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What Is the Difference Between a Condominium, Apartment, and an Accessory Dwelling Unit?
In residential real estate, it's important to understand the differences between condominiums, apartments (flats in the UK and Australia), and accessory dwelling units (ADUs). Each type has its own benefits and considerations, suited to different lifestyles and preferences.
Similarities and Differences Between Condominiums, Apartments, and ADUs
Condos, apartments, and ADUs all offer living spaces but cater to different needs and ownership styles. Knowing their main similarities and differences can help you choose the right one for you.
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Ownership in Condominiums, Apartments, and ADUs
Condominiums (Condos). In a condominium, you own your unit's interior and sometimes parts of the building's exterior, like walls and roofs. You also share ownership of common areas, like hallways and amenities, with other residents. A Homeowners Association (HOA) manages these shared spaces and collects fees for maintenance.
Apartments. Apartments are usually rental properties. Tenants lease the unit from a landlord and don't own it. They generally have less responsibility for maintenance and can't make major changes to the property. In cooperative apartments (co-ops), residents share ownership of the building, but this is less common than condo ownership.
Accessory Dwelling Units (ADUs). ADUs are part of the property where they are built and are owned by the homeowner of that property. Unlike condos, ADUs cannot be sold separately; they are considered part of the main house, so the homeowner is responsible for their upkeep.
Similarities
Multi-Unit Living. Condos, apartments, and ADUs all involve multiple living spaces. Condos and apartments are part of one building, while ADUs are separate units on the same property. This setup can create a community feel, especially in condos and apartment buildings.
Shared Amenities. Condos and apartments often have shared features like gyms, pools, and laundry rooms. ADUs might share amenities like laundry facilities or a backyard with the main house, depending on their setup.
Management. Condos and apartments usually have a management system. Condos have a Homeowners Association (HOA) that manages shared spaces and enforces rules. Apartments are managed by property owners or management companies.
Breaking Down the Costs
Understanding the financial aspects of condos, apartments, and ADUs is key. Here’s a cost comparison:
Condos
Purchase Price. The national average condo costs about $361,600 (as of June 2023). This can vary based on location, size, and amenities. Luxury condos with more features will be more expensive.
Monthly Costs. In addition to the mortgage, owning a condo involves regular expenses.
- Condo Fees. On average, condo fees are about $290 per month but can vary widely based on amenities like pools or gyms.
- HOA Fees. These usually range from a few hundred to a few thousand dollars per year, covering maintenance and administrative costs.
- Special Assessments. Extra costs may arise for unexpected repairs, like roof replacements, requiring additional payments.
- Maintenance. Set aside 1% to 4% of the condo’s value annually for maintenance, which can be several hundred to thousands of dollars per year.
Apartments
Rental Costs: Apartment pricing varies depending on location, size, and amenities. Here's a sample cost breakdown using California as an example:
- Studios: The most affordable option at an average of $1,800 per month.
- 1-Bedroom Apartments: Slightly more space with an average rent of $2,100 monthly.
- 2-Bedroom Apartments: Popular with couples or roommates, averaging $2,795 per month.
- 3-Bedroom Apartments: Suitable for families, averaging $3,600 monthly.
- 4-Bedroom Apartments: Most spacious and expensive option, averaging $4,900 per month.
Accessory Dwelling Units (ADUs)
Construction Costs. Building an ADU in California costs between $200,000 and $400,000, depending on design, materials, and contractor fees.
Property Taxes. Adding an ADU may increase your property taxes, which could affect rental income.
Start with an Analysis to determine how much money you need for your project.
Size and Location
When it comes to size and location within the property, condos, apartments, and ADUs offer different experiences.
Condominiums
Condos vary widely in size, from small studios (about 400 square feet) to large multi-bedroom units (over 1,500 square feet). They can be single-story townhouses with private entrances or high-rise units with panoramic views but less outdoor space.
Apartments
Apartment sizes vary based on needs. Studios are around 514 square feet, ideal for individuals or couples. One-bedroom apartments are about 757 square feet, while two-bedroom units are around 1,138 square feet, suitable for families or roommates. Apartments' locations within the building affect the experience; street-facing units are lively with natural light, while those in the back are quieter.
ADUs (Accessory Dwelling Units)
ADUs are compact. In California, they should be at least 120 square feet but can be up to 1,200 square feet for detached units, depending on local rules. Attached ADUs, like converted garages, are usually smaller, often not more than 50% of the main house's size. They are located on the same property as the main house, either connected or separate, often in a suburban or rural setting.