Whether you are looking to build a condo or townhouse, there are pros and cons. Each development offers a nice place for residents to live and comes with amenities to attract new buyers and renters. While condos and townhouses are similar, there are some differences that may make one a better choice for you to build.

A condo, by definition, is a building that contains different units that are individually owned and occupied by individuals. Typically, there is one owner, who owns the building, and individuals purchase the condominium from the owner, and then the condo unit becomes theirs. Some individuals may want to live in a condominium because it is cheaper to purchase when compared to a house, there is no yard maintenance, and there is a sense of community.

A townhouse is a multi-level house in a small housing development that is connected to a similar home by shared walls. A townhouse is not a single-family home. Some individuals may want to live in a townhome because many have maintenance-free yards, are gated or have security features to enter the community, and are cheaper than purchasing a free-standing home.

Below, we discuss some of the main differences between condos and townhouses, which should help you make your decision about which one to build.

Building Process

The building process for a condo or townhouse is extensive and takes planning. Both of the processes are difficult and require an experienced architect, team of builders, and contractors to complete the job. Each one of the buildings needs to be up to current code and undergo inspections.

In general, condos are more difficult to construct because there are more shared walls.  And, the interior of the building, which must include multiple hallways, entryways for residents, and laundry rooms, only adds to the complexity.

The building process for a condo initially starts out with surveying the land and purchase of a suitable lot to accommodate the structure. From there, an architect creates a set of blueprints ¹ according to the developer’s idea for the building and condo design. When the plans are approved, construction begins. Once the initial structure of the building is constructed, the interior walls begin to go in, and the building is wired for electricity, the plumbing installed, and the process continues until entire building is constructed.

The building process for a townhouse is similar and starts with the purchase of land that is suitable to hold multiple units. From there, an architect creates the townhomes’ plans. Since townhomes only share one wall, there is not as much planning needed. The rest of the construction process includes laying the foundation and building each of the units. 

Ownership

The developer or individual hired to construct the condo or townhouse does not own the building. He or she is hired by the individual or company who purchased the land. The owner will work closely with the developer and architect to design the structure. Often, the owner will rent out the condos or townhouses prior to the construction completion date.

Condo owners do not own the land that their condo is built upon, and they do not own the building in which their condo resides. Condo owners only own the interior of their unit.

In many cases, when someone purchases a townhome, they own the townhome and the land it sits on. Sometimes, townhomes are sold separately of the land, and the owner only owns the townhouse itself and not the land it sits on. It is important to read the terms in the contract before purchase.

When an individual wants to purchase a condo or townhouse, it is important to learn more about any Homeowner Associations (HOAs). Before purchasing, potential buyers should ask for a copy of the HOA’s meeting minutes, financial statements, and rules and regulations, commonly known as CC&Rs or covenants, conditions, and restrictions.

The communities in condos and townhouses are usually similar, but you may find that condos have a closer community feel and offer more than a townhouse community. Condos generally have patios or balconies, community pools, common areas, laundry rooms, game rooms, and fitness centers. Townhouse communities may have some, all, or none of these, but it is common to find a pool, fitness center, and playground.

Maintenance

As a builder or developer, you do not have any responsibility to maintain the property once it is built. The owner or the HOA is responsible for taking care of the property, which is why many individuals choose to purchase townhouses or condos instead of standalone homes.

There are maintenance fees for both townhouses and condos, and it falls on the owner of the unit to make the payment for these services. Maintenance services typically include pool cleaning, repairs to buildings or roofs, lawn maintenance, and similar.

The average cost of maintenance fees for condos and townhouses is a couple of hundred dollars per month, but the actual cost varies depending on the location, amenities, and what is included.

Resale Value

The resale value of a condo is typically higher than that of a townhouse because the condo retains much of its value. However, a condo is not like a single-family or detached home where the price fluctuates. A detached home may sell for more money than a condo when the real estate market is hot, but condo sales allow investors to receive more of their money back over the course of their ownership because they do not fluctuate as much in value.

A townhouse does not always hold its value, and this is for a couple of reasons. First and foremost, it can be much more difficult to have a full community. Also, it can be harder to obtain financing for townhomes.

Remodeling Terms Cheat Sheet

¹ Blueprints: A technical drawing of an architectural design. Traditionally these were made using a printing process that produced a white line on a blue background. They can also be made with CAD software and a large-scale printer