One of the first things you need to understand before buying a place in New York City, are the differences between a Condo and a Co-Op, which are the most popular forms of home ownership in NYC. But what are the differences between these two?
Stats you need to know
Almost 75% of the Manhattan real estate market are Co-ops, and the new constructions are tending to be Condos.
“A lot of people coming into the city immediately think they have to have a condo, and 90% of the time that’s accurate,” –Douglas Heddings (President of the Heddings Property Group.)
What is a Co-Op?
Co-Op is a Cooperative, this means, they are owned by a Corporation. Ans instead of buying real property, you are technically buying shares of the Corporation. These shares entitle you to a property lease, which relates your relationship to the building close to that of an investor.
The approval process for the Co-Op Buildings are usually more strict than the Condo.
Usually the Co-op boards require a series of interviews to meet you and ask questions they may have, and they can approve or deny any applicant as they choose. In fact, since everyone owns shares in the building, the community as a whole with who is or not allow into the building.
On the other hand, Condos cannot reject potential buyers, although they can pre-empt the sale by offering to buy the apartment on the same terms.
Co-Ops tend to impose more onerous restrictions on whether you can sublet your apartment, and sometimes they even reserve the right to approve them.
Other frustrations can crop up because some of these rules “can change on a whim,” Mr. Heddings said. “If the board decides that now they don’t want to allow washers and dryers, you’re at the mercy of their decisions.”
The Price Difference
By just making an overall scan of the price differences, it can seem that condos are more expensive than co-ops, but if you compare apartments of a similar size, amenities, the price difference narrows significantly.
The thing is that Co-op need to pay a monthly maintenance fee to cover expenses such as heat, hot water, insurance, staff salaries, real estate taxes, mortgage, etc. And they usually require buyers to make a down payment of 20% to 25% of the purchase price, which can make it difficult to some people, i.e. self-employed, foreign buyers, etc.
As for the Condos, they are require to pay monthly common charges as well, but they tend to be lower than Co-ops because there is no underlying mortgage for a condominium building.
Either way, both forms of ownership provide different costs and benefits to consumers.
If you are looking for an apartment in New York City, I would recommend consulting with your broker the evaluation of both forms of ownership. And eventually, you will find the perfect place to live.
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By: Andrea Bogarin-Ackerman