Purchasing NYC Real Estate: Welcome to the Jungle

Purchasing NYC property isn’t like purchasing property in any other part of the country. Most homebuyers here end up purchasing a condo or a co-op if they don’t buy an entire building. We outline the key differences between condos and co-ops.

Purchasing NYC property isn’t like purchasing property in any other part of the country. Unless they’re buying entire brownstones or townhouses, most people in NYC are either purchasing co-ops or condos. If you haven’t started climbing the property ladder yet but feel that you’re just about ready to enter the mad, mad world of NYC real estate, you may be wondering if it makes sense for you to buy a condo, if you should put your money into a co-op … or if you should just rent instead.

Buying a Co-Op

The vast majority of people who own property in NYC own co-ops. When it comes to numbers, 75 percent of owners own co-ops, while 25 percent own condos. Here’s what you need to know before going the co-op route.

  • When you buy a co-op, you’re actually buying shares in the corporation that owns the building that the apartment is located in. In other words, you don’t technically own the physical apartment. To put it another way, it’s like you’re an investor in the company that actually owns the building. Once you make your purchase, you’ll have a proprietary lease entitling you to live in the building.
  • In addition to what will probably be an extensive loan application and approval process, you’ll also need to go through a rigorous application with the building’s board.
  • In addition to your monthly mortgage, you’ll need to pay monthly maintenance fees to the building. These fees will cover things like a doorman if there is one, insurance, common area cleaning, salaries for the people who work in the building, and real estate taxes.
  • Many co-ops prefer that you come to the table with at least a 20 percent down payment.
  • Co-ops tend to have strict rules that you must adhere to, including ones pertaining to pet ownership, interior renovations, and renting out the apartment. If you’re planning on using your apartment as an investment apartment, you may find it difficult to do in a co-op that has strict rules against renting or limits the amount of times you can rent. The co-op must also approve the tenant you’d like to rent your space.

Buying a Condo

Although more people own co-ops than condos, the gap is narrowing, since most new inventory being built is almost always sold as condos. Here’s what to know if you’re considering a condo.

  • When you buy a condo in NYC, you’re actually buying the apartment itself instead of buying shares in a corporation the way you do with a co-op purchase.
  • You’ll pay monthly common charges that differ somewhat from the monthly maintenance fee co-op owners pay. Common charges are generally lower for condo owners because the costs don’t include building mortgage costs.
  • The buying process tends to be somewhat less stringent when it comes to buying a condo than it does when buying a co-op, but you may still be asked to fill out an application consisting of questions similar to the ones filled out by co-op applicants.
  • Rules regarding subletting apartments are pretty lax for condo owners, so if you’re dreaming of building your little real estate empire by subletting your apartment, a condo may be the easiest way to make that happen.

These tips should help you decide whether you’re interested in purchasing NYC condos or co-ops, or if you’d prefer to rent an apartment in the city.

Image Source: Flickr/Jeffrey Zeldman


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