Coops vs. Condos
Condo Overview:
When you buy a condo, you buy real property. You receive an ownership deed for your specific unit along with an undivided interest in the common areas. A condo is managed by a Board of Managers, which holds significantly less power than a co-op board. Technically, the board has the right of first refusal to every apartment that’s offered for sale, but this option is rarely exercised.
The biggest barrier to buying a condo is cost. Condos typically cost ~20% more than co-ops on a price per square foot basis, but finding a true comparison is difficult because condos often have larger floorplans and better amenities because they were built more recently. Condos are great for buyers looking to purchase in newer buildings who want to own their unit outright. With unlimited sublet policies, Condos also make great investment properties.
Co-op Overview:
When you purchase a co-op, you purchase shares in the corporation that owns the building instead of buying the real property. You then hold a proprietary lease to occupy the apartment. Co-ops are managed by a Board of Directors, who have the final say in all transactions. Prospective buyers must put together an extensive application and go through an interview with the co-op board.
One benefit of living in a co-op is that the board- resident relationship is that of a landlord-tenant. Under State Law, shareholders have the right to safe and sanitary living and can withhold monthly payments if conditions become unlivable. Co-ops are great for buyers who plan on establishing full-time residency and do not make good investment properties because sublet policies generally require owner occupancy for at least 2 out of every 5 years.
|
CO-OP |
CONDO |
Financing |
At Least 20% Down Payment |
At Least 10% Down Payment |
Inventory |
75% of NYC Market |
25% of NYC Market |
Ownership |
Proprietary Lease |
Individual Deed |
Approval |
Difficult (Board Approval) |
Easy (No Board Approval) |
Monthly Charges |
Maintenance Charges |
Common Charges + Real Estate Taxes |
Sublet Policy |
Varies: Usually 2 out of 5 years permitted |
Unlimited |
COOPERATIVES (OR CO-OPS)
In New York City, 85% of all apartments available for purchase (and almost 100% of pre-war apartments) are in co-operative buildings. When you buy a co-op, you don’t actually own your apartment. Instead, you own shares of a co-op corporation that owns the building. The larger your apartment, the more shares within the corporation you own. Monthly maintenance fees cover building expenses including heat, hot water, insurance, staff salaries, and real estate taxes
Advantages of Buying a Co-op:
Disadvantages of Buying a Co-op:
CONDOMINIUMS (OR CONDOS)
Condominiums are becoming more popular in New York City as new residential buildings are constructed. Unlike co-ops, condo apartments are "real" properties. Buying a condo is much like buying a house. Each individual unit has its own deed and its own tax bill. Condos offer greater flexibility but are often priced higher than comparable co-op apartments.
Advantages of Buying a Condo:
Disadvantages of Buying a Condo: