New York based property management firm, All Area Realty Services blog. Find tips for Co-Op Boards & Residential Building Management.

Weighing The Differences Between A Co-op & Condominium?

Posted by All Area Realty Services Team on May 14, 2019 3:56:24 PM

 

New York City is like no place on earth and this is especially true when speaking about the real estate market. Most apartments in NYC are either condos or co-ops, but there are more co-ops than condos. However, there are more condos for sale than co-ops.

There are many differences between a co-op and a condo. The major difference is  that when you buy a co-op, you are buying shares in a corporation (your building) and when you buy a condo, you get your apartment and a percentage of the common areas. For co-ops, your shares depend on the size of your apartment and these shares allow you to occupy a unit in the building. At a co-op closing, you will receive a stock certificate and a proprietary lease. At a condo closing, you will receive a deed.

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Most buildings in older neighborhoods are co-ops and the newer buildings are condos. Prewar buildings are generally co-ops. Most co-ops and condos have doormen and supers. Some buildings will have more amenities. Also, the downpayment for a condo is less than a downpayment for a co-op.  

Another huge difference between a condo and a co-op is the amount of closing costs that a purchaser will pay. Since a condo is considered real property, there are a lot more fees paid at closing. When buying a co-op, the shares are considered to be personal property and therefore less money is paid at closing.

Each month, an owner needs to pay a fee for the upkeep of the building. If you own a condo, this fee is called common charges. A condo owner pays taxes as well. If you own a co-op, the fee is called maintenance.  Maintenance and common charges can change if there are any major expenses (new roof, new lobby) that come up. The board decides how much the fee will be raised and it is rare for the fee to decrease.

iStock-1086276184Co-op board approval is an arduous and rigorous process for the potential buyer and he/she can be rejected and lose the apartment. Condo boards are generally less demanding of the potential buyer. Condos may request a package on the buyer but there is no interview and the building only has the right of first refusal (they either have to approve you or the condo has to buy the apartment). In general, co-ops have many rules and some of these rules may dissuade buyers. Co-ops want residents to stay for long periods while condos are not as concerned about that.

The question remains, which type of apartment is more preferable and the answer is it depends. Generally, co-ops are more for people who want to remain in their apartment for a long time. Co-ops are great if you want to know your neighbors but be prepared to be analyzed and prodded. However, this process makes for a stable and secure investment.  

If you prefer being left to your own devices and value flexibility, then buying a condo might be the best choice for you. Keep in mind, that this freedom comes with a price and condos are normally more expensive than co-ops.

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.

 

Topics: Buying a Co-Op, Buying a Condo

A Right Of First Refusal Explained by All Area Realty Services

Posted by All Area Realty Services Team on Nov 7, 2018 3:29:14 PM

In a condominium, unlike a co-op, the board doesn’t have a large amount of leeway when approving or rejecting a proposed sale. A Right of First Refusal is a way for the board to step into a proposed deal on a condominium on behalf of all unit owners, instead of allowing the deal to go through. 

When would a condo board use the Right of First Refusal?

The vast majority of the time the board will waive their Right of First Refusal and allow the sale/leasing of the property to progress. A couple of examples of when it would be in their interest to use their right are:

Example 1:

If there is a proposed sale between two family members at an extremely discounted price.

In this scenario, the building's board could buy the apartment to keep for staff, they could flip it at a higher price, or they could lease it out to a renter. The board would want to intervene in this scenario because if an apartment sells at a value much lower than the market value, it will affect the value of the whole building. 

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Example 2:

If the proposed sale is with such an objectionable purchaser that allowing them into the building could disturb the overall peace in the building or if they have a proven record of financial misdeeds. 

In this scenario, the board could again use their Right of First Refusal to prevent the purchaser from entering the building as an owner. 

How to discover if a condominium has a Right of First Refusal.

To find out if a condo has a Right of First Refusal you should refer to that buildings Offering Plan. It is important to investigate and discover if the building holds the right because not all condominiums do. Even some of the condos that do, only have the Right of First Refusal on their commercial units, if it is a mixed-use building. 

The truth is that the vast majority of condominium sales do go through undisturbed. However, it is important to always arm yourself with all the information before a major purchase, like that of a condo. A condominium could or could not have a Right to First Refusal, so it is important to look at the buildings Offering Plan to ensure that your purchase goes through smoothly and with the outcome you’ve hoped for.

If you serve on a co-op board or condo board and need professional property management services, contact All Area Realty Services and find out why our over 30 years experience and loyal clients makes us experts.

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. 

Topics: Co-Op Board, Condo Board Association, Buying a Condo, Co-Op Building, Co-op Insurance, Co-Op Board Lawsuit

Are Co-Ops A Thing Of The Past?

Posted by All Area Realty Services Team on Oct 16, 2018 3:03:36 PM

Although co-ops represent some of the most desired addresses in New York they are also known for a harsh history where prospective owners had to pass notoriously difficult boards, meet rigorous income standards, and abide by inflexible “house rules” when it came to renovations and resale. Due to this infamous history co-op sales have been dropping and more prospective buyers have been looking to buy condos. So the question is does this mean co-ops are becoming a thing of the past? 

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In the prior year co-op sales priced $5 million and up fell nearly 20%, and in co-ops priced $20 million and up sales declined 25%. This is all despite the fact that co-ops compose 70% of Manhattan’s owned housing units. 

Condos Are Rising in Popularity 

There are a few pros to condos in comparison to co-ops that it is enticing to prospective buyers. These are:

  • Condos have a more immediate buying process.
  • They are generally full-service buildings with gyms, high-tech amenities, and on-site daycare services.
  • Condos allow more freedom to sell or rent the space.

Co-Ops are finding it hard to compete with these enticing pros condos have. 

The 5 Valuable Benefits Co-Ops Still Offer

  1. The bright side to the fall out in sales of co-ops is that there are great deals out there for qualifying patience buyers. 
  2. Co-ops, on average, are more affordable compared to their condo counterparts. 
  3. Co-ops still count for some of the most prized real estate in New York making them a better long-term investment. 
  4. There are never foreclosures in co-ops because everyone is in equal financial standing. 
  5. Co-ops have more tools to raise needed funds and to handle delinquent apartment owners. 

The truth is that real estate is cyclical. Even though sales have dropped recently for co-ops it does not mean it is the end. Co-ops still offer comparable benefits to condos, and they represent the most luxury housing in the city. Co-ops will never truly go out of fashion. 

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. Contact us today if you're looking for a professional property management company. 

 

Topics: Co-Op Board, Buying a Co-Op, Buying a Condo, Co-Op Building

Co-op or Condominium – Which is Right for You?

Posted by All Area Realty Services Team on Mar 29, 2018 5:00:00 PM

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.

iStock-589946802The 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.

 

Topics: Buying a Co-Op, Buying a Condo