Pros & cons of buying a condo, co-op or townhome

The realities of financially maintaining a property can lead some to the realization that traditional single-home living situation isn’t for them. For those, shared building living is the perfect low commitment option. Keep reading to learn the pros and cons of buying a condo, co-op or townhome.

Buying into a housing co-op

There’s no doubt that the concept of a co-op may invoke a “hippy vibe” for some; however, for those living in urban areas, it can be a great homebuying opportunity. For one, urban living can often mean dealing with limited space. Simply put, a buyers options for buying a freestanding single family home might be very limited.

Additionally, some cities like Miami, New York and Atlantic City are seeing dips in home purchases as incomes fail to scale with the rising costs of homes in the area. Buying into a housing co-op can be a sound financial move as property maintenance fees being shared amongst all the owners can drastically decrease the monthly expenses associated with homeownership.

So, how exactly does it work?

Co-op buildings are essentially a cross between renting and homeownership. When you buy into a co-op, you’re investing into it by buying a share of the property. In exchange, you’re given a long-term lease – usually one that’s longer than 50 years.

You’re also typically responsible for paying a share of the cost of the building’s overall maintenance and operating cost.

The pros of co-op ownership:

• Since you purchase your shares upfront, you have the benefit of never having to worry about a rent hike.

• Co-op living also comes with many of the other benefits of renting an apartment. You’ll have use of the amenities and grounds, but as long as you pay your monthly fee, you won’t be responsible for any of the daily upkeep.

The cons:

• Since you own a share of the building, rather than your unit itself, your ability to customize it to your tastes may be limited.

• Co-ops are usually overseen by boards who set forth rules and regulations for the building. You will, fortunately or unfortunately, be expected to adhere to them.

Buying a condo

Condos are different than co-ops in that, this time, you own your unit. While any common areas and amenities are still communal property, you have the final say — and bear the responsibility for — everything within your four walls.

Condo owners should prepare for a mortgage payment, plus property taxes on their unit, and a monthly fee for the upkeep of those communal areas, often called the HOA (“homeowners association”) fee.

The pros of condo ownership:

• Much like owning a single family home, you have the freedom to customize your unit as you see fit, but without incurring additional responsibility for the building itself or the grounds.

• Additionally, this option affords you the convenience of apartment living as well as the equity-building opportunities associated with more traditional homeownership.

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The Cons:

• Condos are also run by an association, and you’ll still have to abide by the rules they’ve set.

• Depending on the property, your condo association dues can also be slightly higher than HOA fees for a similar stand-alone property. This is mostly due to maintenance costs for common amenities being factored into the association fees for condo owners.

Buying a townhome

Townhomes are even a step closer to single-family living. These homes are typically larger but laid out closer to what you’d expect for a traditional single family home.

With this type of property, depending on how your community is structured, in addition to owning your townhome outright, you may also own the lot. In this case, your communal areas will likely be limited to amenities like a gym or pool area.

As a townhome owner, you should be prepared to pay your mortgage payment, any property taxes, as well as a monthly association fee that’s used to cover the upkeep of any communal areas (including the exterior of the building).

The pros of townhome ownership:

• Living in a townhome often offers more privacy than either a condo or co-op. Often, you have to deal with just one shared wall, rather than worrying about neighbors all around you.

• For the most part, you’ll also be able to customize your home similar to how you would be able to in a single-family home

• But, you’ll be able to enjoy the added benefit of any exterior maintenance and amenities that are covered by your homeowner’s association.

The cons:

• Unlike condos, maintenance benefits for townhomes are fairly limited, usually to things like snow removal or exterior painting. You should be prepared to take on the lionshare of the upkeep of your home.

• Townhome communities will also have rules and regulations that you should be aware of before purchasing.

Final thoughts

Ultimately, every co-op, condo, and townhome community is different. They all have their own inclusions, exclusions, and fee structures. If you’re serious about making an offer on a condo, co-op or townhome, be sure to ask questions and do your research to ensure sure you know what you’re getting into. ‘

This article is not a substitute for advice from a licensed real estate agent regarding your particular situation. This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice. Opendoor always encourages you to reach out to an advisor regarding your own situation.

Related guides and blog articles

→ How much does it cost to buy a house

→ Should you get pre-approved for a mortgage before looking?

→ How to write an offer letter for a house

→ More guides and blog posts about home buying

Further reading