Condos vs apartments: What to know

Are you a young professional or retiree trying to decide whether a condominium or apartment is right for you?

Understanding the difference is important. The main one is that you can buy a condo, whereas an apartment is only available for rent. But there’s more to it than that. We explore things to take into consideration, take a look at the pros and cons of each and what it means for your insurance to help you make a choice.

The basics

Condos are multi-unit dwellings that can be found in high-rise, low-rise, medium-rise, and townhouse designs. The individual units are purchased from either the builder or unit owner. Condo complexes are managed by a condo corporation, which collects monthly condo fees from unit owners. The owner of a condo unit can also choose to rent it, but there may be restrictions on the number that can be rented.

Individual apartments are only available for rent usually for a period of one year. The lease can be extended if the landlord and tenant agree. The building is often owned and managed by a corporation that leases out units to tenants. The same rules apply to every tenant and unit in the building.

Condos and apartments differ in terms of amenities and services. Condos normally provide a broader range of amenities such as fitness centres, swimming pools, rooftop terraces, and concierge services. These spaces are shared among condo owners and maintained through condo fees. Apartments may have more limited amenities, which can vary depending on the building and management company. Some may have laundry facilities or a basic gym, but they often don’t provide the same luxury or variety as condos.

The Condo Association

Condos are managed by a condo/homeowner’s association. Many associations are composed of unit owners. The association is responsible for establishing rules for the entire building, managing common areas and collecting fees for exterior maintenance, necessary repairs, and the reserve fund through monthly payments called condo or strata fees. This is over and above any mortgage payments.

According to Realtor.com average condo fees range from around $100 to $700 per month, although these fees can be more depending on amenities. If the condo complex has high-end shared features fees can be several thousand per month. Overall they would cover such things as:

• Maintenance of exterior and interior common areas
• Security
• Utilities such as water, sewage and trash. Some include heat, electricity, cable, and Wi-Fi.
• Insurance for common areas and exterior
• Reserve fund

Occasional special assessments may be required for major repairs or improvements. This means you will pay out of pocket for unexpected issues if the condo association’s insurance maximum is reached. In a condo, maintenance of the individual units is the responsibility of each owner.

Finally, it’s important to remember that condo fees do not cover property tax.

READ MORE: Condo water leak case shows evidence important

Property management company

Apartments are managed by a property management company or landlord. They handle rentals, tenant concerns, and collect rent. The monthly rent covers maintenance fees and potentially some utility costs.

The property management company is responsible for any maintenance and repairs inside the unit as well as out. The ability to customize your unit may be limited since companies have design standards across all units.

Pros and Cons

There are benefits and some potential drawbacks to owning a condo or renting an apartment. In a nutshell:

Condo

Pros – Owner builds equity and may make a profit on a sale, ability to personalize unit, more luxurious amenities and control over the building through condo association.

Cons – Initial downpayment higher, condo fees, special assessments, rules and regulations, rental restrictions, maintenance and repair costs of your unit, responsibility for property taxes.

Apartment

Pros –Landlord is responsible for maintaining building/unit, easy move in and out, fewer initial payments and some amenities.

Cons- No ownership, limited ability to personalize based on lease conditions, monthly rent can increase after term of lease is up and higher tenant turnover.

Impact on your insurance

Condo insurance

Your condo association’s master insurance policy covers the main building structure and common areas in the event of an accident or unintentional damage.

This insurance does not cover your personal belongings or unit (including improvements). The master policy also excludes injuries guests may suffer when inside the condo. If extensive damage is caused to the condo building and the condo’s insurance company finds that you or your unit are at fault, you could also be held financially responsible for covering part, or all of the costs.

As the owner, you can option for an all-risks policy. Generally, these policies include damage caused to the condo building by you or your unit (a burst pipe, for example), damage caused to your unit, liability coverage if a guest is injured and protection of belongings from theft and fire. If you have mortgage with a bank, they will likely require you to have a personal policy that covers the unit.

You can also opt for a condo insurance policy that only covers your unit’s contents. Speak with your insurance broker if you plan to store contents in your condo’s storage locker, or if you have valuables that require extra coverage. 

Condo insurance in Ontario, for example, can cost between $300 and $600 per year, depending on where your location, amount of coverage, upgrades and your insurer.

Renters insurance

As a tenant you’ll want to make sure your personal belongings are protected. Most landlords now require proof of insurance for your unit. The average renter has about $35,000 in personal property. Most people could not afford to replace everything in the event of a fire, for example. Tenant insurance also protects you from personal liability. If a guest were to get hurt while at your property, you could be sued. Liability coverage protects you so you won’t be stuck paying for lost wages or medical bills.

Renter’s insurance is affordable. It normally ranges between $20 to $50 per month across Canada.

The last word

Only you can decide which living arrangement is best for you. If you’re a young person trying to enter the housing market – particularly in a place like Toronto or Vancouver – a condo may be your most affordable route in terms of downpayment as opposed to a house. On the other hand, if you’re a retiree that travels a lot or a person that often has to relocate for work, an apartment may be more suitable.

One thing they both have in common is the need to have the right insurance. Have your broker shop the market on your behalf and bundle it with any additional insurance you have, such as a car or recreational property, for additional savings!

RELATED READING:

How rental insurance protects tenants 

Freehold vs condominium ownership: What you should know