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Many people eventually come to a crossroads in their renting journey. They feel like they must decide between renting an apartment or buying a condo. But what's the difference between the two scenarios? Read on as we examine the key differences between renting an apartment vs buying a condo.

What is a rental apartment?

Rental apartments are units in buildings (houses, low rise buildings, high rise buildings etc.) owned by a landlord or company. Residents typically sign a lease to occupy a unit, paying a monthly fee and often a security deposit. After their lease expires, renters continue to pay for occupancy of their unit on a month-to-month basis. In Canada, the average rental cost across all unit types (1 bed, 2 bed etc.) was $2,178 in December 2023 ($26,136 / year)

What's included in a rental?

Many rental units include exclusive use of the unit plus in-unit appliances like fridges and stoves. Some also include microwaves, dishwashers, and laundry machines. Some come fully furnished. The rental cost of some units may include utilities like heat and internet access while others do not. Some rental buildings have as many communal amenities as condos like gyms, pools, party rooms and theatres. There aren't generally separate maintenance fees for renters. Renters are responsible for maintaining the condition of the interior of their apartment. Their landlords are responsible for major unit repairs and maintenance of the building and common areas. 

What is a condo?

Condos, or condominiums, are similar to apartments but occupants tend to own their own unit. Some occupants rent their unit. A condo corporation owns and maintains the building’s common areas, structure and assets (foyer, hallways, roof etc.). According to the Canadian Real Estate Association, the national average price of a condo was $541,500 in October 2023.

What's included in a condo?

Condo corporations often require condo maintenance fees from unit owners, in addition to the cost of buying the unit. The fees can change at any time at the condo board's discretion, which is pretty intimidating if you don't have much stretch in your budget. Condo fees are charged monthly or annually and can be anywhere from modest to as expensive or more expensive than the unit owner’s monthly mortgage fees. Condominium fees are pooled by condo boards to maintain communal areas of the building such as party rooms, gyms, pools, games rooms, lobbies, hallways and theatres. 

How does condo ownership differ from home ownership?

Condo ownership is different from home ownership because you own a unit within a property, not the building or land it's on. Condos tend to have boards and committees so they can make group decisions around maintenance, repairs, enhancements and building rules. You pay fees to the condo board and/or the organization that owns and operates the property as a whole.

Rules

Condos often have rules and regulations for unit owners to abide by. They can be loose but in some cases quite strict. For instance, you may not be permitted to rent out your condo unit without the board's permission, or even at all. You may not be able to decorate your balcony the way you want etc.

Co-ops

Some condos are referred to as co-ops or “undivided”. This means that you and the other tenants own shares of the building, rather than your unit, and undertake all the responsibilities of the property as a group. The cost is often competitive to buy into a co-op as a result of this because if, for example, the roof was damaged, you could be on the hook with all your fellow residents to repair it which can be incredibly expensive. Many co-ops have low or no maintenance fees which means you save money in the short term but there may be no pooled and saved funds to pull from if major property repairs are needed. Some banks will not offer mortgages to purchase co-op units.

Renting vs owning

The primary difference between renting an apartment vs owning a condo is the ownership model. Renting an apartment, especially in the short term, is generally a more cost-effective alternative to owning a condo unit. As a condo owner you must purchase your unit or building shares which can be a big investment that requires financially qualifying and being approved for a mortgage. You must put down a large down payment. For condos in a major city like Toronto, if the price is under $500K you must put down 5% minimum, once over $500K you must put down 10% on the balance, over 1M you must put down 20%.You also must renew your mortgage periodically which can result in higher mortgage rates over time. As a renter you rent your unit, meaning you have to prove you are able to afford the rent and security deposit. Many landlords run credit checks on potential renters before agreeing to rent to them to ensure they have the finances to afford the rent. All banks run credit checks and examine financial health for their clients before granting them a mortgage. Your mortgage must be paid on schedule consistently or you will potentially default on your mortgage and lose your condo to the bank (foreclosure).

As you can see, there are many differences between an apartment vs a condo. We hope this article helps you make the best decision for your future.

Looking for an apartment to call home and make your own? Panoramic Properties would love to welcome you home. Please visit our website to browse our available apartments.