Co-op vs. Condo: Buying in NYC

Co-ops (short for "Cooperatives")

1. Co-ops are owned by a corporation that sells shares of the residence, based on size and floor. "Owners" are actually tenants with a long-term proprietary lease.

2. The corporation pays the the maintenance expenses, real estate taxes, and underlying mortgage on the building. The shareholders ("owners) pay a monthly maintenance fee, which is determined by the number of shares.

3. A large percentage of the monthly maintenance is tax-deductible. The percentage is determined by the corporation.

4. The building has a Board of Directors, which protects the interests of the shareholders and the building.

5. Co-ops vary greatly in their rules and regulations regarding: pet policy, subleasing, residence renovations, etc.


Condos

1. Condos are considered real property, where the owner recevies a deed in the formal title transfer.

2. The owner pays the monthly common charges for the maintenance of the jointly-owned areas.

3. The owner is responsible for the real estate taxes allotted to their individual residence. This is paid directly to the city and is tax-deductible.

4. There is typically a Condo Board.

5. Condos offer greater flexibility, far fewer restrictions in policies, such as subleasing and pets.


Co-op vs. Condo: Buying


Co-ops make up approximately 80% of the available residences in NYC and tend to be less expensive. When purchasing a co-op, the down payment typically ranges from 20% to 50% of the purchase price. From contract to closing, the process normally takes about 90 days. The interested buyer fills out an application and provides financial information and documents, as well as personal and professional references. If the application is satisfactory, they will then be invited to an interview by the Board of Directors. The Board reserves the right to reject or approve the applicant.

Condos are generally more expensive than co-ops, although the monthly maintenace can be lower. The down payment is usually 10% of the full purchase price. The application process tends to be less extensive and rigorous than that of a co-op and only takes approximately 60 days. While the buyer may be required to provide financial and personal information, there is typically no interview. Condos are ideal as investment properties because of their greater flexibility.

So you want to rent an apartment in NYC...

...and you don't know how to get started. Here are some tips that could save you time and money.

Apartments usually come on the market about 30 days before they are available so your best bet is to start viewing one month prior to move-in. There are exceptions, but this is the general rule. So how do you prep before then?


1. Determine what you can afford

In general, landlords want to see good credit and at least 40 times the montly rent in your annual gross income (pre-bonus). Outrageous, you say? Hey, don't shoot the messenger. If you fall short or are a student, hope is not lost. You can usually work around it by offering more rent or security, showing liquid assets, or by using a guarantor. Guarantors should have good credit and make at least 80 times the montly rent.

2. Prepare your paperwork

• Letter of employment on company letterhead verifying position, annual salary, and length of employment. If self-employed, provide a CPA letter stating the same.
• Last 2 months' bank statements
• Last 2 paystubs
• Tax Returns from the last 2 years
• Landlord Reference letter- confirming that you are a good tenant, paid rent on time, etc.
• Photo ID

If you are using a guarantor, they should provide the paperwork above, except for Landlord Reference Letter.

3. Rank the importance of apartment characteristics

Figure out the absolute must-have's and the can't live with's. With any budget, you still might have to compromise so you should determine what is most/least important.

• light
• size
• price
• layout
• neighborhood
• pet-friendly
• walk-up vs. elevator
• if walk-up, how many floors?
• attended lobby (full-time/part-time doorman)
• amenities: gym, concierge, children's playroom, etc.
• proximity to public transportation
• access to nightlife, restaurants, supermarkets, etc.

And now you are ready to start viewing apartments.