Home buyers get the two terms mixed up frequently, but townhomes and condos are totally different types of properties. Many online home shoppers are intrigued the relatively low cost on Albuquerque condos, but once they learn about the HOA fees which impact their monthly payment and the restrictions that can limit their use of the property, many decide that townhomes are the better option.
One big difference between condos and townhomes are the HOA fees that accompany them.
HOA fees on condos are typically much more expensive than those on townhomes. Here in Albuquerque, it's not unusual to see monthly association fees of $200 or more. That's on top of your prinicipal and interest payment.
Some HOA fees for condos are lower, but if you see a higher HOA fee, don't jump to negative conclusions. Sometimes higher HOA fees are so high makes good sense and won't impact your monthly payment at all.
For instance, at Winrock Villas Condos in Albuquerque the high sounding HOA fee includes the county property taxes.
The tax bill is paid by the association instead of the individual owners. You pay the association, then they pay county when the taxes are due.
It comes out in the wash as the monthly tax payment would otherwise be made to your mortgage company.
Other times utilities are included in the HOA fee. You may not have your own water bill or trash bill.
Another fee that can occur on a condo is called an assessment. Occasionally the association will need additional funds for large scale improvements. They will assess an extra fee on all the owners to pay for the project. An example of this would be for new roofs or new stucco on all of the units.
When you buy a condo, you are actually purchasing a portion or a share in the entire condo association. If there are 67 units in the complex, you own a 1/67th interest in the association. Usually, you do not own the land that your unit sits on. In fact, in one popular condo community in Albuquerque, the association doesn't even own the land; the units are built on leased land.
There may be common areas with grass and landscaping, but they will be maintained the the association. If you're a gardened you'll have to stick to patio tomatoes.
On a townhome, you almost always own the land just like you would on a single family home. You can plant flowers in your yard, you can have a nice patch of grass outside your back door for your dog to use, etc.
All neighborhoods have some covenants and restrictions, even for detached, single-family homes. At the minimum there are city zoning codes that determine how a property can be used.
On the other end of the spectrum, condo developments can have the most stringent restrictions. There can be restrictions on the number of pets and a limit of their weight. My favorite restriction prohibits For Sale signs in the yard (or any other signs for the matter).
There are tight restrictions on renting out condos too, so investors beware!
There is a big difference in financing condos and townhomes. Condos can be extremely difficult to finance these days due to high default rates from condo owners in past years.
FHA and VA loans with little money down are problematic. There is a certification process that condo associations must pass in order to be what's called FHA Approved.
In order to be FHA approved the condo association must be able to show that they have the adequate financial standing including cash reserves, that there are a limited amount of rental units and that the buildings are in good condition.
That makes FHA and VA loans hard to obtain on many condos these days. Are you a buyer using a conventional loan?
Even if you are not planning to use an FHA or VA loan, a conventional loan can be harder to get if the complex is not FHA approved. Lenders frequently ask for a larger down payment than 20% on those units. Some lenders won't do them at all.
How you live should be a big factor in which type of attached property that you decide to buy. Too many people are misled by the lower prices advertised on condos, but of course as I mentioned before, after the HOA fees are paid the monthly payment will not be as low as they expected.
Do you want to have a yard? Condos are more popular with people who answer "no" to that question. Yards take time to maintain, even here in New Mexico.
Are you looking for an attached garage? If the answer is "yes" to this question you'll want to be aware that many condo complexes do not have attached garages. You may have to walk some distance to get to your car. There are exceptions of course.
Do you travel frequently? Are you rarely home because you travel for work or pleasure, and just need a crash pad that's low maintenance? Than a condo may be the better choice for you.
Once you decide what type of property is right, let me know. I'll be happy to suggest some of the better townhome and condo communities and answer any questions that you have.
To help you get started, here are 5 of the freshest attached property MLS listings. Or you can create your own condo search.
Some of the information contained herein has been provided by SWMLS, Inc. This information is from sources deemed reliable but not guaranteed by SWMLS, Inc. The information is for consumers’ personal, non-commerical use and may not be used for any purpose other than identifying properties which consumers may be interested in purchasing.