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What is the Difference Between Condo and Apartment?

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Are you interested in buying an apartment or a condo? Investing in a property like this can be a great way to build some equity and have an asset for later in life, all while paying for the roof over your head. But, when you start looking for a home, you may be looking at both apartments and condos. But, what is the difference between a condo and an apartment, and how can you decide which one is best for you?

The biggest difference between condo and apartment

Condos and apartments have a lot of similarities. On paper, they look more or less the same and might cost around the same amount of money. But, the biggest difference between a condo and an apartment comes down to homeownership. In a condominium or “condos”, each unit has a separate owner. The owner pays Home Ownership Association (HOA) fees and the HOA manages the condominium, and they own their home but must follow rules and stipulations set out by the HOA.

Apartments, on the other hand, are owned by someone who owns the entire building. They then rent out each unit to renters, and the entire unit is managed by a management company hired by the owner(s). While there are circumstances in which someone can “buy an apartment”, you would actually be buying a condo and paying HOA fees to own that unit. Or, you’re buying TICs, which means “Tenants in Common”, which is like putting in your own money to have a share in the unit.

Condos build equity

Equity is the difference between how much you paid for a property and how much that property is worth. In general, if a home appreciates – and, as long as the economy is doing well, it will – over time, you’ll start to build equity. You can then use that equity to refinance your home, withdraw funds to invest in another venture, use it as collateral for a business you want to start, etc.

Equity can be a really good thing to have, and owning a condo can help you build that equity. Why rent if you’re able to own and create that equity for yourself? It may be difficult to buy, but if you work towards saving money for a downpayment, it’s possible. And, you may even find that your mortgage plus your HOA fees are less than your rent and other utility/maintenance costs you might be paying as a renter to your landlord.

Condo cost vs. apartment cost

Perhaps you’re in the unique financial position to buy an apartment unit or a condo. Which option is best for you? Or, should you just rent? To figure this out, let’s compare the cost of a condo to the cost of an apartment.

  • HOA dues By paying HOA fees for your condo, you are gaining equity in the condo. When you live in an apartment (that you’re renting, because it’s not technically considered a condo if you don’t rent). Those HOA fees usually also go to the maintenance and management of the condominium community.
  • Mortgage costs – The mortgage costs of a condo might be more money than a house would be when you break it down because you have to account for the HOA fees which add to the base cost of the mortgage.
  • Maintenance –  Part of your HOA fees will go to maintenance. Each condominium community will have different aspects that those fees cover. Some examples of where the maintenance fees will be allocated include the building’s common areas, swimming pools, laundry rooms, and elevators. It may also cover utilities, garbage, landscaping, etc.
  • Emotional costs – When making any major investment in something like a house or condo, it’s important to also consider the emotional costs on top of the monetary costs. Are you prepared to pay for your condo if you hit a bump in the road financially? What if you decide to move – will you be able to rent it out? You shouldn’t make an investment like this until you are ready.

The bottom line

Though they may have more similarities than differences, apartments and condos are not the same. And, if you plan on investing your money to buy and/or live in one, it’s important to understand the difference between a condo and an apartment so that you don’t misunderstand where your money is going. This difference is that while not all condos are apartments, all apartments that you can theoretically own would have to be a condo.

Frequently asked questions


What makes a condo a condo?


A condo is considered a condo when a person has the ability to buy that condo and own the individual unit, but they pay extra expenses (HOA) fees that go to the communal areas in the condominium community.


What’s the difference between a townhouse vs. a condo?


The main difference between a townhouse and a condo is that a townhouse may offer a little more privacy than a condo. A townhouse may have an adjacent wall, but you’ll have the whole house to yourself, which you’ll own. Instead, a condo might be in a condominium community, and you may have people living above you, next to you, under you, etc.

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