Buying a Condo versus Renting an Apartment

02/10/2014 23:53


Knowing the difference between an apartment and a condo will help you choose what suits you best.

Should you buy a condo? Or would you be better off renting an apartment? Before making a decision, know the difference between the two and understand their pros and cons.

One misconception about a condo and an apartment is that you can distinguish one from the other simply by how it looks. Physically, it is impossible, which perhaps is the reason why many Filipinos make the common error of addressing units in any residential building—whether privately owned or rented—a “condo,” even if it is an apartment.

There is a legal distinction between the two, and it is in the form of ownership.

The basic difference

Simply put, a condo is bought while an apartment is rented.

In a condominium setting, units have different owners and separate titles. However, common areas and facilities are shared and collectively owned by all the residents of the building. This means that condo owners only have full ownership of their own unit but not the entire complex.

An apartment, on the other hand, comprises of many rooms for rent, all of which, including the building itself, are owned by a single person. This means that tenants pay only one individual, which is the owner of the building or the landlord.

To buy or to rent: Which makes more sense?

The answer varies from person to person, as every individual has his or her own specific requirements when it comes to dwelling. Before deciding whether to buy a condo or rent an apartment, determine your current and long-term needs, and understand which option you can gain more from. Here are some important things to consider:

1. Ownership and rental costs


Home ownership is possible in condos only, while apartments are about renting.

Condos and apartments are becoming increasingly popular in the Philippines today, because both options are more affordable compared to a house or a townhouse in the same area. However, expect the prices to still be expensive, as location and size have significant influence on a property’s overall price.

Buying a condo, for instance, costs between Php30,000 and Php80,000 per square meter, with the average being Php50,000 in traditional residential suburbs like Paranaque and Muntinlupa. In prime locations such as Makati and Fort Bonifacio, the price ranges from Php40,000 to Php140,000 per square meter, with the average being Php80,000.

If you are thinking of renting an apartment, the cost is a lot cheaper, but it will also depend on the room size and how long you intend to stay. According to Numbeo, the rent price for one-bedroom apartments outside the city center ranges from Php3,000 to Php10,000 per month, while renting within the city center costs between Php6,000 and Php24,000 monthly. This option makes more sense if you are looking for a short-term living arrangement, as it will allow you more time to save for your future home or other investments.

2. Location

The home address you’ll pick will command the property price.

Location affects two major things: cost and convenience.

Ideally, the choice would be to pick a home that is strategically located near leading establishments, central business districts, top institutions, and major thoroughfares. With these conveniences, however, come higher property costs. This is where it pays to determine and completely understand your financial capacity and specific needs.

If you are eyeing on purchasing a condo, you will be glad to learn that there is an abundant number of condominium developments emerging in urban and up market areas today. But if are leaning toward renting an apartment in a prime location, expect to find only a few in the market, as this type of dwelling is more popular in residential suburbs.  

3. Mobility


Identify how much living space you need so you can decide whether a condo or an apartment will suit you.

Compared to the sizes of condo units back in the ‘80s and ‘90s, condos today have gotten ridiculously small. For whatever reason—whether to accommodate more units in the complex or compensate for the nice location and amenities—what used to be the standard size for a studio unit is now the standard size for a one-bedroom to two-bedroom unit.

This is when renting an apartment becomes the better option. Not only does this type of residence provide more room for tenants to move about, but it also supplies them with more available spaces and storages for their belongings.

4. Equity


Condos are ideal for people who want to maximize their properties and make it an investment.

If building equity is one of your reasons for purchasing, buying a condo would be more favorable than renting an apartment. Even though a condo appreciates much slower than a single-family home, its market value—less liabilities such as mortgage—increases a hundred times faster than a rented apartment. This is because renting has no investment potential, as tenants do not own their dwelling.

5. Monthly fees



With the ownership of a condo comes the obligation of paying monthly association dues, or fees paid to the homeowner’s association for the maintenance, repair, and operation costs of all common areas in the condo complex, in addition to mortgage and taxes.

Apartment renters don’t have such obligation. However, the downside is that they do not have control over annual increases in rental costs.

6. Maintenance, repairs, and refurbishing


Home repairs are shouldered by condo owners and apartment landlords.

Excluded in a condo owner’s monthly association dues is the inside maintenance and repair of his or her unit. This is the least of an apartment renter’s concern, because even though he or she doesn’t pay association dues, interior and exterior maintenance costs are built into his or her rent. This means that all upkeep is the landlord’s responsibility, unless a tenant accidentally damages the property.

In terms of refurbishing, condo owners have the edge, as they are free to do interior renovations as they wish. Renters do not have such freedom since the apartment is not theirs.

7. Safety and security


Condos enjoy full security unlike apartments, which may be shouldered by renters.

Condominiums are well guarded and normally provide round-the-clock security and monitoring systems, such as CCTVs, to ensure the safety of all residents. Most also have intercommunication systems so that unit owners can speak to and identify their guests before letting them past the lobby.

This is opposite of the security you will experience living in an apartment. Some landlords allow the installation of security equipment inside the room, but it varies. To be sure, ask the owner what precautionary measures are in place before pursuing to rent.

8. Financing 


Know what home financing you can afford to avoid problems.

Unless you intend on paying spot cash, you will have to apply for a home loan in order to buy a condo. This is in addition to your down payment and closing costs, which include the documentary stamps tax, transfer tax, registration fee, notarial fee, and loan fees.

The good news is if you are leaning toward renting an apartment, as it typically requires only the first and last month's rent and a security deposit. However, don’t be surprised if your landlord refuses to pay back your deposit even without any damages after your lease has expired, because this is very common in long-term rentals even in other countries.

In a nutshell

There are so many things to consider when deciding between buying a condo and renting an apartment. It is best is to choose the option that appeals to your current needs and will make the most sense in five years or more.

by: Chow Paredes is the Co-Founder and Chief Revenue Officer at ZipMatch. A practicing Licensed Real Estate Broker, she specializes in property sales in key areas including Makati and Bonifacio Global City. Her experience as a sales director for 8 years gives her an extensive understanding of buyer behavior, sales people skill optimization, and the real estate sales process in the Philippines. She graduated from De La Salle–College of Saint Benilde with a degree in Interdisciplinary Studies.

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