A few of you responded to last week’s email asking why someone would consider a co-op over a condo, given the challenges with board approvals. Number one, you can usually get a much better price per square foot on a co-op versus a condo. However, there are pros and cons to both.
In addition to being less expensive than condos, another benefit of co-ops is they typically have lower closing costs. Yet the flipside is they require a larger down payment and lenders tend to shy away from them, which can make getting a mortgage a tad bit more difficult. Also important to know is that co-op monthly fees are generally higher because they include the building’s underlying mortgage and property taxes on top of maintenance, utilities, and security. And of course, as I covered last week, co-ops have a more stringent and lengthy approval process.
While condos may be slightly more expensive per square foot, they are often easier to finance and have lower monthly fees. Condos are also not subjected to many of the stringent rules posed by co-op boards. For example, co-op owners looking to sell their units can run into delays and hurdles if the board does not approve the buyer. There may also be board restrictions on renting out or subletting your co-op unit, whereas most condo owners are typically free to do as they please.
Some co-op owners would argue that having rental restrictions and strict board application processes helps reassure the building has responsible, quality residents, helping to foster a greater sense of community among shareholders. Meanwhile, condo owners may argue that they prefer the flexibility of owning their units.
Deciding on whether to purchase a co-op vs a condo depends on what’s important to you. If you’re looking to get into something right away with the possibility of selling later down the road, then a condo may be better suited for you. On the other hand, if you’re someone who is less transient and prefers stability, a co-op may be the best choice. Either way, the current market is in your favor regardless of which you choose. Please reach out if you would like to discuss what’s the right fit for your needs.