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vIf you’re ready to become a property owner in New York City, there are a couple of things you should understand about the housing market before you fall in love with your dream place.
Cooperatives, or co-ops, make up about 75 percent to 85 percent of the NYC real-estate and corporations own 100 percent of pre-war buildings. So buying a co-op, means buying shares in a corporation, not property. Usually the amount of shares you own in the corporation correlates to the size of your apartment.
Before purchasing shares in a co-op, a board must approve your purchase. This means the buying process is generally longer and more involved than that of a condo. The co-op board sets their own standards and approval process, which involves an in-person interview. Approval is contingent on many factors and co-ops can approve or deny anyone they wish. The process means more financial security for the building.
Since the members of the co-op have an interest in the building, they are generally more discriminating than the average real estate seller.
You can expect to pay a monthly maintenance fee, which covers staff salaries, hot water, taxes, insurance, heat, etc.
Image via Flickr by Peter Zoon
Benefits of a Co-op
Due to the stringent purchasing process and the shares in the corporation, dwellers of co-ops are generally more personally invested in their property. Because of this, the co-op community is closer than that of a condo. Since co-op owners own a share(s) of the building corporation, they are more interested in what is going on with the entire property. Co-ops are also generally less expensive than condos.
A co-op is ideal if you plan on living there indefinitely, have the means necessary to live there, and want community.
Condominiums are deed-based and unlike co-ops, you’re purchasing property, not shares. There are less available, so the demand is higher. In a condo you will be responsible for paying the real estate taxes for your property directly.
While some condos do have a board with an approval process, if you have the funds, there generally isn’t much more involved. Condominiums have more investors/landlord arrangements because of this. Depending on the financial institution involved and your credit history, financing all or most of the purchasing price. While you can expect to pay a monthly maintenance fee, it’s generally lower than a co-op because it does not include the insurance and taxes for the building.
Benefits of a condominium
There is a much less stringent approval process (if any) and there’s greater flexibility with what you do with your property. Selling it is up to the owner, as is subletting.
If you’re looking for a newer building, less rules and more flexibility on selling/subletting a condo is a good choice.
Selecting between a co-op or a condo is a lifestyle decision. If you prefer an involved community, where you know your neighbors, co-ops are ideal. If you want a more independent existence with newer amenities, look at the condo market. Either way, make sure you work with your broker to understand the total costs involved with your options.