What Are The Pros And Cons Of Each?
BY DR. LOUIS ALPERT
The choice of purchasing either a condo or coop will first depend on the availability and affordability of comparable properties of each category located in a convenient part of Rockland for commuting purposes as well as proximity to shopping, good schools (if necesssary) and offering similar amenities such as swimming pools and community rooms.
Once the prospective purchaser has located one or more candidates in each category, he or she should consider the following pros and cons of the condo versus the coop:
1) When you purchase a coop you are not actually buying an apartment, you are buying shares of stock in the coop corporation that owns the building in which your apartment is located and you are leasing that apartment from the corporation.
In contrast, when you purchase a condo, you are buying a physical unit in the building that has its unique deed much like a single family home.
2) While monthly maintenance fees associated with a coop may first seem higher than they do for a condo, consider that these fees include the share of the building’s mortgage expenses and real estate taxes (which are tax deductible to the individual).
In contrast, while the common charges in a condo will likely be a lot less per month, they cover only building maintenance and staff salaries and the tax-deductible real estate taxes must be paid separately by the condo owner.
3) Properly run coops can be a great deal; however, would be coop owners must first be approved by the Coop Board, a process that requires the applicant to place a down payment of at least 20 percent of the purchase price of the unit and also requires detailed information about the applicant’s finances and employment history. Anyone can be turned down for any reason (outside of illegal race, creed or color discrimination). Also the rules for leasing the property are usually very strict compared to maintaining the ownership of a condo.
In contrast, the approval process for a condo is relatively stress-free since no board approval is necessary and financing terms are much more flexible.
4) Condo owners are usually free to sub-let their apartments unlike coop owners, who may have difficulty obtaining permission from Coop Boards for this same privilege To be fair, this difficulty is often touted by a Coop Board as a reason to choose a coop over a condo since it allows for a carefully selected community.
In summary, coops can be an excellent choice for those individuals who value stability and make a long-term protected real estate investment, but who must first be prepared to be analyzed and generally obey much stricter rules than those required by Condo Boards.
Alternatively, if you require more flexibility, then a condo may be the wise choice for you. However, understand that this freedom comes at a price. Condos are nearly always more expensive than equivalent coops.
In addition, if you don’t want renters in your building, look elsewhere.
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