Condo vs. Co-op in NYC: What's Best for You?
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- čas přidán 22. 07. 2024
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The topic of condos vs coops in New York City real estate is one of the most debated topics in the city. Both condos and co-ops have different considerations when it comes to the initial purchase, lifestyle when you're in the property as well as the various costs associated when buying and selling.
In this video, we will be talking about specific differences between a condo and a coop both when you're purchasing, when you're living in the unit and when you're selling.
This is Nick from Hauseit. If you have any questions about today's video or if you have any ideas for topics give us a shout, you can contact us via email: team@hauseit.com
Now back to the topic of condos vs coops. The most important consideration when you're thinking about what property type to buy in New York City really comes down to the cost. The main benefit of buying a coop apartment is in fact the actual purchase price can be anywhere from 10 to 40% less expensive than what you would pay for comparable condominium in New York City.
Now the reason for that is there are more cooperative buildings in the city vs. condos. The supply demand dynamic dictates that the prices should be lower for coop apartments. The other reason why coops are less expensive is due to the various rules and restrictions associated with owning a coop apartment. Specifically when you purchase a coop, you must submit an application to the board of managers, and the cooperative board has the complete discretion as to whether or not to approve your purchase.
It's this additional quirk in the purchase process that is not the same thing as you would have in a condominium and it makes coop slightly less attractive to investors as well as people who don't necessarily want to go through such an exercise when buying an apartment.
So the buyer base for coops is also smaller. You don't have investors. You really only have people to intend on living in New York City for the foreseeable future. Another reason why co-ops are less expensive is because they have various rules and additional cost associated with subletting. More specifically, the coop has the authority to approve or deny any perspective tenant for your coop apartment. What this means is that it's not necessarily going to be automatically approved if you submit an application for somebody to rent your apartment.
Furthermore, co-ops also have outright restrictions on how often you can sublet your apartment. The most common coop sublet policy in New York City permits subletting for 2 out of every 5 years usually with the additional requirement that you initially occupy the unit for at least 2 to 3 years.
Coops do exist that permit unlimited subletting and investors do consider purchasing those types of units, but they are far less common and it is much riskier as an investor to purchase a coop compared to a standard condominium.
Now you maybe thinking: so if I buy a condo, I have to pay more money. What's the benefit? Well the benefits are numerous. Number one the condominium board, while they will require that you submit an application in most cases, they cannot reject your offer to purchase the apartment. Unless the condo corporation itself actually purchases the unit instead of you at the same price. The condo generally also has minimal restrictions on renting, if any.
The condo board cannot reject your applicant for the rental and generally speaking condominiums have slightly lower fees and fewer restrictions surrounding renting as a whole. While a condo may indeed have restrictions on renting, they're usually fairly minor and most of the restrictions in condominiums in New York City are pertaining to the very short term sublets such as Airbnb.
Most condo buildings do prohibit short term sublets. Anything less than 30 days i usually prohibited and in some cases for a larger condo buildings there maybe outright restrictions on the lease term. They will not permit anything shorter than 1 year. So the take away is that a coop is a much less flexible form of ownership but it's a less expensive property. If your budget is $800k and you need a 2 bedroom, it's more likely going to be a co-op.
The other benefit of buying a coop as opposed to a condo is that there are lower buyer closing cost associated to the purchase of a coop.
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Excellent delivery and well explained. Thank you!
Coop is crazy
Very helpful analysis on condo vs. coop decision in NYC and weighing the cost/benefit. Thank you for clarifying!
While coops are much cheaper than condos, it may end up being a trap as well depending on
your goals. From my experience, I much prefer the value of a Condo that is well run over a Co op.
Well said, Tommy! We agree that a prospective purchaser must carefully consider her or his long term goals, financial objectives, values and lifestyle preferences before deciding on a condo or co-op. Thanks for your contribution! ~Team Hauseit | www.hauseit.com
Totally. Condo winner!
Hi! I'm from Philippines, If you’re looking for a good investment opportunity, you may want to consider an SMDC investment. The Philippines is definitely enjoying a major surge in the real estate market now 😊
@@choosetoshine2610 Hi! I'm from Philippines, If you’re looking for a good investment opportunity, you may want to consider an SMDC investment. The Philippines is definitely enjoying a major surge in the real estate market now 😊
Just did a video on co-ops. In my marketplace they arent really popular but seem to be a. big hit in DC.
Buy outside the city.🌴
That's definitely a trend we've observed during the pandemic! ~Hauseit NYC | www.hauseit.com
Hi! I'm from Philippines, If you’re looking for a good investment opportunity, you may want to consider an SMDC investment. The Philippines is definitely enjoying a major surge in the real estate market now 😊
You are the BEST
I’m interesting in buying condo in bronx NYC but i would like to know what the average maintenances fee monthly and what is the average condo rent if I rent it ? I wanna calculate how much I can make monthly profit , thx
Coop is so complicated
Great basic information for CCP vs COND.
Which is better if we are buying on cash. no financing required?
Hi Faraz - since the Mortgage Recording Tax in NYC (a large buyer closing cost) doesn't apply to co-ops, it's less advantageous to pay all-cash for a co-op vs. a condo, all else equal.
The NYC Mortgage Recording Tax (MRT) is 1.8% for loans below $500k and 1.925% for loans of $500k or more. Learn more: www.hauseit.com/mortgage-recording-tax-nyc/
So does your equity increase as you pay your loan down with a co-op?
What about property tax? Coops fee might include property tax whereas condo may does not, is that correct?
Hi Natasha, you're correct! Co-op monthly maintenance fees include real estate taxes, which the building pays to the city on behalf of all owners. With a condo, individual owners are responsible for paying property taxes directly to the NYC Department of Finance. This is why condo apartments have two monthly payments: common charges / HOA and property taxes (in addition to the mortgage payment, if financing). ~Hauseit NYC | www.hauseit.com
People who buy COOPS are FOOLS because its cheap to buy, but it's impossible to sell - You do not have full ownership of a COOP! CONDO is more expensive, but you have 100% ownership of the real estate which is easy to sell!
Thanks for chiming in, Dexter! Condos are certainly less restrictive than co-ops per the language in the Offering Plan , but in our experience some NYC condos do try to 'impersonate' co-ops from time to time by selectively enforcing rules, harboring grudges and treating some owners differently, etc. It all depends who is on the board. Sadly, both condo and co-op boards often attract neurotic owners or people who simply have too much free time on their hands. The management company plays a part as well.
So even if you have the money to afford it, you could get denied by a snooty co-op organization? I could see a lot of undercover discrimination happening with co-ops not wanting “a certain type” of person in the neighborhood and denying them. Gross.
That’s exactly what happens. Many co-op boards hate lawyers for example because they are more likely to sue when the board enforces a rule that a tenant deems unfair.
Very true. That's why I work in property management.
Is there such thing as an investor-friendly co-op in NYC?
Yes! While less common, 'investor friendly' co-op buildings which permit unlimited subletting do exist in NYC.
~Team Hauseit | www.hauseit.com
I would be very hesitant to buy any co-op as a pure investment property. The 'investor friendly' board of today could become the anti-investor board of tomorrow....
I would prefer they are investor- unfriendly.
I don’t like a glove apartment I don’t like
Do you think it's smart to purchase a co-op for 20k and stay for more or less 3 years in NYC? About how much would you say I would be risking to lose? I really don't want to rent here because I would have to make too many concessions. Would appreciate your feedback!
Where can you find a co-op for $20K?
@@TexasbyStorm Lalaland