Ready to buy an apartment in NYC but not sure of the differences between condos and co-ops? In this week’s buyers hack I’ll be highlighting the differences between the two property types so you can make a better informed decision about which to purchase. Ready? Let’s dive in.

A co-op building is a cooperative and makes up about 80% of the available housing inventory in NYC. Unlike condos, co-ops are owned by a corporation, so if you buy an apartment in a co-op you are not actually buying real property – you’re buying shares of a corporation and the shares you own entitle you to a proprietary lease for the unit. A condo (or condominium if you hate abbreviating words) is real property and purchasers are given an actual deed to the apartment.

Now that you understand the differences between ownership, let’s talk about what each property type has to offer. For starters, co-ops are generally less expensive than condos, so buyers typically get more bang for their buck. Property taxes and building fees are rolled into one bill, which is called the ‘maintenance fee.’ The maintenance fee contributes to general building up-keep, building staff, as well as the mortgage of the building. Generally, a portion of the maintenance is tax deductible.

The sublet policies for co-ops are often less flexible than condo buildings, so if you are looking to buy an apartment as an investment and rent it out, a co-op is likely not for you. Usually, co-ops require shareholders to live in the apartment full-time as their primary residence for a few years before they allow any subletting. After that time period, subletting is allowed, but usually only for a couple of years before the shareholders are required to move back in. In a nut shell, co-ops do not want a revolving door. If you want an investment property, a condo would be the way to go because you can rent it on day one.

Additionally, the co-op board approval process is far more invasive than a condo and also requires an in person interview. Co-ops set their own standards as to who they allow in the building, so you may spend months going the application process only to get rejected by the board after your interview. It’s brutal and I’ve seen it happen. Condos have right of first refusal so if they turn you down, they have to buy the apartment… which is why it almost never happens.

Of course, there are more nuances in the world of condos and co-ops, but hopefully this article shed a little light on and removed some of the mystery. If you are considering purchasing in NYC and have more questions about which property type might be right for you, please don’t hesitate to reach out – I’m happy to jump on a call and discuss.

If you found value out of this article, please like or share with your colleagues. It will help motivate me to keep writing and pushing these out.

YES, I Want the Inside Scoop!

YES, I Want the Inside Scoop!

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