Major Differences Between Co-ops & Condos

Unravel the distinctions between two of NYC's prime purchasing options. Explore our breakdowns below and rest assured, we've got your back when you're ready to embark on that NYC purchase!

CO-OPS

In NYC real estate, a cooperative building stands as a distinctive entity. With this type of purchase, the concept of ownership takes on a nuanced form as the property is held by an apartment corporation. Unlike the conventional notion of acquiring tangible property through a "deed," prospective buyers instead engage in the acquisition of shares within this corporate structure. This financial involvement is coupled with a proprietary lease, a legal document that not only confers the right to reside in a specific unit but also delineates the intricate fabric of regulations and principles governing the entire building.

It is important to note the following about co-ops:

*A purchaser must interview with the corporation's Board of Directors and be granted approval before being allowed to purchase.

*MINIMUM down payments for co-ops fall in the realm of 20-25% of the purchase price. You will be hard pressed to find many co-ps that will allow 10-15% down.

*The financial requirements to purchase a co-op apartment are stricter than bank approvals for mortgages. This is important to note: just because you are pre-approved for financing does not mean you will pass a co-op board.

*Most co-ops have restrictions on subleasing. Each building sets its own sublet policy.

*Majority of co-ops in the city are not investor friendly.

*Co-op purchasers can take tax deductions on: the building’s mortgage, a portion of the maintenance & the interest on the building’s underlying mortgage.

CONDOS

Purchasing an NYC condo is relatively comparable to the process of acquiring a single-family house. Your path to ownership is facilitated through the issuance of a legal instrument known as a "deed," which confers unequivocal ownership rights over the unit. Generally speaking, so long as you can procure a mortgage for a condominium purchase, you can buy the property. Condominiums do involve a Board of Directors that holds the right of first refusal in purchase approvals. Nonetheless, unlike co-operatives, no interview is required.

It is important to note the following about condos:

*There is no Board interview required.

*The possibility of securing financing with a down payment below 20% is contingent upon several variables, including the prevailing financing climate, your income, debt situation, liquidity, and credit history.

*There are not financial requirements held by condo boards.

*Purchasers have much greater flexibility with subleasing.

*Generally investor friendly.

*Pricing is higher as compared to co-ops.

*Closing costs are considerably more as compared to co-op purchases. Thus, a purchaser's cash outlay is greater.

*Condo buildings can be more transient with renters.

*Newer buildings/New developments tend to be condos.

Work with NYC experts like us who understand how to best steer your investment!