Condo vs. Apartment: Which is the Better Choice for You?
One of the biggest steps in entering adult life or accepting more challenges as an individual is living alone. Indeed, living alone has a multitude of difficulties. From choosing the doing your daily chores to choosing where you want to live and eventually settling down whether you would want to live in a condominium vs. apartment.
When it comes to housing in the Philippines, there are several alternatives. Renting an apartment, purchasing a condominium unit, or building one's own house are all viable options. In this post, we will compare investing in a DMCI Homes condominium to long-term apartment renting and determine which choice is ideal for folks who have recently moved out of their family home.
In the short run, renting an apartment is less expensive than purchasing a condominium unit. However, buying a condominium unit is more cost effective in the long run. This is because the value of a condominium unit often improves over time while the price of rent usually does not. So it really depends on whether you want to invest in a condominium vs. an apartment in the Philippines.
There are various reasons why people would opt to buy, and ultimately own, a condominium unit. The main reason, however, is either for end-use or merely for investment. The intention to buy a condo for end-use is usually for use in family matters, such as settling down; whereas, the intention to purchase a condo for investment usually means that the unit is to be used for rental or lease.
It is notable that most condominiums in the Philippines are located inside a city’s central business district. That being the case, if you are living in the city, condominiums are your best bet to consider as your home in the city.
There are several advantages to living in a condo. They are often contemporary, roomy, conveniently placed, and well-equipped with all the amenities that someone might need. But how can those who are relocating decide between renting an apartment and looking for condominiums for sale?
While the choice is dependent on an individual's present financial circumstances and future intentions, there are a few guidelines to assist potential purchasers and renters decide. Of course, factors such as the cost, maintenance, or location must be considered.
You must take into consideration the following factors and crucial real estate investment questions in determining whether to invest in a condominium v. apartment:
Factors Between choosing a condo and an apartment?
1. Cost of investment
For apartments, the cost of renting an apartment is rather straightforward. When you begin your lease, you typically pay a deposit and may be asked to pay the first and last months' payments in advance. Then, for the duration of your leasing agreement, you make monthly installments.
For condominiums, on the other hand, the fees of becoming a condo owner are slightly more extensive and costly. First, you will pay a down payment, closing charges, then a home inspection fee up in advance.
Furthermore, depending on the mortgage, you can make a down payment which, in certain circumstances, may be as little as 3% and spend up to 5% of the purchase price in closing the deal. Monthly Homeowners Association (HOA) dues which may vary depending on the amnesties and services offered.
In an apartment and, when something goes wrong, such as a leaky faucet, cracked walls, destroyed or damaged gates, the responsibility of repairing or fixing these problems is usually that of the landlord. In stark contrast, in a condominium, the responsibility of fixing any problem in the unit, such as: leaking roof, broken hinges, or broken lights, is that of the owner, you.
When determining where to reside, location is crucial. Because apartment and condo structures can have comparable structural footprints, you'll find both in cities and smaller suburbs (though they're less frequent in rural regions). Both sorts of structures can be found near places of commerce, restaurants, parks, and other amenities.
Because condo and apartment buildings are generally similar in form — either high-rise or a few stories — they often have identical facilities. Consider what facilities are most essential to you, such as a doorman, a pool, a gym, or greenspace, then evaluate what different communities in your region have to offer.
Most, if not all, condominiums have their own facilities that you may use for free. Swimming pools, fitness gyms, sports gyms, and even playgrounds for children are among the amenities available. You split the cost with the other unit owners, so it's a pretty tiny sum. You may use it whenever you want and without having to maintain it yourself. You are not only saving time by having all of these conveniences nearby; you are also saving money since you are paying a lesser price for everything. These monthly fees cover everything from utilities to repairs.
When deciding between an apartment and a condo, restrictions will come into play. Both types of communities include regulations governing common area conduct, the sorts of pets permitted, and the types of decorations permitted on the unit's outside. Apartment landlords can also limit what renters can do within their units, such as hanging art or painting walls. Condo owners, on the other hand, may typically design the inside of their house whatever they choose.
6. Rent vs. Mortgage
Rent may oftentimes be cheaper than a mortgage. After all, the monthly cost of renting an apartment cannot go over and beyond a 10-30 year mortgage on a home. That said, if you consider renting an apartment long-term, the cost of renting, while seemingly cheaper at face value, will definitely rack up in the long run.
One thing you must also consider, is the time that you will spend in the condominium or apartment. If you are merely staying for, say a year in an apartment, then the obvious choice would be renting; on the other hand, if you decide to stay in a condominium unit for a long period of time, then purchasing a unit would definitely be cheaper.
Now that we have discussed the factors that you must consider, let us see each advantage and disadvantage of investing in a condominium and renting an apartment.
Pros of Owning a Condo
One of the biggest perks of buying a condo is that you become an owner rather than a tenant. Ownership will give you a sense of security and can be especially beneficial if you plan on living in the property for a long time.
2. Passive income
If you buy a condo that is already rented out, you can earn rental income from it. This can help you cover your mortgage payments or generate some extra income. Even if you plan to leave in a few years, a condo is one of the finest investments you can make. Property owners, unlike renters, may rent out their apartments to short-term tenants and earn additional money while still utilizing the condo for personal trips. Renting a property on a short-term basis also allows the owner to increase revenues during busy seasons.
3. Minimal upkeep
Condo owners benefit from sharing the expense of building maintenance with their neighbors. In reality, several condominiums provide in-house maintenance and repair. Furthermore, because most condominiums on the market are relatively new, there is frequently little in the way of maintenance to be done.
4. Resale and renting value appreciation
Condos can be used as a primary residence or a vacation house, as well as a real estate investment. When you're ready to take the next step in your homeownership adventure, you can choose between selling your apartment and renting it out to supplement your income. You should also verify with your HOA's rules and regulations to ensure that you may rent out the unit for as long as you like. Lastly, Condos in prime locations have high resale value in these market groups.
Disadvantages of buying a condo
1. Price fluctuations
The price of condos can go up or down depending on the market, so it’s important to do your research before buying one. If the market crashes after you purchase your condo, you could lose money on the investment. And due to these price fluctuations, there may be instances where the owner has difficulty reselling. Indeed, it can sometimes be difficult to sell a condo if you need or want to sell it quickly considering that it is not a very liquid asset. This problem might also be caused by competition from other sellers in the market.
2. Homeowners association dues
An homeowners association dues is a type of fee that members of a homeowner’s association must pay. These dues are similar to condo fees. Simply put, a homeowners association fee is money typically paid monthly by homeowners living within the HOA community to help maintain all properties, amenities, and common areas within the association. These include maintenance fees and rules and regulations set by the homeowners' association (HOA). Maintenance fees are typically collected by the HOA in order to pay for things such as repairs and maintenance of common areas. Rules and regulations set by the HOA can vary from building to building, but can generally be quite restrictive.
Condominiums have shared walls. Your neighbors may be strolling across their condo or hosting a party; you may hear loud televisions or animals; or they might even hear you too. This may not be a problem for folks who are used to living in flats. However, for individuals searching for peace and quiet when downsizing from a house to a condo, condo life may not be perfect.
Advantages of renting an apartment
1. Cheaper rent
Renting an apartment is usually less expensive than getting a mortgage. Other financial components, like utilities and upkeep, are also less expensive due to the smaller area, and are frequently included in the rent.
2. Safety and security
Apartments are rather secure and safe. Most flats these days are fitted with a security system that keeps outsiders out through the use of access cards and security guards stationed at each building entrance.
3. A short-term option
An apartment is an excellent short-term solution. It is the greatest option if you are just starting out in your career and want to leave your choices open about whether you want to stay close to your workplace or move further away. Even if you are unclear if you will stay with the firm for a long time, renting an apartment meets your immediate needs.
Disadvantages of renting an apartment
1. Lack of privacy
When renting an apartment, privacy might be an issue. The near closeness of the residential units might give you a headache. Loud noises might readily be heard coming from apartment apartments above and alongside yours. Having a quiet weekend may be tough if your neighbors are busy drilling holes in their walls, moving furniture, or throwing a party.
2. Limited parking space
Parking may be a real pain in the buttocks. A unit will usually come with at least two parking places, but most of the time, you will only receive one if you are lucky. Having guests over might be tough because the roadside parking places in front of your apartment complex are usually all used up by the apartment occupants as well. Your buddies will have to park a long distance away, which might be unsafe for them.
3. Restrictions for customization
Having your own place sometimes means you want to personalize it to reflect your individuality. This can be problematic because most apartment units have stylistic limitations. Apart from shifting the furnishings, there is virtually nothing you can change to the flat. Some landlords prohibit renters from altering the color of the walls. There is no way you can have your dream kitchen. Personalization, in other words, is not generally allowed in apartments.
Compare and contrast of condominiums
While the decision between owning a condominium and renting an apartment is mostly dependent on your own personal circumstance, each choice offers advantages and disadvantages. For example, purchasing a condo unit provides condo owners with a long-term and beneficial investment. Even better, it provides the comfort of mind that traditional renting issues such as rent rises are a thing of the past. However, condo ownership may not be suitable for everyone, especially if you will only want to live in a particular area for a short period of time. In which case, it is more advantageous if you merely rent an apartment, rather than purchasing a condominium unit. Those considering entering the real estate market should thoroughly assess their alternatives utilizing the recommendations provided above before making a decision.
For first time homeowners choosing the home that suits you best can be a daunting task. There are a multitude of factors that you must take into consideration, such as the price, location, benefits provided, etc. However, if you are choosing a home that you might want to settle down in, you might consider investing in a condominium as this will save you money in the long run.
While it is true that rent is indeed cheaper than mortgage, this premise holds true only in the short term. In other words, if you decide to stay in a particular area indefinitely or for long periods of time, say 10-20 years, then you would rather put your money in a condominium investment. The converse also holds true; that is: if you decide only to live in a place for a short period of time, say 1-5 years, then it would be best to rent an apartment instead. In the end, it really depends on the individual investor on which option is best for them.
To learn more about DMCI Homes pre-selling and ready for occupancy projects, units for lease, and special promos, log on to www.dmcihomes.com or call (632) 5324-8888. You can also check out https://leasing.dmcihomes.com/ for currently available condos for rent.
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