What is the difference between a co-op and a condo?
A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit. While a condo owner owns a unit, a co-op owner does not own the unit. Co-ops are collectively owned and managed by their residents, who own shares in a nonprofit corporation.
Which is the better investment co-op or condo?
Generally, condos are more expensive than co-ops. Buying a condo also means paying higher closing costs since you will have to buy title insurance and pay mortgage tax. However, when it comes to loans, condos offer more flexible alternatives when it comes to the down payment.
What is Coop townhouse?
A housing cooperative or “co-op” is a type of residential housing option that is actually a corporation whereby the owners do not own their units outright. Instead, each resident is a shareholder in the corporation based in part on the relative size of the unit that they live in.
Why are co-ops cheaper than condos?
Fees. Co-op fees tend to be higher than condo fees because co-ops roll all the monthly expenses into one bill, including gas, water and property tax. For example, if a co-op shareholder owns 2 percent of the property, they will pay 2 percent of the electric bill.
Is buying a co-op worth it?
The main advantage of buying a co-op is that they are more affordable and cheaper to buy than a condo. For a real estate investor looking to make passive rental income immediately, this means co-op apartments are not a good investment. This is one reason why most property investors gravitate towards buying condos.
Is living in a co-op worth it?
The main advantage of purchasing a co-op is that they are often cheaper to buy than a condo. Co-ops are typically more financially stable. The instance of foreclosure is rare. Co-ops are typically going to be a higher owner occupancy rate.
What happens if the co-op goes bust?
In the event that a co-op files for bankruptcy as a result of defaulting on its mortgage, the lender has the power to foreclose on the building and evict the shareholders. In bankruptcy or foreclosure, the co-op shareholders remain as tenants if they are living there, but their proprietary lease is canceled.
Do you make money when you sell a coop?
When you move, you sell your stock in the co-op. In some co-ops, you may have to sell it back to the corporation at the original purchase price, with all the stockholders sharing collectively in whatever profit is made when the shares (unit) are resold. In others, you get to keep the profits.
Can you negotiate co-op price?
A co-op purchase is particularly intricate and delicate—more so than a condo. Co-ops often have post-closing liquidity requirements or other financial requirements. If you have stellar finances, plenty of liquidity, or could even pay cash, that could put you in a strong negotiating position.
Are co-ops risky?
Another risk factor for co-ops comes from its core characteristic of shared ownership – if one shareholder defaults on payments, be they maintenance fees or their share loan, it can affect all members of the association.
Can you get a mortgage on a co-op?
In a market-rate co-op, members are allowed to sell their shares for whatever the market will bear when they decide to sell. These are generally the types of co-ops you can get a mortgage on because a lender knows they can base the value of the loan on the value of your share.
Can a coop be inherited?
When you inherit a co-op apartment, you are inheriting shares in a corporation that owns real property. You can sell those shares from the estate, or you can keep them. However, in order to be allowed to live in the apartment, the Board of Directors of the cooperative corporation must approve you.
How do I transfer ownership of a coop?
No matter what alternative is used, you must request permission of the cooperative board to transfer ownership. In general, the board requires financial information and interviews the new co-owner(s) to see if he or she is suitable to be an owner and a resident.
What is a flip tax on coop?
A flip tax is a fee paid by a seller or buyer on a housing co-op transaction, typically in New York City. Flip taxes are considered a method to help raise money for a co-op’s overhead expenses without raising the maintenance fees or assessing flat charge to all residences.
How are co-op interests transferred?
Each member or stockholder of a co-op owns an interest in the corporation. So, you should be able to re-register your membership certificate to effect a “transfer on death,” unless the co-op’s bylaws or your lease restrict your ability to transfer your interest in the co-op.