Condo vs. House: Which Properties Are Easier to Manage?

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There’s a reason why the property management industry is expected to be worth $22 billion by 2023. Investors can make a lot of money by purchasing properties and managing them for tenants. However, this type of business isn’t always easy. Some properties can be lucrative, but cost a lot to maintain. Others are easy to manage but don’t make much money for investors.

At the center of this issue is the ongoing debate between a condo vs house for investment properties. Both options come with their pros and cons for interested real estate investors.

But, which option is easier to manage? And which one is more lucrative? If you want to learn the answers to these questions and more, then you’re in the right place. Keep reading to find out which type of property is better for your property management style. 

Condo vs House: What’s the Difference? 

Before we go into the pros and cons of buying a condo or a house, let’s go over some definitions. This might seem unnecessary, but it’s important to the specific terms before going to the details. Let’s start with a house. By definition, a house is a four-walled structure that doesn’t connect to any type of residential building.

These types of properties typically come with a lawn and/or backyard. They may also feature added structures like a garage, pool house, or workshop. Roughly fourteen million families rent out single-family homes, so it’s fair to say that they’re pretty popular. Next, we’ll move on to the condo.

It’s helpful to think of condos as apartment buildings you own. Everything inside the interior of your condo falls under your responsibility. However, the exterior is dealt with by the homeowner’s association. This includes exterior building maintenance, lawn care, and facility upkeep.

Condos can vary in terms of size and amenities. Some of the more advanced condo communities come with pools, parking garages, clubhouses, and gyms. With over five million Americans living in condos, they’re popular amongst first-time home buyers and investors. 

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Advantages of Investing in Condos

Condos are typically much more cost-effective than houses when it comes to real estate investment. They’re also generally easier to manage. Let’s take a closer look at some of the pros that come with purchasing a condo. 

1. Typically Affordable 

When it comes to single-family rentals, condos are typically much more affordable than houses. Part of this relates to space. condos are typically much smaller than houses. More often than not condos are offered at prices that are significantly less than their assessed value. As such, they have a chance of appreciating more quickly if you’re able to snag one of these opportunities.

This low price tag makes it ideal for new investors who want an inexpensive piece of property to dip their feet into the water. Many people see it as a good place to park their money while it slowly, by steadily, increases. 

2. You Don’t Need to Worry About Maintenance

Condos share common areas which a property manager isn’t required to maintain. This includes pools, gyms, lawns, and garden areas. As such, any investor doesn’t need to worry about maintaining these areas. Instead, fees collected by the homeowner’s association are put toward the maintenance cost.

This means that you can offer amenities like exercise and pool areas, without needing to worry about taking care of them. Plus, you can take the money you save on maintenance and upkeep and put it back into the condo itself. This pro is ideal if you want to cross off some of the obligations you have as a landlord

3. High Demand For Condos on the Rental Market

Currently, there is a high demand for condos in the rental market. Why is that? Young people like millennials typically prefer renting out multi-family homes so that they can have space to work from home. As such, large condo spaces are the perfect environment for many of these individuals.

Because of this condos are more likely to generate high occupancy rates. This means that it will be easier to find tenants for your place. On top of that, you’ll also have easier access to a consistent rental income. 

4. Potential Package Deals

If you’re a large investor, then you might be able to take advantage of package deals when it comes to condos. This means that you purchase multiple condos at a light discount on the individual unit.

You can then rent these properties or sell them for a profit. Some investors also purchase an entire condo building if they’re small. If you own all of the property, then you no longer need to worry about the HOA. In effect, you become the association. This provides you the freedom to manage how you see fit. 

Disadvantages of Investing in Condos

Unfortunately, condominiums also come with plenty of drawbacks. Many of these have to do specifically with the strict guidelines set by the Home Owner’s Association. Let’s take a closer look at some of the cons that come with purchasing a condo. 

1. Some Condos May Come With Renting Restrictions

If you plan on renting out the condos you purchase, then make sure to check the fine print. Many on-site communities actively discourage renters through rental restrictions. There can be a variety of reasons for this.

One of the main ones is that young renters can sometimes cause a lot of noise and damage to public areas. As such, you should always consult with the homeowner’s association about renting policies before deciding to purchase the property. This is just one thing to consider when deciding to rent out a condo

2. It Can Be Difficult to Get an Investment Loan on a Condo

Condos are indeed affordable. Unfortunately, they can also be difficult to finance. This is especially true if you go through traditional mortgage lenders. These types of lenders typically require high down payments to get a loan.

Others will force you to live in the property for a certain amount of time before they allow you to rent it out. This can be easier if you go through more specialized lenders, or if you have enough money to pursue a package deal. 

3. Homeowner Association Fees

Condos require monthly maintenance fees and special assessments. Unfortunately, the price of these services can easily add thousands of dollars in expenses each year. You also won’t find many renters willing to pay HOA fees. As such, you as the property owner will be stuck paying them. However, the homeowner association problems don’t end with fees.

Strict rules can prevent you from using your property how you want to. To find out you should check the specific HOA restrictions in your local area. Homeowner association restrictions can vary from state to state. So, if you want to learn the full laws in your state, then use this resource here

people shaking hands in front of house

Advantages of Investing in Single-Family Houses

Single-family homes often offer a higher degree of flexibility than condos. They can also be more lucrative investments in the long run. To get a better idea, let’s take a closer look at some of the pros that come with purchasing a single-family home. 

1. Higher Appreciation Potential Than Condos

Condos are indeed much less maintenance and affordable than houses. However, it’s important to also remember appreciation conditions. Condos typically appreciate over time, but these gains are cut into by the expensive fees.

Houses on the other hand usually appreciate more in value over time. The main reason for this is people would rather pay a higher sales price for a property that doesn’t come with fees. Houses are also easier to apply home improvements too, which can increase the value.

2. No Condo Fees

There’s no getting around it: no one likes condo fees. While the expenses do make you and your tenant’s life easier, they can also cut into any of your earning. That’s why one of the main benefits of houses is a lack of fees. However, as we will see, that also means more work for you as a property manager. 

3. More Freedom With Tenants and Renting

Condos typically attract young people. And while some of these millennial-age individuals may be model tenants, not all of them will be. Many will cause problems and potentially damage the property.

Houses, on the other hand, usually attract small families. These types of tenants are much more ideal for taking care of the property. Also, you will have more freedom with renting. A lack of HOA restrictions means you can choose whoever you want to sublet your property. 

Disadvantages of Investing in Single-Family Homes

Unfortunately, single-family homes aren’t perfect. They can be more expensive and require a more hands-on property management style. To get a better idea, let’s explore some of the cons that come with purchasing a single-family home. 

1. Might Be Difficult to Find Tenants

Sadly, there’s a huge current demand for condos and apartments. While this is ideal for condo owners, it can be frustrating for house property managers. If you own a single-family home, then it will likely take you a longer period to find a good tenant for your property. Also, any vacancies you have will likely last a lot longer than they would with condos.

This can result in a lot of potential negative cash flow for house investors if they aren’t careful. However, keep in mind that this depends greatly on the location of your property. A house that’s right next to an urban area will likely find applicants much faster than a property found in a rural area. 

2. More Expensive Upfront Cost

Houses represent a steeper upfront cost than condos. This is due to the size increase and the fact that you own any surrounding property that comes with the house. This can make it difficult for some people and investors to receive funding for their projects. There are also maintenance and renovation costs to consider.

To make your home more attractive to the renter, you will likely need to upgrade it and maintain it. This can get expensive over time. As such, houses are generally a better choice for more experienced investors who have a lot of funds to disperse. 

3. More Management Expectations

Since you’re not relying on the HOA services for help, you will be responsible for both interior and exterior maintenance. If you’re running the property yourself this means a lot more work and expenses for you. For example, depending on the terms of your lease, you will likely be expected to deal with exterior maintenance of your property.

This typically means mowing the lawn, shoveling snow, garden upkeep, and exterior building maintenance (roof, exterior wall, etc.). If you want to own a single-family home without worrying about this type of maintenance, then your best bet is a property management service. However, you can also follow these tips for maintaining the landscape yourself. 

Need Help With Leasing Management Sales? Contact Nomadic Real Estate

We hope this article helped you learn about the difference between a condo vs house when it comes to management. As you can see, the right answer depends on what you want out of your investment. While certain managers might like the convenience and affordability of a condo, others will prefer the flexibility and financial potential of houses.

Regardless of your decision, it’s important to find a good real estate team to help with the leasing, sale, and management of the property. If you live in the Washington D.C., Northern Virginia, or Maryland area, then look no further than Nomadic Real Estate.

For over fifteen years we’ve been helping individuals and investors take care of their properties. If you’re interested in the personalized service that you deserve, then get in touch with us today. 

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

Owner Portal Reports
  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

Enhanced Rent Roll Report
  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

Unit Comparison Report
  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

Income Statement by Month Report
  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

Owner Portal Documents
  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

Owner Portal Property Statement

You'll also find a month-over-month operating statement:

Month over Month Statement

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

Commincation Dashboard Screenshot
  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Owner Portal New Message Screenshot

Responses will show up in the conversation ticket:

Portal Conversation Response Screenshot
  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Owner Portal Comment

Each conversation will be logged in its entirety:

Portal Conversation Snapshot

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

Owner Ledger Dates
  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

Ledger Property Column
  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

Owner Ledger Description Column
  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

Owner Ledger Amount Column
  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

Owner Ledger Account Balance Column
  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

PW Portal Filters

View a snapshot of income and expenses on your dashboard:

PW Owner Dashboard View

See every transaction in real-time on your ledger:

Owner Portal Ledger View

Statements and forms will be posted to your documents library:

Owner Portal Document Library

View a suite of real-time financial reports:

Portal Reports View

See a running list of all bills, and drill down for more detail:

Owner Portal Bills View

Under Bill Details, you'll find dates/descriptions/amounts and more:

Portal Bill Details

You can also communicate with your Account Manager through the portal:

Owner Portal Communication Tools

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

Net Distribution

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.