A condominium unit, or a condo, is a popular first home for young professionals who want to invest their money in property but are not ready to buy a house and lot yet. It is a lot more affordable and, often, there are other facilities offered within the property. For people who work in urban areas, it makes more sense to buy a condo that is near their office.
However, is buying a condo worth it?
Lower Upfront Costs
There are condos out there that have exorbitant prices built for the rich but, for the most part, they have a much lower price tag and are within budget for more people compared to a regular single-family house.
However, there are a few reasons why condos are a lot more affordable than houses. The main factor to consider is space. Although condos are in prime locations, which should drive their prices up, the living space you would get is considerably smaller compared to a house. You also should not expect to get a front or back lawn. You can enjoy the different amenities available to you, but there likely would not be space for you to plant your own garden.
Most real estate property developers also start selling units before the building has been completed. Aspiring homeowners and investors can snap up units at a much lower price.
Lower Maintenance Costs
Living in condos may also be less expensive than being in a house. You are only responsible for what happens inside your unit. Everything else is up to the association that manages the property to maintain.
You can also save up on utility bills. Because the space is smaller, you do not have to crank the air conditioning and heating systems up. It does not take much energy to keep a room that measures about 3 meters by 5 meters at a temperature that is comfortable and cozy. You can keep your electricity usage low.
There are also fewer lights needed. A single bulb at the center of the room is enough to illuminate all four corners.
Additional Condo Association Fee
However, the price of the condo unit and the expected expenses for utilities are not the only factors that you should consider. Every amenity that is available to you comes at a cost.
In addition to your monthly dues, you would have to pay fees that will be used for the maintenance of the entire property. This includes amenities like playgrounds and swimming pools. It would also go toward the people who keep you safe 24/7 and keep your surroundings clean.
The condo association fees would pay for the building’s repair. If the exterior has started looking drab and dirty, the money needed to repaint the entire property will come from the condo association fees.
This would not be cheap. Residents may have to pay a few thousand pesos (or upward of $100) every month on condo association fees. The money you might save from your utility bills may have to go directly toward paying the condo association fee.
Moreover, at some point, the condo association fee would go up. While it might be reasonable right now, there is no assurance that it would continue to be low next year or in two years. Just like other expenses, you probably would have to pay more in the future.
Selling a Condo: How Much Can You Get From It?
A starter home is meant to be outgrown and, eventually, sold to a new owner. If you tend to have a family in the future, chances are, you would need more space to accommodate your kids.
So, if you see yourself one day leaving the high-rise life, you should find out how much you probably will get from it.
Unfortunately, selling a condo unit is more difficult than selling a house. It might take you a long time before you can move out into a new property.
Some condo owners choose to rent out the space so that they can have a source of passive income, but before you start looking for a tenant, you should check if the management allows it. Others list their condo units on Airbnb for short-term occupants.
You also will get a better offer for a house compared to a condo unit. Condos do appreciate in value over time, but not as fast as houses do.
In some areas, prices for condos depreciate. If the number of available units far exceeds the demand, you probably will have to sell your unit at a price that is lower than what you paid.
There are pros and cons in buying a condo unit rather than a single-family home. While the total cost of a condo unit is lower, there are still monthly expenses to be paid. Knowing how much living in a condo costs could hopefully help you make a decision that is best for you.