybe you’re even planning to pay the plane fare of the entire group. 

But just in the nick of time, your parents advise you to use the money on something worthwhile; a new apartment, perhaps? It sounds like a great idea, but you have no real estate knowledge and are again going overboard, looking at stand-alone buildings. 

Luckily, a real estate uncle tells you to buy a condo, using it as a launching pad for stabilizing your career. However, just like many others, you’re skeptical about it; that’s why we have written this guide to explain why condos may be perfect for first-time homeowners. 

But even if you aren’t a first-timer, keep reading because we bet there are many things you didn’t know about condominiums. 

What Is A Condo Or Condominium

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What Is A Condo? 

You always hear about celebrities buying condos in exotic places and partying with other high-profile guests over the weekend. Or popular sitcoms show one of the characters investing in condo units and shifting to a condo community, which leaves the other characters disgruntled. 

So, what are condos, and why do they attract so much attention? In short, condos are individual units in apartment buildings that belong only to the condo owner. And each condo unit is part of a larger condo community, where people live in a shared space. 

That’s why condo associations charge a monthly fee to cover all interior and exterior expenses, known as maintenance costs. 

Moreover, these units are part of beautiful high-rises, situated in picturesque locations and complete with modern amenities, including swimming pools, tennis courts, and gyms. Not to mention, there is a governing board of directors who take care of daily operations, resolving any issues. 

However, anything that happens inside the condominium units is solely your responsibility. And as mentioned in the agreement, the HOA fees you pay go toward renovating the common areas and providing extra perks. For instance, snow removal is a major responsibility in cold climates, which the condo association takes into consideration. 

Condo Buildings 

That’s just the teaser about condo living, and if you’re interested, there’s a lot more to discuss, starting with the different types of condo buildings. 

1. Condo Home 

A condo home is just another residential property, but the condo owner owns only a portion of the building, consisting mostly of the interiors. In other words, think of it as a house where a single-family has access to the external perimeters of the property but doesn’t own it. 

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2. Condo Developments 

In technical terms, these are known as freehold condominium developments, where the developer owns the land. That said, they transfer the ownership to the buyer after the deal is complete, following which you need to take care of everything, including maintenance of the exterior property. 

The developer will only be responsible for maintaining the common areas once you move into the condo complex. 

3. Condo Share 

Do you long to have a place just to relax and spend some quality time with friends on vacation? Why not try out timeshares, also called condo shares, which you can use as a second home? 

We should tell you that these aren’t investment properties, and you have to pay property taxes and maintenance fees. Also, they are challenging to sell but what makes these properties desirable is that the living cost is only a fraction of hotel and resort prices in similar picturesque settings. 

4. Apartment Buildings 

These are the most common condo communities with several individual buildings making an apartment complex. While apartment owners are in charge of their respective units, a property management company or the HOA looks after external maintenance. 

5. Detached Condos  

What if we told you that you could own a condo without spending a fortune on maintenance? It may sound too good to be true, but detached condos can make this dream a reality. 

You can enjoy all the advantages of condo living and planned communities while the HOA takes care of the maintenance. However, there are no walls between houses, with buildings clustered together close to cities. 

6. Private Condo 

As is evident from the name, the landlord is the owner of the private condo who rents the apartment to a suitable tenant. Also, these aren’t your usual private apartments as the cost, paperwork, and criteria may vary depending on the landlords’ requirements. 

Advantages Of Condo Living 

If you’re hell-bent on getting a condo, the real estate agent will tell you all about the advantages of condo ownership, conveniently leaving out the cons. We have highlighted both for your benefit, but let’s look at the good points first: 

1. Amenities 

Before discussing the amenities, let us ask you a simple question – who are the people looking to buy a condo? These are mostly single people, first-time property owners, or senior citizens who don’t need a lot of space and want to avoid the hassle of maintenance. 

As a result, they enjoy the benefits of the community pool, dog park, and convenient parking, which would have otherwise been difficult for them to afford in a residential space. Also, the HOA takes care of the upkeep and maintenance, thanks to the modest condo association fees. 

2. Affordable 

The best part of owning condos is that they are affordable compared to traditional homes, and ideal for people looking to invest their monthly salary on something worthwhile. Plus, they are cheaper than a freestanding house even after considering the condo association fees, so purchasing a condo might be within your budget. 

3. Low-Maintenance

The idea of a single-family home is attractive, but the maintenance costs keep people away, tilting them in favor of condominium ownership. Basically, you can enjoy the pleasures of condo life without worrying about fixing the roof, shoveling snow, or mowing the lawn. 

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Disadvantages For Condo Owners

As mentioned, there are certain things you should know about before owning condominium complexes. 

1. HOA Fees 

Apart from the community regulations and your mortgage, signing the contract brings you under the ambit of the HOA restrictions. While the rules vary depending on the condominium association, you could find rental and pet restrictions in place. 

Similarly, condo owners pay association fees for the upkeep of the condo complex, which might vary based on the neighborhood. 

2. Privacy Takes A Hit 

You can pretty much wave your privacy goodbye after purchasing a condo because everyone lives on common property with shared walls. Sometimes, there are no walls with just buildings clustered together. 

Naturally, you can face several issues, not least of which are noise violations and a time limit on guests. 

3. Small Space 

If you have lived your whole life in a large family, enjoying acres of outdoor space – condos might not suit your lifestyle. They are smaller, and it won’t be surprising if you feel cramped. 

What’s more, some condo units don’t have a designated outdoor space, and you’ll have to walk a fair distance to the playground or park. 

Identifying Condominium Units 

A. Condo Vs. House

1. Amenities 

When moving into a new space, you should ask the other condo owners about the amenities on offer. This is because regular high-rise buildings for a single-family don’t have any additional amenities, which makes condo complexes much more desirable. 

For instance, you’ll find gyms, pools, and other utilities included in the condo fees. 

2. Cost 

And when there are utilities, you would think that the cost of living in condo communities is higher? However, that’s not the case, and condo units cost less than single-family homes as the living expenses are shared among the condominium owners. 

In contrast, a single-family home is bigger, while you have to pay for the property and the land, increasing the living cost. Not to mention, you should take into account additional expenses, such as lawn maintenance, which condo associations cover. 

3. Ownership 

Aren’t you the owner of the condo since you alone bought it? That’s right, but you forget that condos aren’t free-standing structures, something real estate agents leave out conveniently. 

When you buy a house, you’re the sole owner as it doesn’t share any boundary wall with other structures in the vicinity. In contrast, a condominium complex is built on a shared space, whereby each owner contributes to property upkeep with a monthly payment. 

4. Maintenance 

As mentioned in the earlier point, maintenance of a condo is different from that of a house, with the latter requiring significantly more work. This is because you’re responsible for the upkeep of the house, the lawn, and everything else that comes with the property. 

But since numerous people are part of a condominium association, everyone contributes towards the maintenance, lowering the overall cost. As a result, it’s easier to carry out renovations compared to a single-family home. 

5. Regulations 

A point in favor of living in a house is that you’re not bound by the HOA rules, which are often quite strict and may leave people frustrated. Equally pleasurable is the feeling of living in a free-standing home, as you’re the sole rule-maker and can bend the rules as you want. 

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B. Condo Vs Apartment 

1. Amenities 

Overall, it wouldn’t be an exaggeration to say that the amenities in a condo are far greater than in apartment buildings. However, it all comes down to how much you’re paying and the locality. 

In some cases, both condos and apartments offer similar facilities, including gyms, swimming pools, and tennis courts. 

2. Cost 

There are many things to worry about if you buy a condo, especially when it comes to monthly fees for maintenance, mortgage, property taxes, and HOA fees. That said, this is only true if you’re buying a condo as renting a place reduces the costs significantly. 

In fact, apartment owners have to bear lower expenses overall due to the fewer amenities, and even more so if they are renting the place. On that note, apartment renters may have to pay less than condo inhabitants as the condo landlord usually increases the monthly rent to cover maintenance costs and association fees. 

3. Ownership 

If you choose to live in an apartment building, a property management company will hold the ownership of the building. On the flip side, you’re the sole owner of the condo unit and hold sway over the interior of the property. We say interiors because the outside is shared community property, and you need to take up any issues with the condo association. 

But in the case of an apartment, you’re answerable to the property manager who takes care of the daily functioning of the place. 

4. Maintenance 

Maintenance is a slight hassle if you’re living in a condo because all problems within the unit are your responsibility. And if you can’t figure out what’s wrong or are renting the place, sometimes the only option is to contact the owner. 

In that regard, living in an apartment is more convenient because each building is likely to have a maintenance staff. The staff is well-trained and can deal with most issues promptly, saving you the hassle of finding a professional. 

5. Regulations 

As you know by now, the property manager establishes rules for the apartment, which is the same for all owners. 

Similarly, condo owners must abide by all the association’s rules and regulations. The only difference is that the association has a decision-making board comprising condo unit owners, whereas apartment landlords work individually of their own volition. 

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C. Condo Vs. Townhouse 

1. Amenities 

For those who don’t know, a townhouse is a cross between a condo and a single-family home. These buildings have multiple units and often feature shared walls with other similar structures. 

But there are only a few shared amenities for townhouse residents compared to single condos. Hence, we suggest living in a townhouse community that has playgrounds and pools reminiscent of a resort. 

2. Cost 

The advantage of townhouses is that they are cheap, especially compared to the higher living costs of a condo. Moreover, the area is larger than a condo, and you’ll have to pay lower HOA fees, but the maintenance costs may vary, depending on the house and property. 

3. Ownership 

Remember we mentioned that a townhouse is a condo and single-family home rolled into one? That’s why there are two types of ownership options highlighted by real estate agents during the purchase of the property – fee-simple and condominium ownership. 

If you opt for the latter, the functioning and responsibility are pretty similar to that of a standard condominium. In other words, the interior of the unit is completely your responsibility, while you’ll have to pay HOA fees for outdoor maintenance. 

But with fee-simple units, you’ll be the owner of the indoor and outdoor space, comprising everything that the property sits on. 

4. Maintenance

You should know that although the HOA fees are lower than a regular condo, the difference between a condo and a townhouse is that the latter requires more upkeep. This is because, as a townhouse owner, you’ll have to look after the interior and exterior walls, roofs, and the rest of the property. 

5. Regulations 

Since a townhouse is high-maintenance, the HOA rules are more relaxed, guaranteeing more freedom to the unit owner. 

However, this is mainly for fee-simple owners as you have to manage the entire property, whereas the rules are different for regular condo owners. In this case, individual unit owners pay association fees to keep the property in top shape, and naturally, there will be stricter rules for upkeep and to prevent quality issues. 

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Finding The Right Condominium Building

Now that you know about a condo and how it’s different from other residential units, you might be curious to check out a condo space. But where should you go to find a quality unit?

1. Real Estate Agents 

Although there’s a lot of information available online, we believe it would be wise to contact a reputable real estate agent. They are aware of all the latest projects in the vicinity and will point you toward a suitable condominium development based on your budget and other preferences. 

2. Online Research 

That said, it never hurts to do your own research before reaching out to a professional, with simple Google searches paying dividends. For instance, you can search with “condos for sale/rent” or “condos close by” to check the latest listings. 

Following this, you can request the professional agent to look at a particular unit or ask for their opinion. This would help you have a well-informed discussion rather than going by what they say. 

3. Paper Work

Moreover, you can drive around the neighborhood to check if any new projects are in the making; a realtor can help you with this. 

Most importantly, purchasing a condo involves a lot of paperwork compared to a single-family residence. As a result, the real estate agent should take care of all the financial details and documents to make the process hassle-free. 

But even if you completely trust the agent, make sure to read the declaration and financial forms before signing the legal document. 

4. Condo Loans 

When purchasing condo homes, most people want to pay the money through installments or take out bank loans. However, you should know that getting loans for condo ownership is slightly more complicated than normal home loans. 

Most investors are unwilling to loan their money to potential condo owners at face value; instead, asking for a percentage share of the condos. This is known as shared ownership, whereby a single person cannot hold 100% of the living space. 

In fact, many lenders impose regulations that prohibit people from owning more than 10% of the units in a building. Additionally, others approve loans only if condo owners have occupied more than 90% of the units. 

There are several other regulations, including fixed LTV ratios, called loan-to-value ratios fixed by individual lenders. This determines the worth of the condo in comparison to how much of it is owned. So, if the LTV value is 80%, it means that you should pay 20% of the condo fees. 

The bottom line is that you should get your finances in order before splurging on a condo.

5. HOA Details 

Before you buy a condo, we recommend studying the HOA guidelines or attending a condo association meeting in person. This will give you a fair chance of reviewing the regulations to see whether they are overly restrictive. 

Moreover, talk to the neighbors to determine how they feel and if they are happy with the policies. On that note, you can ask for the details of recent meetings to determine if the HOA dues have increased or decreased in the past couple of years. 

Moving on, it wouldn’t be the worst idea to review the litigation history when it comes to daily issues and taxes. But why is this important? Because you, obviously, wouldn’t want to own a property that has pending lawsuits, and it’s best to steer clear of these legal matters lest you get dragged in. 

Let us offer you an example of how everything is interconnected in condo ownership and why we are telling you to do a background check before buying. 

At times, many people refuse to clear their HOA dues, thereby pushing the condo association toward bankruptcy. What’s more, if they don’t clear the dues, the valuation of the property decreases, causing lenders to withhold their financial assistance. 

On that note, a proper community will have at least 25% of its gross income in reserve for dealing with emergencies. 

6. Tax Assessment For Condos 

When the condo association runs out of money, the onus falls on the condo owners to find a solution because they are subject to an assessment. That’s why people should assess the tax details before moving into the property, especially if the condo selling price is low. 

In such a scenario, the tax assessment is usually high, and you can expect a higher-than-normal tax bill waiting in the mail. Long story short, you need to always ensure that the taxes add up to the valuation of the property for safety. 

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What Is A Warrantable Condo? 

Thus far, you have seen that condo living isn’t as easy as it looks on television, and several factors determine its worth. Yet another vital assessment you must make is checking whether the condo is warrantable, ensuring that it’s easy to sell later on. 

On the flip side, if the condo is non-warrantable, it fails to satisfy the financial guidelines. As a result, it will have a detrimental impact on the appraisal value, and most buyers won’t be able to purchase the property. 

So, how will you know if a condo complex is warrantable? We have shortlisted the essential points below: 

  • An individual can’t own more than 2 units in a complex comprising 5-20 condos
  • Can’t own more than 20% of the units, if there are more than 20 condos 
  • Lenders can waive the issue when there are less than 5 units 
  • The owner should occupy 50% of the units
  • Occupancy isn’t essential after an agreement is reached with the owner 
  • No running lawsuits 
  • Square footage should be less than 35% of the commercial space 
  • Detached condominiums shouldn’t share walls 
  • More than 85% of the owners should have cleared their dues 

In a nutshell, following the above points will help you get adequate financing for purchasing a suitable unit. 

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How To Rent A Condo? 

When you can’t invest in a condo, renting a condo complex would be the next best option. This makes it convenient to manage your finances and needs while choosing a suitable property. 

But did you know that there is a right time to start looking for a condo? Although it may seem insignificant, you should start searching for condos at least four to six weeks before moving in. 

Moreover, if you can get the paperwork ready during those initial weeks, it will make shifting that much easier. You can also check whether you need to make any major repairs to renovate the place. 

Ideally, paying rent should be easier than buying a unit; however, the paperwork may vary, depending on the locality and your requirements. We have listed the common paperwork that you will require for condominium living: 

1. Lease 

Simply put, the lease agreement contains all the details about duration, leasing terms, conditions, price, and everything related to the condo. 

2. Credit Report 

Went to the bank, and they asked to see your credit score? Well, you may not like the long-drawn-out process, but it’s essential to determine whether you can pay your bills on time, based on past records. 

Long story short, the credit report is an estimate of whether you can pay off the installments at the correct time. 

3. Rental Form 

Once the lease agreement and the credit scores are in order, the real estate agent or landowner will draw up the rental form. It contains details about your contacts and references that you have mentioned, but most importantly, it deals with the financial side of things. This includes automobile leases, outstanding debts, and financial sources.

4. Employment Letter 

The final document, and perhaps the most important, is your employment letter detailing your annual income and the duration of the employment. In a nutshell, it provides an insight into your financial situation and if you can fulfill the necessary payments when the time comes. 

Think about it; no one will want to rent the condo to you, even if there’s a slight chance of you missing the installments. What’s more, self-employed people will be declared fit by the landlord’s real estate agent after going through the Notice of Assessment, available at the revenue department. 

We know that some of you may find the above points too complicated, so it would help to contact a property manager to go over the details. 

Is It Worth Buying A Condo? 

It’s definitely worth buying a condo, especially for first-time homeowners who can conveniently pay the condominium fee. If you remember, we have already spoken about how condo prices are lower compared to traditional homes; not to mention the tax benefits on offer. 

Plus, thanks to the homeowners association, you can enjoy shared amenities at affordable rates, saving you the hassle of monthly maintenance. But to truly judge the worth of a condo, it’s essential to know whether they appreciate or depreciate in value. 

And to answer this question, we have to ask a couple of follow-up questions related to the location, popularity, and condo fees. Naturally, a condo situated in a popular neighborhood comprising quality amenities will increase in value after a few years. 

Similarly, the valuation will fall if the property taxes are high and the rules are restrictive, making it challenging for condo owners to adjust. On that note, vacation condos are your best bet since they are located in pristine neighborhoods with modern amenities for comfort. 

But remember that the HOA fees may vary, increasing or decreasing every year, depending on landscaping and repairs. So, pay attention to these factors to determine the overall cost, ensuring that when you sell the place, you can at least break even. 


That’s all the information we had about condos and what it feels like to live in condo developments. 

While driving by a posh neighborhood, the spell-binding architecture and large lawns may leave you awestruck, but it’s equally important to know what life’s like inside the four walls. And although it’s difficult to put into words the challenges and advantages of condo life, hopefully, this guide provides a much-needed insight into a condo complex.

In other words, we are trying to say that you shouldn’t judge a book by its cover or a condo by its amenities. Instead, use our guide as a reference to find a suitable property. 

And when you do, sit on the balcony and raise a toast to us if this article was helpful.

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