Cooperatives Versus Condos – Which Are The Better Option?
Coops or “cooperative housing projects” existed before the condominium ownership scheme. Instead of owning your apartment, you own the shares of the corporation that owns the building, wherein the number of shares are in proportion to the size of your apartment.
Payment for monthly maintenance fees are used to cover building expenses such as hot water, heat, staff salaries, real estate taxes, insurance. Monthly maintenance in coops can be higher than condos because of the insurance, property taxes and maintenance of common areas. Also, in some cases, the fees already include utilities. While the fees are higher, some of them are tax deductible.
There are a few negatives about coops you will have to keep in mind. A higher down payment is usually required, and it requires a strict and time consuming approval process.
The ruling body will also put limitations on how you can use your apartment, including any type of secondary leasing. On the good side though, passing on the lease is easier as it is viewed as a simple transition of shares, meaning that there is less in the way of lawyer’s fees and other such ephemera.
But you have to take other things into consideration with a condo, as the apartment is yours, meaning that you are a property owner. This is reflected in the cost of the condo compared to the co-operative, and also in any tax that you will pay.
There are lower monthly maintenance fees but these are not tax-deductible unlike coops. You will also need a lesser amount to put up for down payment since you can finance a higher percentage of the price.
With a condo there is no ruling body who decides whether you can move in so this part of the process is far less painful. Added to this is the fact that you will be able to use the unit in any manner you choose.
Of course, you will not be able to vet who lives next to you as there is no ruling body who make these decisions. This might mean that it can be easy for undesirables to move in next door and you won’t be able to do anything about it.
The writer has been writing about residential real estate for the past three years. Additionally, this writer is fond of blogging about New York neighborhoods, including Midtown apartments along with Central Park apartments.
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