Buying a condo can be a great way to dive into homeownership without worrying about the upkeep that comes with single-family homes. Condo dwellers can also typically take advantage of shared amenities, and the condo association takes care of building maintenance. Buying a condo can be a great way to dive into homeownership without worrying about the upkeep that comes with single-family homes. Condo dwellers can also typically take advantage of shared amenities, and the condo association takes care of building maintenance. You don’t necessarily have to live in it, either: If the association permits rentals, a condo can be a great investment to earn rental income. The buying process can be a bit tricky, though — here are our top tips for buying a condo, plus pros and cons.

What is a condo?

Let’s start with the basics. Short for condominium, a condo is a single unit within a multiple-unit property, typically an apartment-style building or townhomes (though they can be freestanding homes as well). It can be one of many units in a shared structure like a high-rise building, or it can be in a much smaller walk-up building with two or three units.

If you’re thinking about buying a condo, it’s important to understand what your purchase includes. No matter how big the building or property is, you own your individual unit. You also own a pro-rata share of common areas and amenities of the community with your neighbors, which can include parks, pools, playgrounds, gyms, dog-walking areas and other public spaces. This also includes the land underneath the structure. Condo owners also pay for their own property taxes, utilities and maintenance, and sometimes for exterior maintenance, as well, depending on the community.

Shared areas of condos are usually managed by a condo association. The association typically acts as a supervisory board and hires a property management company to handle maintenance, communication with residents and other duties. Condo associations can differ based on the requirements of the individual property. Some may impose additional fees to cover shared expenses, such as unexpected building repairs or new amenities approved by the board.

“A condo owner has the title to their individual unit but shares ownership of the common areas,” says David Lee, a Realtor and team leader of the David Lee Group with Keller Williams Realty in Orange County, California. “Being a part of an association, condo owners typically pay an established monthly fee to cover their budget and expenses set by the association.”

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Condo vs. house

One of the key points of differentiation between a condo and a house is price. The median price for a preowned condo was $331,000 as of October 2022, according to the National Association of Realtors — a sizable savings versus $379,100 for a single-family home.

However, the saying “you get what you pay for” rings true here. When buying a condo, you’re only purchasing the interior space of your dwelling unit. The land and other facilities are owned in common with the other owners of the complex. Condos are generally more affordable because they come with less space — you likely won’t have your own backyard, for example, and the interior tends to be smaller than the square footage of a single-family home. In addition, while house owners are relatively free to make changes to suit their personal needs and tastes, condo owners are usually not permitted to remodel.

Condo mortgages can also come with more stringent requirements and a higher interest rate than those for single-family homes, as well as a larger down payment requirement of 25 percent if you want to avoid paying for private mortgage insurance. (With a house, that figure is 20 percent.) Why? With the association’s financials and other factors to consider, mortgage lenders typically view condos as a somewhat riskier investment.

7 tips for buying a condo in 2023

1. Consider your lifestyle

   Hate to mow the lawn and trim the hedges? What about pressure washing your driveway? Are your finances such that having to lay out $5,000 or more for a new roof will be a burden? Condo living means less effort for maintenance, so if you answered yes to these questions, a condo might be for you. However, if the desire for a large backyard outweighs the time you’ll need to spend maintaining it, then another type of property could be a better option. Similarly, if sharing walls, ceilings or floors with a neighbor seems unappealing, a condo might not be the answer.

2. Find a Realtor who knows the condo landscape

   If you’ve decided that buying a condo is for you, you’ll want to find a real estate agent who understands the ins and outs of the process — ideally, someone with a track record in condos. An experienced agent will be able to address any concerns you might have and guide you through crucial steps, like reviewing the condo association documents.