What is it about Co-ops ?

Hey everyone,

I don’t understand the benefits of owning a co-op, as primary residence.
For example, there’s a co-op for sale in my area for $150k, 1BD 1 BA. The maintenance alone is $1500/month!! Who would pay that amount and why!?

What are the benefits of owning a co-op? What do the experienced investors think when they hear about co-ops ?

wow, thats sounds more like a per year maintenance fee. In my area the high priced condos only have about a $300/month fee.

I think some people like condos for the location and no maintenance aspect of it. I know thats why my mother owns one in florida.

Condos and Co-ops are structured differently and are not even close to being the same. A co-op is part of a corporation. When you buy one, you receive a certificate stating how many shares of the corporation you own. For instance, a 1br owner has less shares than a 2br owner. Condo are real real state, just like a house. Also maintenance fees are different. In a co-op, your fee includes maintenance plus your share of the mortgage of the land underneath the building. A condo however, must have its land paid off before construction. hence why a condo fee is a lot lower than a co-op. it has been a couple years since I really was researching everything about them, but that is the main stuff.

Why would someone want to own one? Here in NY, this is usually the only properties first time buyers can afford. if this is the only property you can get, and are never going to move from the NY area(as oppose to us who come here from out of state, and stay 3-5 years and doesnt make sense to buy), wouldn’t you bite the bullet as oppose to renting the rest of your life? Could go on more, hopefully Frank Chin will chime in too

Primary residences are not looked at like investments for profit. You buy a primary residence because you want to live that kind of lifestyle. You want to walk to the parks and send you kids to the schools in the neighborhood. You buy a primary residence because of emotions you love your home. You can’t look at it as you would your investments. That is why people live in New Jersey or Connecticut. They love it there but it makes no sense for anybody to live there.

You got that right, financially it doesn’t make sense to live here.

Co-ops can have the same restrictions or more than a condo. One thing to make sure about buying a condo is that they allow you to rent it out. Some prevent you from doing so because too much investor ownership lowers the property value because it’s more difficult to get a loan.

You may also run into the same problem with a co-op. Co-ops are for living there and you may have the option of living with like minded people. Depending on the state, the co-op board has final say on whether they will accept or reject your application. Some boards have taken this as an opportunity to discriminate on who can live there. They have that right because you’re also buying into the debt of the co-op and if you don’t make your mortgage payment, it falls to all the other shareholders so they want to make sure you’re stable enough to carry your share.

With a condo, there’s no restriction like that.