Coop or Condo?

Cooperative:

Cooperatives seem to be more common in New York City than in any other city in North America. Over 80% of New York City apartments available for purchase are in cooperative buildings, which means less than 20% are condos. From the simple rules of supply and demand, coops are generally cheaper since there are far more of them.

Cooperatives are owned by an apartment corporation. Private owners do not actually own real estate, but they own shares in the corporation. Share amounts are dictated by apartment size, exposure, and floor level. Residents receive a stock certificate and a long-term proprietary lease. Advantages of buying a coop:

Advantages of buying a coop:

1. Less $$$ per square foot. More to choose from.
2. The Board of Directors has the right to “approve” or “reject” any potential buyer, to give them control over who their neighbors are. The board, elected by all of the tenant-owners of the co-op, interviews all prospective owners.
3. A portion of the maintenance is tax deductible. The amount accounts for your portion of the real estate taxes as well as your proportional share of the building’s underlying mortgage.

Disadvantages of buying a coop:

1. Much more thorough and rigorous board approval process. Also, when you decide to sell, your prospective purchasers must go through the same process.
2. Down payment amount is typically at 20%-25% minimum.
3. Subletting may be restricted or disallowed.

Keep in mind that most apartments for sale in Manhattan are Co-ops. Prior to beginning your apartment search, please keep in mind the financing and board qualification requirements. Your BARAK broker can provide you with more information.

Condominium:

A condominium apartment is real property. The buyer receives a deed and title and truly owns a piece of real estate. Owners are responsible for paying their own real estate taxes. In addition, there is a monthly common charge, which is similar to the maintenance charges in a cooperative. These common charges are used for the upkeep of the building, staff salaries etc. and are not tax deductible.

Advantages of Buying a Condo:

1. Financing is flexible. There are usually no restrictions, except those imposed by your bank. You can finance up to 90% in some cases.
2. Subletting is very flexible. That's why condos are the favorite choice for investors.
3. Application process for buyers is quicker and simpler, with the chance of rejection minimal. If the board rejects your buyer/tenant, they have to buy/lease your apartment themselves. Generally, that doesn’t happen.

Disadvantages of Buying a Condo:

1. There are fewer condos to choose from. They are more expensive. The extra freedom and smaller supply translates into higher cost.
2. Condo owners know fewer of their neighbors. Condos have a greater number of investor units and higher turnover.
   
   Your BARAK broker can guide you to your condo, if that's your choice.

Meet our Agents - Contact Us - Search Sales - Search Rentals