NYC Condo vs. Co-op–Which One Is Best For You?

🏙️ Are you considering buying property in NYC but confused about the differences between condos and co-ops? Believe me, you are not the only one! Condos and Co-ops can be confusing, especially for first-time buyers.

But I am here to help you with this, so let’s break it down step by step!

 

1️⃣ Ownership Structure:

Condos: Buyers own the unit outright, similar to owning a house. They also share ownership in common areas.

Co-ops: Buyers purchase shares in a corporation that owns the building and are granted a proprietary lease to occupy their unit. This is not considered real property.

 

2️⃣ Financing:

Condos: Typically easier to finance since buyers can obtain a traditional mortgage. No board interview for condos.

Co-ops: Require board approval and may have stricter financing requirements, including higher down payments, max financing requirements, DTI requirements, and more.  You should check with the building you are wanting to live in what their requirements are.

 

3️⃣ Monthly Fees:

Condos: Pay monthly common charges, which cover building amenities and maintenance. Condos usually have higher monthly charges than co-ops; however, they are more “relaxed” with rules like subletting, pied-à-tere, investment properties, etc.

Co-ops: Pay monthly maintenance fees, which cover building expenses, property taxes, and underlying mortgage payments. Often, monthlies for co-ops tend to be lower, which draws an appeal to many buyers. However, the strict rules and deep diving into your finances are sometimes turnoffs. Usually, co-ops are strict about subletting and do not allow it, or they only allow it after living at the residence for x number of years.

 

4️⃣ Rules and Regulations:

Condos: There are generally fewer rules and regulations for condos, including subletting and renovations. You will still have to make the board aware of things, but you generally have the freedom.

Co-ops often have strict rules regarding subletting, renovations, and pet ownership. Some like the strict rules, while others find them cumbersome, which turns them off. The co-op board can also deny anyone for any reason, and it is not required to provide a reason why. You may remember hearing the infamous stories of celebrities being denied to live-in coops from the board, including the likes of Mariah Carey, Barbra Streisand, and Madonna. There is even the infamous coop ‘The Dakota’, the home to the late John Lennon, which has denied residency to Billy Joel, Carly Simon, Melanie Griffith,  and even Cher.

 

5️⃣ Resale Potential:

Condos: Generally easier to sell since buyers only need condo board approval, if any. Their approval is called “right of first refusal,” which the condo board signs off on, indicating that they will not be buying back the condo. Barring anything absurd, condo boards always approve 99.99% of the time. They have 30 days max to get back to you. You have to do a board package for condos.

Co-ops: May have more limited resale potential due to stricter board approval processes. The co-op board packages are often more intense, stripping down your finances and asking for everything. After the board package, you have a “board interview,” during which you must put your best foot forward. Co-op boards can sometimes take weeks to get back to you with decisions or updates, as some only review prospective buyer applications during the board meetings.

 

Remember, each option has pros and cons, so it’s essential to consider your lifestyle, financial situation, and long-term goals before deciding. These are just some of the things that will come up. Many other things, including titles, shares, and flip taxes, will also need to be kept in mind.

I am here to help you with this process, so don’t hesitate to reach out. Even if you are not looking to sell or buy a place and just want to drop me a line, feel free to do so.

I am here for whatever real estate needs you have.

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