Confused about FHA/short sale/coop pros and cons

I am new to investing and ideally would like to find a place I can rent out or maybe live in one room and rent out the other. I currently rent myself so moving is not an issue.

I have done some reading and some looking at different places in my area and I found one place that seems to be a good deal, its low cost and doesn’t seem to require a lot of repair.

Some concerns is that from the description it says it is a “Coop, FHA approved complex, short sale.”

Some people say avoid coops and others say short sales are great and I have heard mixed things about FHA approved, so overall I don’t know if this is a place I should spend more time looking into.

Some factors
The price has dropped about 30% in the last year (and the value seems to be lower than comparable places)
I have great credit and putting 25% or more down wouldn’t be an issue.

Any pros or cons or other factors to consider would be good. Pointing me to a website that has clear information would also be helpful.


Fairfield County, CT


Ok, lets start and cover each of your concerns one at a time.
  1. “COOP” or smetimes refered to as a cooperative is much like a condo or townhome except that a COOP is deeded as a group of owners rather than deeded as an individual unit where a HOA would normally manage the properties exterior and land, a COOP is manged as a ownership committee. (A “COOP” is owned by X number of people together all on the property deed according to there unit.)

  2. “FHA” is a type of Loan or Lender, it is government underwritten and generally will be owned by Fannie May / Freddie Mac. (Basically the listing realtor has put the property against criteria for FHA underwriting requirements and the property meets the scrutiny and terms and conditions to make a loan.)

  3. “Short Sale” means the unit will be sold for below what is owed against the 1st and 2nd Trust Deeds. (This means the lenders will potentially look at excepting a payoff for less cash than is owed against the Trust Deeds on the property, A COOP unit!)

COOP’s are fairly standard on the east coast as an alternative to a deeded Condo or Townhouse, you may potentually save 10 to 50% of FMV buying a shortsale and the FHA approval is the preliminary approval that the property it’s self meets FHA requirements.

I would recommend getting your own realtor and making your offer, this way you can ask your realtor if he / she would contribute something toward your closing costs and second you can get a lower initial offer presented and submitted to the owner and lender.

Make sure you review the operating budget for the ownership committee and request to see the written rules / regulations and the terms / conditions of covered maintence and repairs and a copy of the operating cost budget of which you will make a payment much like an HOA dues to cover these cost’s!

I think it has the potential of being a good home and has more investment upside than renting!

Good luck,


The COOP is listed for short sale, however some COOPs are not allowed to be shortsaled. Basically when owning a COOP you do not own the unit, you own X amount of shares. Some place restrictions on the min price a share can be sold for to help control the price of all the shares. Also remember your monthly fee will be much higher than a standard condo as you will have your property taxes included in the fee.

There are some upsides to owning one. Typically utility bills are much lower as in most states I believe they can not place taxes on each individual phone/electric bill. The taxes are applied to the COOP bill. This is the case in Florida. So your unit bill is lower.

you will deal with strict rules and check out renting rules prior to buying, however rules can be changed and you will have to follow, like it they ban rentals. Assessments must always be paid even if you disagree. When living in a COOP or any association you have an elected board that makes financial decisions and everyone must adhear to them