Are condos and apartments the same thing? What is the difference?

In most parts of the country when someone refers to a condo they're generally talking about a residential unit in a development that has an individual owner. So condos are owned and apartments are usually only rental units that are all owned by the same company or entity.

 

In some places like New York City the terms condo and apartment can be used interchangeably and generally refer to units that are available for purchase. In a few markets sometimes an apartment building will convert to condo which means the company that built it and developed it will turn around and partition out each unit for individual sale.

Is buying a condo cheaper than renting?

That's a tough one because there are so many variables. Rent in high rises is pretty steep and interest rates are at historical lows so it is possible that buying a condo could be cheaper than renting. If you consider that a nice apartment in a full-service building might be say, $2,500 a month for rent, a condo in a similar building might cost $400,000 to buy but with 3% down at about 3.25% percent interest your principal and interest payment would be about $1700 a month. So then you escrow about $400 for property taxes and then the HOA dues might be another $400 and you're right there around $2,500 per month.

Once you factor in the tax advantages of buying you could actually come out ahead if you itemize your returns. So it is important to talk to your accountant and see if there is a way that when you do your taxes you could actually benefit even more by owning a condo instead of renting.

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6 Properties Found.
Photo of Listing #T3255404
  • Active
  • $8,500
  • Virage Bayshore
  • MLS® #: T3255404
  • 2900 W Julia St
  • Tampa, Florida 33629
  • 2 Bed, 2 Bath, 2,864 SqFt
Photo of Listing #492398
  • Active
  • $6,200
  • Esprit Park
  • MLS® #: 492398
  • 850 Minnesota
  • San Francisco, California 94107
  • 2 Bed, 2 Bath, 1,586 SqFt
Photo of Listing ##499371
  • Active
  • $3,000
  • One Mission Bay
  • MLS® #: #499371
  • 110 Channel
  • San Francisco, California 94158
  • 1 Bed, 1 Bath

Is it smart to buy a condo instead of renting?

Is it smart to buy a condo instead of renting?  Well that really depends on your individual situation. If you're relatively sure you will not have to relocate for the next five to seven years and you have good credit for a low interest rate then it's generally better to buy something and accrue some equity than it is to spend money on rent.

Condo Tax Advantages

You'll gain some tax advantages too since the interest in taxes might be deductible. You are going to want to talk to your accountant about that to be sure. You may also be able to participate in the market appreciation that occurs while you live there over five to seven or more years.

Remember that nothing is guaranteed, it could be worth less if there's a market correction. But generally if you can ride that out and not have to sell in a short period of time you'll do okay. If you did have to sell within a couple years then you would have to pay realtor fees and the mortgage fees you paid when you took out the loan would kind of be wasted on just using a loan for that short period of time. So it's really best to talk to your accountant, mortgage broker and a good realtor and describe your situation so they can help you decide if buying or renting makes more sense for you.

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