Condo VS Town home, What is the Difference?

CONDO VS TOWN-HOME

Today’s question is: I am considering the purchase of either a town-home or condo, but I don’t know the differences between the two, can you help me?

There are many difference between a condo and a town-home, but the main differences between the two are how you insure the properties and how you finance the properties.

First,  with a condo,  you own from the walls in.  This may sound strange, but you basically own all of the air space from the drywall in, not the actual building. And since you don’t own the building you are not responsible to purchase hazard insurance for the building. You just need interior content coverage which is cheaper than a regular home owners policy.  Now your dues will be high however, because you’re sharing in the responsibility with all of the other unit owners with maintaining the common areas, recreational facilities and building insurance. The good news is, if something happens to the building you’re not going to be paying for the repairs all by yourself. Condos offer a maintenance free lifestyle however there is a cost associated with this convenience. I find that most condo fees pay for themselves though, because most homeowners pay for these services anyway.

Another thing to consider when purchasing a condo is that financing a condo can be a little tricky, and that’s because the condo has to qualify for the loan just like you do. Banks look at condo communities differently and the condo association has to be in good financial shape. Most lenders will look at the associations financials to see if there are delinquencies, reserves for repairs or if there are any pending assessments.  The bank will also look at the number of renters in the building, usually they will allow up to 50% but no more than that, so if the building has 55% in renters,  you probably can’t finance the unit. A bank will look at the financial health of the condo association just as they would look at your financial health.

So, if you’re thinking about a condo purchase, make sure you use a lender that knows condos , and a realtor who is experienced in condos sales. Condos are much different than buying a single- family home.

TOWN-HOME

Now, townhouses shape up much differently. First, you actually own part of the building , the land underneath and the airspace above it. People that own town-homes share a wall with their neighbor, but everything on your side is yours and your responsibility. That means someday you’re going to have to paint it, and eventually re-roof it, but your dues will be much lower than a condo.

Another thing, when you finance a town-home it’s just like financing a house. You don’t have to worry about how many renters there are in the community, or any of the picky rules that banks requires in a condo review.  You do have to purchase a regular hazard policy that does cover your portion of the building, just like a house. As I mentioned above, the fees are lower, as you are not sharing in the building insurance expenses with others, but you are sharing in the common area maintenance.

So, in a nut shell,  town-homes work very much like a house with both the same insurance expenses and the same financing options, however,  lawn maintenance and the common area’s are maintained by the home owners association.  Bottom line, town-homes offer less in the way of maintenance for the owner , as most home owners association take care of everything outside of the unit for you, thus giving you more free time to go out and play.

If you’re looking for breathtaking views of the ocean and or the convenience of town-home living, you can visit the search page on this site and see some great home values. And of course, you can always contact me to talk about any of the communities in my local area.