5 Differences Between Buying a Condo and Renting an Apartment

A typical condo and a typical apartment may look and feel a lot alike — but they’re actually pretty different. Each one comes with its own barriers to entry, costs, benefits, and lifestyle.

To put it simply, renting an apartment is a very low-commitment lifestyle. You pay your rent, but all the maintenance and property taxes are on the landlord. Buying a condo, on the other hand, comes with much more responsibility. After the long process of scouring real estate websites, putting in bids, and successfully pulling off a purchase, you’ll be met with a mortgage payment, HOA fees, and various other homeowner costs — but unlike with renting an apartment, you have the benefit of building equity.

Deciding between renting an apartment versus buying a condo can be a tough call. Let’s go over some of the major differences between the two!

Requirements and Barriers

In general, getting an apartment is a lot easier than buying a condo. When you apply for an apartment, your prospective landlord will usually do a credit check, and possibly check past references, but if your financials look good, getting into an apartment is relatively fast and easy.

Buying a condo, on the other hand, is the same process as buying a house. You’ll have to apply and qualify for a mortgage through a lender, which will involve a deep dive into your financial situation. If, for example, your credit isn’t great, you’ll have to work hard to buff up your credit score before you apply for a mortgage, or your chances won’t be great.

You’ll also have to put down a substantial down payment, and pay closing costs like home inspection fees and title insurance. The bar here is a lot higher, and the purchase process will usually take weeks or months.

For these reasons, many people who have an unsettled or unconventional financial situation often opt to rent an apartment, or pursue opportunities like rent-to-own homes, until their situation improves enough for them to qualify as a home buyer.

Responsibilities

One of the biggest differences between renting an apartment and owning a condo is who is ultimately responsible for the space.

If you’re renting an apartment, the landlord has ultimate responsibility for all regular maintenance. If the roof springs a leak, if the stove or the refrigerator needs to be repaired, or the toilet gets clogged, it’s the landlord’s responsibility to handle the problem. Many tenants even call the landlord to change a burned-out lightbulb! Renting is a lot like being a permanent guest. You live there, but you don’t have to do any of the labor of keeping up the place.

On the other hand, owning a condo is more or less like owning a house. Any problems that crop up in your unit — the clogged toilet, the burned-out lightbulbs — are now your responsibility. The homeowners association (HOA) is only responsible for maintaining common areas, which you’ll pay HOA fees to fund.

Freedom to Customize Space

If you’re renting an apartment, you’re going to have very little freedom to customize the space. Don’t like the wall-to-wall carpeting, the avocado-colored appliances, or the 1970s-era light fixtures? You’re probably going to have to live with them. While some landlords do give their tenants limited freedom to renovate or change the space, many don’t — and it’s perfectly within their rights to forbid any changes at all. If you go ahead and make changes to the space without getting permission from the landlord, you could lose your deposit.

With a condo, you’ll have more freedom to renovate the space to your own tastes. You’ll likely be able to paint, replace appliances, and customize features like light and bathroom fixtures, wall and window treatments, and other cosmetic finishes.

However, many HOAs have strict rules on interior renovations that could complicate or prevent certain changes. For the most part, these restrictions are put in place for the benefit of your neighbors, since intrusive renovations like tearing up walls and floors can be extremely noisy and disruptive for people in adjacent units. And if plumbing or electrical work goes wrong, it can result in catastrophic flooding or fires. Condo owners should always review their HOA rules before undertaking any renovations.

In the end, both apartments and condos are going to come with significant restrictions on what you can do to the space.

Differences in Cost

Whether you’re renting an apartment, or you own a condo, you’re going to be shelling out a significant amount of money each month. But condo owners will generally have to pay a lot more.

If you’re renting an apartment, you’ll have to pay rent to your landlord and possibly take care of a few basic utilities. Your landlord can only increase your rent when your lease is up, and if you don’t think the increase is fair, you can always move out.

Condo owners have more financial responsibilities. Unless you buy in cash, you’ll have a monthly mortgage payment just like any other homeowner. You’ll also need to buy condo insurance — the equivalent of homeowner’s insurance — that covers your unit only. The building will be covered by a master policy taken out by your HOA.

Of course, condo owners will also have to pay HOA fees. These are monthly charges that cover things like maintenance of common areas, landscaping, emergency repairs, and such. This monthly fee is not negotiable, and it generally increases over time.

While condo owners can take up HOA fee increases with their condo board, there isn’t much recourse if they find fee increases objectionable — there’s no way to bring down your HOA fees like you can bring down realtor fees. Condo boards can also levy “special assessments” to cover emergency costs, such as major unforeseen repairs. This is essentially a one-time fee that every condo owner in the building has to pay on top of routine HOA fees. To avoid paying for a lot of special assessments, make sure your prospective building has a healthy reserve fund before you move in and sign that HOA agreement.

Of course, while condos come with higher costs than apartments, you also accumulate equity with every condo payment. Apartment renters get no future benefit from their rent payments. Once that money is paid, it’s gone forever.

Property Taxes

As an apartment renter, you don’t have to worry about property taxes, which are the responsibility of the owner or landlord.

However, condo owners do have to pay property taxes on their unit, since they own it. While condo taxes are generally lower than property taxes on single-family homes, they’re still a fairly significant annual expense.