Usually, homes in New York City are not large Victorian houses with white picket fences. Instead, your choices are between tall buildings which hold apartments and condominiums or an occasional townhome, brownstone, or loft. Roughly 85% of apartments for sale are co-op buildings. This means you don’t own your apartment. Instead, you’ve purchased shares of the co-op and the co-op owns the building.
If you weren’t born and raised in New York City, this can seem like a foreign concept, so we've decided to explain a little further...
Pros vs Cons of Buying a Co-op
Let’s discuss the pros first. With a co-op you do not actually own your apartment, which helps keep the prices lower than a condominium purchase. With a condominium purchase, the buyer owns the property and there is usually a property management company that handles the day-to-day maintenance (which co-ops do as well). In a co-op, you have a tax advantage of being able to write-off some maintenance fees.
The cons of purchasing a co-op is you do not own your apartment and there is a rigorous application process that involves showing current and previous tax returns, bank statements, and every aspect of your financial life to strangers. And of course the often dreaded, co-op board interview. While a pro is that some of your maintenance fees can be tax-deductible, the con is maintenance fees tend to be higher than for those who purchase a condo. Another con is not having the ability to make extra revenue by subletting or renting out your apartment while you are out of town. Many co-ops have strict rules about if and when you can sublet your apartment.
Pros vs Cons of Buying a Condo
Years ago, condominiums were not common in New York City. But now in 2018, as new buildings are being built, more condos are popping up. A nice pro with buying a condo is the ability to have a mortgage payment. That’s right, it’s much easier to finance your purchase than it is to try and get approved from a co-op board. Forget board approval because in condo land, that’s not a requirement!
The cons of purchasing a condo is quite like the cons of purchasing a co-op, only the complete opposite. For instance, there are no maintenance fees that allow for a tax deduction, condo prices are more expensive, and there is a very small condo market available which increases sale prices.
All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area.