While this may not be a million dollar question deciding whether or not to rent in a condo building versus in a rental building is a question that many renters have on their mind. What are the differences? What are the benefits and the risks of each? Well, lets dive right in and discuss.
First, let me explain that the Chicago market has seen a massive resurgence in the rental market. With less people being able to qualify for mortgages and many “would-be” buyers still hesitant about the real estate market, there are more renters in the market than we have had in a long time. When we factor in the depressed sales prices of condos in the city, many condo owners have decided to rent out their units instead of sell them. This leaves renters with two choices: Rent from a private owner in a condo building or Rent from a professional management company that owns an “apartment building” or “apartment tower/high rise.”
Common Questions Asked about Privately Owned Condos:
WHAT IF SOMETHING BREAKS? LETS SAY MY DISHWASHER STOPS WORKING. WHO DO I CONTACT THE BUILDING OR THE OWNER?
The answer varies depending on your landlord. In many cases the landlord will want you to contact him/her first, however, they will typically utilize a management service or even the building engineer to take care of the problem. With the large amount of condo owners now renting out their units, many small management companies have started. These companies specialize in managing single units such as a condo or a house.
WHO DO I PAY RENT TO?
You will pay rent directly to the landlord. Sometimes the landlord will have an LLC or Corporation set up that you will pay rent to or you may pay rent to the management company that HE/SHE has hired to manage the property you are renting.
WHAT IF THE LANDLORD SELLS THE UNIT WHILE I’M LIVING THERE?
For starters all leases survive the sale of a unit unless stated otherwise. In other words, this means that if your unit is sold, the new owner must abide by the lease and honor it. However, in cases where a unit is up for sale and up for rent, I ALWAYS REQUEST that the unit be taken off the market for sale once a lease is signed. Typical leases only allow a landlord to show the property for rent or for sale during the last 60 or 45 days of the lease and NOT AT ANY OTHER TIME DURING THE LEASE TERM. There are exceptions, however, these must be clearly spelled out to you in the lease and are only in rare cases and also means you would need to agree to it!
WHAT IF THE LANDLORD STOPS PAYING HIS MORTGAGE EVEN THOUGH I’M PAYING RENT?
You may have read stories of this happening. First you need to know this is very rare and doesn’t happen often. Most condo unit owners are renting their units out because it is an investment for them. Furthermore, most condo owners in the city are well to do and do not want to risk a foreclosure on their record. In the unlikely event that this does happen, rest assured it takes a very long time for a bank to foreclosure, typically 12 to 18months under PERFECT conditions. Plus, the bank must give you notice before taking over the unit. It is not as if they can show up one day and say “guess what, you’re gone!” While this is a perfectly good question to ask it is something that you shouldn’t worry about.
WHAT ARE THE BENEFITS OF RENTING IN A CONDO BUILDING?
It has been my experience, when compared with apartment buildings of the same price range, condo buildings offer a better value in total. Typically the units are more updated and upgraded. Things such as Hardwood Floors, Granite, SS Appliances, Marble Bathrooms are much more common place in condo buildings than in all rental buildings.
Since the majority of people in the building are owners it is my experience that the building is kept up better. There are less people moving in and out, therefore there is less wear and tear on the building as well.
Even though you are renting in the building, you are treated as an owner whether it is the maintenance staff or the doormen, I’ve found there is a great sense of a “home” feeling.
Common Questions Asked About Apartment Buildings
APARTMENT BUILDINGS ALWAYS SEEM TO BE RAISING THEIR RENT PRICES. WILL MY RENT PRICE INCREASE WHEN IT IS TIME TO RENEW?
Many apartment buildings use lease incentives to get you into their units. There are many reasons for this, however, the largest reason is that they want the high lease rate on their books. For instance if they lease a place to you for $2,000/mo but give you 1 month free they still have $2,000/mo on their books. However, as far as you are concerned your effective rent is only $1,833/mo since you are only paying for 11 months but living there 12.
The question here is “Will your rent be $2,000/mo when it is time to renew?” The answer is: More than likely YES if the rental market is good. If the building is hurting for people, however, you can typically negotiate a very good incentive for not leaving. Unfortunately, right now in 2011, chances are your building has people banging down the doors to get in so there is no need for them to offer you an incentive to stay.
MY FRIENDS LIVE IN APARTMENT BUILDINGS. THEY LOVE THEIR HEALTH CLUBS AND ALL THE SERVICES. DO ALL RENTAL BUILDINGS HAVE THIS?
No, not all rental buildings have great health clubs, but many do. One of the big advantages to an “all rental building” is that the amenities are typically well designed and LARGE. They typically have good size fitness centers, newer facilities and are kept up quite well. The biggest reason for this is because it is one of the ways rental buildings draw in new renters.
ARE ALL MY UTILITIES INCLUDED IN MY RENT?
Unfortunately, unlike in many condo buildings where the assessment paid by the owner can include many of your utilities, most rental buildings charge you an “Activity Fee” or a “Utility Fee” on top of the rent you pay. This fee is typically based on the size of the unit you are renting and can range anywhere from $75 to $250/mo.
What are the biggest benefits of each?
BIGGEST BENEFITS OF RENTING A CONDO VERSUS AN APARTMENT:
Better Quality Units – Your dollar gets you more – More locations to choose from – Well kept hallways – You are treated as an owner
BIGGEST BENEFITS OF RENTING AN APARTMENT VERSUS A CONDO:
Larger Amenity Floors – Your unit will always be available for you to rent if you’re willing to pay the price