Townhouse Vs. Condo: How To Make The Right Choice?

Buying any property – such as condos and townhomes – requires a certain amount of prior knowledge in real estate.

The potential buyer – or, should we say, future condo owner – should be familiar with the costs, ownership, taxes, interior, and exterior maintenance, resale value, insurance costs, and so much more.

Generally speaking, the list of items that future townhome owners and/or condo owners need to tick off before they officially set foot in their dream home.

Your appointed agent will surely point you in the right direction. However, this doesn’t mean that you can sit back in and wait. First-time homebuyers should take the initiative and learn about the main differences between a condo and a townhouse.

We’re here to help you get to know these two housing options and go through some basic condo vs. townhouse information that will surely be an asset once you decide on the right choice for you.

Necessary Information For Condo Owners

To begin with, what are condo developments or condominiums?

Condominiums are a complex of buildings consisting of private units. In essence, this is a private property that you own, but at the same time, you share common areas with your neighbors.

Are condos detached houses? 

It’s possible to come across a detached condo – meaning you don’t share walls, bottom floor, or other architectural elements with neighboring condos. These units are legally classified as single-family homes.

Different Types Of Condos

Before we go on, let’s just briefly explain the difference between condos and apartments because we feel people often mix up these two. The main difference here is in the ownership:

You can rent apartments, but you can own condos. That’s all there is to it.

Condos are popular housing options for young people who are looking for independence. However, potential condo owners are not aware that there are more types of condo units.

What are some of them?

First off, you have condo buildings, as we mentioned a moment ago. It’s a complex unit consisting of several owners. Next, you have detached condos. The main difference between these condos and homes is the separate walls.

And if you’re looking for a vacation home, then condo shares are the right choice. With these, however, there are fees and taxes that you’ll need to pay over the course of the year.

Monthly Maintenance Fees A Condo Owner Has To Pay

Before deciding on a condo, you should be familiar with your finances and ready to pay the bills.

Of course, you won’t be paying the same for a 500 and 1,000 square feet condo. These fees depend on:

  • The size of the property (square footage)
  • Whether the building’s a high-rise or low-rise (multistory buildings)
  • How many buildings are in the complex
  • The amenities covered (tennis courts, parks, playgrounds, pools)

The condo association is in charge of overseeing the fees for your condo community and must take into account the following factors:

  • Utilities
  • Contracts
  • Housekeeping and lawn maintenance
  • General admin costs (office expenses)
  • Property taxes

Numbers can vary.

For less square footage, you’re looking at approximately $500. But if your condo is bigger, though, you could end up paying more than $ 1,000 per month – which is not that budget-friendly if you give it a second thought.

With condos, the destination is a matter of personal preference. Still, if condos you’re interested in are located in urban or central areas of the city, you’ll have to bear with higher numbers.

Here’s a list of average monthly fees for some major cities in North America:

  • New York: $1,334
  • Log Angeles: $600
  • Chicago: $400
  • Houston: $416
  • Philadelphia: $450

What Is Covered?

Monthly condo fees cover a wide range of services and shared amenities, including:

  • Lobby and common spaces
  • Landscaping
  • Tennis court
  • Snow removal
  • Sewage lines
  • Elevators (repairing)
  • Trash removal
  • The building’s exterior
  • Swimming pools, fitness centers (if there are any)
  • Sidewalks

What Is NOT Covered?

Although monthly fees cover plenty of common amenities, condo owners are responsible for accidents in individual units. 

For instance, if your bathroom floor starts to flood or the tiles in the kitchen start coming apart, you’ll have to pay out of your own pocket. That is why all the condo owners should inquire about the building first!

However, not everything’s rainbows and butterflies in the real estate business.

Many condos turn out to be in worse condition than they were initially described. And since we’re on the topic of condos, here’s a thought:

Many of you will choose condos for privacy reasons, but what happens if you end up having noisy neighbors? That could turn into a huge problem.

Privacy expectations could be violated simply because of different lifestyles.

On that note, before you decide to move into your condo, you’ll have to sign a contract that prohibits you from making noises that disrupt the lives of other tenants.

The not-so-comforting news is that there’s only so much that can be done regarding this issue. The most you can do is have a condo debate with the noisy neighbor without legal action.

One more thing:

If your condo building is located in urban areas, be prepared for 24/7 uproar!

Condo (HO6) Insurance

Also known as HO6 insurance or walls-in coverage, this policy includes personal liability coverages and living expenses. There are three main types:

The first one is bare walls coverage, and it covers fixtures, structure, and most of the furnishings in shared spaces. The second one would be single entity coverage, which provides coverage for the built-in property. All-in coverage is the third one, and it applies to the entire property owned by the condo association.

While condo associations protect some common areas, HO6 insurance protects an individual unit.

A typical condo (HO6) insurance covers:

  • Building property: Units, walls, fixtures
  • Personal property: Furniture, electronics
  • Personal liability: Legal expenses
  • Loss of use: Costs of transport and lodging (if the unit is uninhabitable)
  • Loss assessment: Personal portion of losses shared by the condo association

To gain a better idea, here are annual condo insurance rates in 2021:

  • Alabama: $540
  • California: $501
  • Delaware: $406
  • Florida: $942
  • Georgia: $473

Important note:

Floods are usually excluded from both townhouse and condo insurances.

Townhouse Owners – Vital Information

Time to move on. The next topic we’re going to look at is townhouses.

What are they?

Townhouses are multistory units. So, unlike detached houses, most townhouses share walls with other units, making them townhouse communities. These living spaces have been around for centuries, but their number has started to drop drastically in recent decades.

Most townhouses are built in suburban areas, and they’re fit for growing families.

Townhouse Vs. Townhome – Is There A Difference?

First-time homebuyers must be confused by the concurrent use of “townhouses” and “townhomes.”

Lets us clarify that for you:

The difference is the destination. Townhouse development, also known as rowhouses, shares at least one wall, and they’re more compact than detached homes. They’re also common in suburban areas.

On the other hand, most townhomes were initially built in cities where real estate was in great demand.

Individuals usually own townhomes, so it’s viewed as a single-family home. They have a separate entrance and a great deal of outdoor space.

Homeowners Association (HOA)

Both condos and townhouses should be a part of the Homeowners Association.

It’s a type of membership that binds one or both sides to obey certain rulers regarding their living space or living quarters.

These community guidelines help set the foundation for a peaceful and respectable neighborhood.

As soon as you become a townhome owner – and, in turn, a part of HOA – you are obliged to respect these guidelines.

What Are The Guidelines For HOA?

It’s safe to say that every HOA is unique, but some widespread guidelines serve as the basis of every Homeowner Association. They are as follows:

  • Architectural controls
  • Home occupancy limits
  • Parking rules
  • Short-term rental restrictions
  • Trash and recycling rules
  • Lawn and holiday decoration restrictions
  • Noise complaint policies

The last one might have you wondering, are townhomes private?

Unfortunately, there have been a ton of complaints over the past few years. Most are related to issues regarding private outdoor space, noise problems, and the like.

Residents complained that they could hear their neighbor drilling while sitting in the dining room – that sort of thing.

Homeowners Association Fees

Homeowners association fees refer to the money that all condo owners and townhouse owners must pay to their HOA once a month. This money is meant for regular maintenance of the property.

It’s essential to note down that these fees also apply to single-family homes.

The numbers change from province to province, but we can agree on an average price of $200 to $300 per month. However, some HOAs charge their residents up to $1,000.

What Do HOA Fees Cover?

Usually, HOA fees cover:

  • Maintaining shared areas (lobby, swimming pool, a tennis court)
  • Utilities (water, sewage, garbage disposal)
  • Special assessments (if enough money is raised)

The price of the fees depends on the property and amenities – the bigger the property and the more amenities, the higher HOA fees.

VA Loan – A Helping Tool For Condo And Townhouse Communities

If you’re a veteran, here’s something to look forward to:

Namely, with the help of the Veterans Administration Loan, you’re one step closer to buying a home. With this loan, veterans and service members and their spouses can buy a home with almost no down payment and no private mortgage insurance.

VA loans have requirements and set standards for potential clients.

Private lenders, such as banks, usually provide these loans – and the borrowers will need to provide the lender with a certificate confirming their position.

Most people opt for this loan to build a home, improve it or refinance a mortgage.

Condo Vs. Townhouse – Which One Is Better?

We’re slowly bringing this topic to an end. Now’s the perfect time to ask the following question:

What is better, a townhouse or a condo?

To make the final decision, you’ll have to go through everything we’ve mentioned so far. It comes down to personal preferences – and what you’re looking to get out of your future home.

One thing’s certain – you’ll have to pay property taxes and fees. That’s something you can’t avoid, but you can limit your budget and say, “This is the most I can set aside for fees, and not a penny more.”

Whether you are looking for a detached single-family home, condo buildings in your area, or traditional houses, be sure to consider everything we discussed before putting your name on the contract.

Oh, and don’t forget about homeowners insurance:

Take the time to think about what type of coverage suits you best – and check out our helpful tool that allows you to compare quotes from the leading insurance carriers in the US for free.

Insurance Geek is here to help you choose a plan that will protect your property – and your budget!