Co-op or Condo, Which is Right For You?

Buying your first apartment is such and exciting time. In addition to choosing which neighborhood to move to and seeing all that is out on the market, you are invariably confronted with the question: should you go for a condo or a co-op?

The first thing you’ll notice is that condos usually cost more. That’s because buying a condo is more like buying a house. Buyers own their deeds and pay taxes. The good news is the percentage down-payment requirements are smaller and you can sublet condos more readily than co-ops.

Co-op is short for “cooperative housing project,” and you technically don’t own your apartment, as you do with a condominium. Instead, you own shares of the co-op corporation that owns your building. The larger the living unit, the more shares you own in that corporation.

While you’ll pay less money for a co-op you need to keep in mind the board, run by other shareholders, will have a bigger say in almost every facet of living.

As thus, everything that happens in a co-op must be approved. From purchase, when the board checks personal background and finance information, as well as comprehensive employment history and background checks; to any renovation that goes on in the apartment; to subleasing, which in many cases, is not allowed at all. Moreover, co-ops require larger down payments than condos, and those all-encompassing maintenance fees are higher than in condos, although they are tax-deductible.

Finally, selling a co-op can be little harder than selling a condo. Some boards assess a “flip tax” if you resell within a set period, such as one to three years.
So, depending on your financial status, how much money you have for a down payment and how much you want to be part of a group, you can decide for yourself whether you wish to go condo or co-op.

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