There may many decisions to make when buying your first home, including how much home you may be able to afford, which type of mortgage loan may be right for you, and which real estate agent to use. Another choice to consider is whether buying a condo is a better fit than a single-family home.
Personal finance expert Stephanie Bousley says a condo may be ideal for working families or single professionals who have less time and need more convenience when owning a home. They may also make sense for “people who aren’t sure if they want to live somewhere forever, but want to invest in real estate and stop throwing away money on rent.”
If you haven’t explored the benefits of buying a condo, here are three reasons to consider one for your first home, as well as a few potential downsides.
1. Low Maintenance
Buying a first home means assuming responsibility for maintenance and repairs, something your landlord may have handled previously. Bousley, who owns two condos, says one of the perks of buying a condo is not having to bother with the typical chores that go along with owning a single-family home.
That may include things like landscaping and lawn care, maintenance and/or repairs to the roof or exterior of the condo and keeping sidewalks clear in winter. “The association fees you pay essentially cover all this,” Bousley says.
2. More Amenities
Depending on the neighborhood, buying a condo could offer more amenities compared to a single-family home. For example, you might have access to swimming pools, tennis courts, fitness areas, a dog run, or a shared recreation space you can use for parties or other events.
Similar to maintenance, you’re paying for these amenities through your homeowners association or condo association fees. The main benefit of that, says Daniela Andreevska, marketing director at real estate analytics platform Mashvisor, is that “you don’t have to pay for them in their entirety, but you get to split the cost with the other condo owners.”
3. Lower Sale Prices
Making sure you’re choosing a property that fits your budget is important when buying your first home. A condo may prove to be more affordable.
According to the National Association of Realtors, the median sale price for a single family home was $260,500 as of September 2018. By comparison, the median sale price for a condo was $239,200 — a difference of $21,300.
A lower total purchase price may result in a lower monthly mortgage payment. You may also not need as much money for your down payment, which could make buying a condo more budget-friendly.
Weigh the Potential Downsides
While condos can offer convenience and lower purchase costs, they may not be right for every buyer. Andreevska says first-time buyers need to be aware of the rules of condo ownership.
For example, “you can’t decide what to do with the outside of your unit,” she says. “The HOA [may have] responsibility and control over how to maintain and improve the curb appeal and common areas.”
Your condo association or HOA may also have restrictions on things like pets, noise and renting out your unit. If you’re eyeing a condo as a potential investment property for the future, be sure to keep this in mind.
There are other possible challenges you may have to contend with when buying a condo.
You may be living “in closer proximity to your neighbors, so if you accidentally buy the condo sharing a wall with a particularly loud, rude or unreasonable person, you’re kind of stuck with them,” Bousley says. Additionally, “the association fee you pay every month doesn’t go towards home equity and [may simply be money down the drain.”
Monthly HOA fees average $331, according to Trulia. That’s nearly $4,000 per year, which doesn’t include the cost of repairs or maintenance for the inside of your unit.
Consider Costs and Lifestyle
If you’re on the fence about buying a condo, compare what you’d spend on a traditional home and the type of lifestyle each one offers. A condo may be preferable if it costs less than a single family home, Andreevska says, and you prefer urban living to suburban surroundings.
Once you’ve decided the route you want to take when buying a first home, connect with a Finance of America mortgage advisor to discuss your home loan options.