Should I Invest in Condo or House?

By Emily Southey | 8 minute read

Housing options are abundant — especially in Canada — which can leave investors confused as to which type of property is worth buying. For example, two of the most popular options, homes and condos, each come with a unique set of pros and cons. Investors will need to consider their budgets, investing goals, and lifestyles in determining which is right for them. 

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Condo Versus House

Before we dive into the pros and cons of investing in a condo versus investing in a house, we’re going to outline each option. A condo or condominium is a single unit within a multi-unit property. The multi-unit property can be small, consisting of a handful of units, or highrise, consisting of hundreds of units. When you invest in a condo, you are purchasing the individual unit along with a share of the building’s common areas and amenities. The common areas and amenities that condo buildings have vary but may include everything from fitness rooms and saunas to swimming pools, rooftop terraces, cinemas, and more. Although each condo owner has partial ownership over these areas, they are typically managed by a condo association that serves as a supervisory board. That is why, when you invest in a condo, most owners are required to pay monthly condo fees to the association to cover property management expenses.  

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In contrast, detached homes are on their own lots and range in size. While some can be less than 1,000 square feet, others can be mansion-size. The defining feature of a home is that it is a free-standing structure (there are no neighbours with whom you share walls). Purchasing a home is often more expensive than a condo, however, it also comes with greater freedom, independence, and flexibility. That said, where detached homes tend to offer more space than a condo, they also come with more maintenance and fewer amenities.

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The Pros and Cons of Investing in a Condo

Keep reading to learn more about the pros and cons of investing in a condo below. 

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The Pros

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• Minimal maintenance: First, when you invest in a condo, the condo association is responsible for handling all building maintenance and repairs. This means that as an investor, you won’t have to worry about the physical upkeep or repairs of the building.  
• Amenities: Another benefit of investing in a condo is the on-site amenities they offer. Many condo buildings, especially new ones, feature a range of luxurious amenities that can not only make your unit more appealing to tenants but may allow you to charge a higher rent. Common examples of condo building amenities include swimming pools, saunas, fitness rooms, cinemas, rooftop terraces, garbage pickup, snow removal, and a 24/7 concierge.  
• Proximity to urban areas: Condos are typically considered to be a lucrative investment opportunity owing to their close proximity to major urban areas. While purchasing a house in a major city might not be affordable, buying a condo might be. And buying a condo in such a prime location increases the odds of appreciation. (Fun fact: Condos in city centres often appreciate quicker than condos in suburbs.)  
• Safety and security: The safety and security condo buildings offer is another perk for real estate investors. Condo buildings often have 24-hour security personnel, as well as locked or gated entrances and elevators, reducing the odds of crime.

The Cons

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• Shared costs: Condo ownership involves sharing costs with the other owners in the building, which can be a drawback for investors. Why? In such a scenario, you would have to deal with the fallout of another resident damaging a common area or involving the community in a legal dispute.
• Condo association rules: The second con of investing in a condo is the condo association rules, which are often strict. Some investors might find the lack of freedom and independence that comes with condo ownership frustrating, especially if they want to renovate their units. Oftentimes, condo owners must obtain permission from the condo association to make changes to a unit, and if the association denies the request, there is little recourse.

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The Pros and Cons of Investing in a House

Let’s move on to the pros and cons of investing in a house.

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The Pros

• Higher property appreciation: One of the biggest perks of investing in a house is the high potential for property appreciation. Though appreciation is never a guarantee, no matter what kind of property you buy, buying a home increases your odds of a higher appreciation.
• Freedom and control: When you buy a house rather than a condo, you aren’t subject to a condo association’s rules. This gives investors complete autonomy over the property. They can customize or change anything they want to without permission, or even plan renovations. You could finish the basement, build a new bathroom, or add an entire extension onto the home, any of which could further increase the property value. Ultimately, the ability to change everything and anything is often attractive to investors.
• Privacy: The privacy that homes offer can be a plus for both investors and tenants. As you don’t have to share walls with neighbours, your tenants will be free to live their lives how they wish, reducing the odds of tenant issues relating to noise complaints.

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The Cons

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• Greater upfront costs: Buying a home is generally more expensive than buying a condo, which means that investors will need more capital to pull it off. The larger down payment coupled with higher ongoing costs (utilities, garbage, mortgage) can deter investors from buying homes.
• Expensive, hard-to-predict repairs: House repairs are often harder to predict than condo repairs and they can get expensive quickly. Repairs like a roof replacement, a new HVAC unit, a flooded basement, or new water drains can come out of nowhere and end up costing you thousands if not tens of thousands of dollars. If an accident were to occur, investors would be responsible for dealing with these repairs, which could have a significant impact on your monthly cash flow.
• Ongoing maintenance: Beyond the cost of ongoing maintenance that comes with investing in a home, there is also the time component. Caring for a house can be incredibly time-consuming. From lawn mowing and snow removal to pest control, HVAC maintenance, window washing, gardening, and more, house maintenance is a big commitment, and many investors aren’t willing to put in the time.

Tips to Get Started When Buying an Investment Property

Ready to purchase your first investment property? Whether you ultimately choose to buy a condo or a house, follow the expert tips below to ensure a successful rental property. 

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1. Research locations

Real estate investing requires extensive research and planning, whether you’ve decided to invest in a house or condo. One of the main factors that makes for a successful investment is location. To determine if a location is worth your time, consider everything from crime rate and green space to nearby schools, access to public transportation, amenities, vacancy rates, and more. 

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2. Consider your budget

Our second tip for investing in real estate is to carefully consider your budget. Spending beyond your means is often a mistake, which is why it’s so important to figure out how much you can realistically afford to pay for an investment property. As part of this step, calculate your upfront costs. Remember to include the down payment, REALTOR® commissions, necessary repairs or updates, legal fees, property taxes, and more. 

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3. Enlist the help of an experienced REALTOR®

Our third and final tip for getting started with real estate investing is to enlist the help of an experienced REALTOR®. If this is your first foray into real estate investing, having an expert guiding you through each step can be a huge help. Research REALTORS® in your area and choose one with extensive knowledge of the local market, as well as prior experience with investment properties.