The decision to own or rent a condo comes down to two matters: financial feasibility and personal desires. You must prioritize these concerns in order to determine whether renting or buying is a better option.

Financial Considerations

  • Affordability is the first priority. If you cannot afford to buy a condo, then you must decide to rent the condo. Stretching your budget just to own is very risky, particularly in light of mortgage and housing market uncertainties. 
  • Comparable investments should be considered. If you were to rent and invest an amount equal to a housing down payment, how much growth could you reasonably anticipate? Also consider investing the sum you would spend on homeowner's insurance, taxes and homeowner's association fees. You may actually find, despite many feelings to the contrary, that renting is a more profitable investment option. When home prices are not appreciating, taking money out of real estate and placing it in other markets is a wise choice.
  • Rentability of the property should be considered. When you own a home, you lose the flexibility to leave if necessary. This can be problematic if you must leave at a time when selling is a bad option. As long as you believe you could rent the property to cover at least the majority of your mortgage, you may decide buying is a wise financial decision. If you are in a market without renters, this can be highly risky.

Personal Considerations

  • Consider how long you can reasonably anticipate staying in the property. Barring any unforeseen circumstances, could you stay for five years? How about ten? Look at your long-term personal goals and see if home ownership fits in at this time.
  • What personal benefits will you gain from owning a property? Are you someone who takes pride in ownership and would like to make property improvements? Or are you someone who generally allows properties to deteriorate? If you are the latter, home ownership may both a bad personal and a bad financial decision. Taking good care of and improving your home is one way to increase its value, and this can add to the financial feasibility of home ownership. If, however, you know you lack the time or interest to properly care for what will amount to a large responsibility, buying can be financially detrimental.
  • How stable is your employment? If you work in a very unstable job or industry, renting gives you flexibility to modify your living expenses in the case of an emergency. Ownership does not come with this option, and you may be caught in a bad place if your employment changes.
  • Do you have assets to fall back on? Just because a bank approves you for a mortgage does not mean it does not pose a risk to you. You may find yourself in a situation where your mortgage becomes too costly to maintain. If you had to sell the home at a loss, would you still have a large enough financial backing to continue living your life, or would you face bankruptcy?

What's the difference between a townhouse and a condo?

A townhouse and condo have many similarities because they are both situated in multi-family residential buildings. The key difference, though, is the way they are situated within those buildings. A townhouse is attached to the house next to it by one or more shared walls. A townhouse owner owns the outside of his or her house, including any yard and external areas. However, there are no units above or below the house itself. A condo, on the contrary, may have units surrounding it on all sides. Condos are essentially apartments offered for sale rather than for rent; the owners do not own any property outside of their immediate units.

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