I've had a lot of questions lately from buyers asking my thoughts on buying a townhouse versus a condo.
Assuming you are not looking at a townhouse-style condo, there are some lifestyle choices that might help you make a decision. Condos do not require yard work.Condos do not require exterior maintenance. Condos do have shared walls in all four directions. Condos usually have shared main entrances. From an investment perspective, condos are typically the first kind of property to lose value in a down market, but they are sometimes the first thing to gain momentum when a down market starts to turn around because their lower price attracts first-time home buyers.
If your lifestyle preferences do not encourage you to buy a condo, you can certainly get more bang-for-your-buck by purchasing a Fee Simple ownership property as opposed to a Condominium ownership property. In this area, Fee simple ownership typically includes single family homes and most townhouses where Condominium ownership typically includes apartment-style properties and some townhouses. Single family homes and townhouses usually have lower monthly HOA fees: $60-$70. Monthly condo fees start at about $225 in the suburbs and can get as high as $800 for some of the luxury buildings close to Washington, DC. I put together a table to show how this affects a monthly payment. This is VERY generic as it would be too hard to cover all contingencies. The table is based on the following constants:
- 5.25% interest on a 30-year fixed mortgage
- $70 monthly HOA fee for the Fee Simple payment
- $300 monthly Condo fee for the Condo payment
- Taxes that are proportional to property value so taxes are higher for higher loan amounts
