Considerations when buying a townhouse or a condo

Are you thinking of buying a townhouse or a condo? Both these homes are popular choices among homebuyers. According to the National Association of Realtors (NAR), townhouses are the second most popular choice among homebuyers in the US, especially those under the age of 30. Townhouses and condos generally have a lower price and less maintenance than single-family homes which makes them a popular option when buying a home. But what is the difference between a townhouse and a condo?

Architectural differences

Townhouse

Townhouses are an attached structure of two or three stories that share the walls with the properties next to them in a community of buildings. They don’t have any units under or above them. Townhouses typically have a front yard and a small yard or private outdoor space in the back of the property.

Condo

A condo is a single-residential unit that’s housed within a larger building that share one or more walls with the other units in the buildings. Most buildings have several units per floor, so the condo may have other units above, below, or next to it.

Ownership

Townhouse

Townhouses offer two types of ownership: fee simple and condominium. With fee-simple ownership you own the land your townhouse is built on as well as the actual townhouse structure. The owner will therefore be responsible for maintaining the property as well as the front, back and side yards. With condominium ownership, you only own the inside of the townhome, and therefore maintenance of the home’s exterior and yards will be covered by HOA fees.

Condo

When buying a condo you are buying the air space or living space on the interior of your unit along with a fractional co-ownership of any communal areas. The owner of a condo are only responsible for the maintenance of the inside of the individual unit. The owner typically pay homeowners’ association dues to cover the maintenance of the building’s exterior, amenities and common property. Condos and townhouses with condominium ownership tend to be cheaper to buy because ownership is confined to the interior of the unit.

Rules and regulation

When owning a townhouse or a condo you will have to pay fees to an HOA, Homeowners association. The HOA is run by the tenants and handles the maintenance of the shared spaces within the community. The fee is typically paid monthly to help maintain the properties, amenities and common areas within the association. The service that the HOA fee will provide vary depending on the HOA communities' needs. The HOA also establish rules within the community that may regulate what you can do with your property, such as renovations, renting out your property, etc. The HOA rules will vary from community to community.

Costs

Homeowners also have to pay property tax, but the tax will vary depending on which state you live in. The tax will also vary depending on what type of home you own. Condo owners typically pay a smaller amount of property tax because there are less square feet they own and they don’t have to pay tax for the rest of the building apart from the unit they own. Townhouse owners have to pay a higher amount of property tax since they own the inside and the exterior of the house and the land it stands on. But the HOA fees are usually lower since the owner maintain their own property.