Are you ready to buy a home but finding it hard to decide whether a house (single family home) or a condo would be a better option for investment? While you may have been advised that a house is a better option, this is not always the case. Both houses and condos have their pros and cons. Let’s start with houses.
Buying a House
Given a choice between a house and a condo in the same neighbourhood, most homebuyers will go for the former for the following reasons:
- A house comes with your own freehold land, which means it belongs to you in perpetuity. Unlike a condo, a house has no expiry date. You can keep it as long as you like and pass it to your children, who can keep it as long as they want to.
- The value of a house always rises faster and by a higher percentage than the value of a condo located in the same neighbourhood. This makes a house a better option for investment.
- You have a lot of freedom in doing things to increase the market value of your house, such as painting, renovating, and adding floors or features.
But houses also come with a few disadvantages. The costs of owning a house are higher than the costs of owning a condo. They include property tax (based on the annual value of the house, utility bills (electricity, water, refuse removal, etc.), and maintenance (painting walls, repairing cracked tiles, termite treatment, etc.).
Buying a Condo
A condo located in a good neighbourhood is a better investment option than a house located in a relatively bad neighbourhood. The reasons to buy a condo include the following:
- Since individual owners are not directly responsible for repair and maintenance, the maintenance costs are lower. This makes it ideal for people who have to be away from home a lot of the time.
- Condos sell more quickly in commercial areas and financial centres because there are always buyers willing to grab them at a reasonable price. If you are looking to make a profit within a year or two, then you should buy a condo in Central Business District (CBD) and other business districts.
- In certain areas, condos have a higher rental potential. If you are looking to make a steady rental income, then you should buy a condo in such an area.
But, of course, condos come with a few minus points that make them less attractive than a house. Condo prices usually appreciate slower than house prices. There are often restrictions on what you can do and what you cannot do, such as you may not be allowed to keep pets or paint the walls with the colours of your choice. There may also be restrictions on how often you can rent out your condo.
House or condo?
By now, it must have been clear to you that the most important factor in deciding whether to buy a house or a condo is the location. From an investment point of view, a condo in a centrally located neighbourhood is worth more than a house far from the city centre. Head down to the condo showflat location of your preferred condo and find out more about the vicinity from the property agents.