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What is an NYC Co-Op and what are the Pros? Cons?

added by Jonathan D on January 11, 2013
What is an NYC Co-Op and what are the Pros? Cons?

What is an NYC Co-Op and what are the Pros? Cons?

Even if you’ve only looked online at homes for sale in New York City, chances are that you’ve run across more than one listing that is actually a co-op. In fact, studies have shown that between 75% – 85% of all residential properties in the city are co-ops compared to a much smaller percentage that are true condominiums. What is the difference and how does it affect you?

When you purchase a condominium you are buying your own, specific property. You are the owner of your domicile. In an NYC co-op, the building as a whole is owned by a co-op and when you purchase your home in that building you are actually buying shares in the co-op’s corporation. You are not an actual homeowner, but instead a shareholder in your building.

What are the Advantages of a Co-Op?

Purchasing housing in a co-op building has numerous advantages over owning a traditional condo including:

  • Cheaper purchase prices – often by up to 40 percent. In Q3 2012, the average Manhattan co-op unit cost just over $1.2 million. Condos, on the other hand, averaged out at nearly $1.8 million.
  • Better living conditions. Co-ops are historically known to be much stricter in both approving new owners and renters, as well as setting regulations for daily life in the building.
  • Less responsibility. While you still have responsibilities as a shareholder in the co-op, NYC co-ops are legally classified as the landlord of the shareholders living there. This means you are offered protection under NYC’s landlord-tenant laws.


Disadvantages of a Co-Op Compared to a CondoDisadvantages of a Co-Op Compared to a Condo

Although the majority of NYC buildings are co-ops, condos still have their pluses such as:

  • Tax benefits. When you own a condo, you own the property. This allows you to claim home-owner tax deductions that are not available to co-op owners.
  • Rental freedom. Co-op boards are known to be much more strict on approving renters. If you plan to rent your unit out in the near future, you may have a much more difficult time in a co-op.
  • High purchase equity. Co-ops can set defined limits on how much of the purchase price you pay may be financed meaning that although units in co-ops are normally cheaper than condos, they often require larger down payments.

What is an NYC Co-Op and what are the Pros? Cons?

Even if you’ve only looked online at homes for sale in New York City, chances are that you’ve run across more than one listing that is actually a co-op. In fact, studies have shown that between 75% – 85% of all residential properties in the city are co-ops compared to a much smaller percentage that are true condominiums. What is the difference and how does it affect you?

When you purchase a condominium you are buying your own, specific property. You are the owner of your domicile. In an NYC co-op, the building as a whole is owned by a co-op and when you purchase your home in that building you are actually buying shares in the co-op’s corporation. You are not an actual homeowner, but instead a shareholder in your building.

What are the Advantages of a Co-Op?

Purchasing housing in a co-op building has numerous advantages over owning a traditional condo including:

  • Cheaper purchase prices – often by up to 40 percent. In Q3 2012, the average Manhattan co-op unit cost just over $1.2 million. Condos, on the other hand, averaged out at nearly $1.8 million.
  • Better living conditions. Co-ops are historically known to be much stricter in both approving new owners and renters, as well as setting regulations for daily life in the building.
  • Less responsibility. While you still have responsibilities as a shareholder in the co-op, NYC co-ops are legally classified as the landlord of the shareholders living there. This means you are offered protection under NYC’s landlord-tenant laws.


Disadvantages of a Co-Op Compared to a CondoDisadvantages of a Co-Op Compared to a Condo

Although the majority of NYC buildings are co-ops, condos still have their pluses such as:

  • Tax benefits. When you own a condo, you own the property. This allows you to claim home-owner tax deductions that are not available to co-op owners.
  • Rental freedom. Co-op boards are known to be much more strict on approving renters. If you plan to rent your unit out in the near future, you may have a much more difficult time in a co-op.
  • High purchase equity. Co-ops can set defined limits on how much of the purchase price you pay may be financed meaning that although units in co-ops are normally cheaper than condos, they often require larger down payments.

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