Figured I'd ask this question here since a lot of us are in NYC, but has anyone bought a co-op apartment in NYC (specifically Manhattan)? Personally I can't imagine picking one over a condo unless it was a price issue, so coops are cheaper per sq ft. than condos and there are few condos under $1M in Manhattan, or if it was one of the epic apartments facing the park, but that's mostly because there are no condos on the park. If you've bought one, has anyone actually had a positive experience with the purchasing process
and then the coop board into your ownership? Every story I've heard about the purchase has been super difficult, and then once you own your unit making any changes has been near impossible and dealing with the board a nightmare.
Curious to hear what other's experiences have been. Why are the stories about coops so bad? Why do people keep moving into them then?
I own a condo and not a co-op but in the buying process I looked at both. Here are a few things to keep in mind:
1) co-ops tend to be cheaper - there are a few reasons but the main two I’ve seen are: condos tend to be newer (on average) with more amenities and as you point out, you have more restrictions with a co-op. Also know that the supply of co-ops is higher.
2) share of building rather than a unit - at a co-op you own a share of the building, not your actual unit, which is part of the reason for the restrictions.
3) land lease - while not many co-ops are still on a land lease some are, so you need to be cautious when buying a co-op if the land lease is coming up soon you’ll be hit with a huge assessment and need to pay up.
4) board and restrictions - these vary wildly by building. Co-ops have a reputation for having lots of restrictions and difficult approval processes and that can be true, but it just depends on the building. The one thing I’ve found to be pretty universal is that they tend to require larger down payments (or at least cash reserves) and have stricter policies on leasing out your unit.
The co-op process is just more complicated. You need to do a lot of research to make sure you aren’t walking into a terrible deal or are going to have restrictions that you’ll hate. You have more freedom with a condo, but again it is pretty building dependent.
So a long way of saying co-ops are cheaper on average and there are more of them so that’s why people will buy them (and more of them means some tend to be in the exact spot someone wants to buy).
EDIT: forgot to add:
1) condo closing costs are higher if you are financing - there is a tax on the size of mortgage you take out if you buy a condo but not for co-ops
2) financing on a co-op can be tougher - not just down payment but banks might require more.
This is helpful information. I guess my question is more why people would pick a coop. Location and lower price are good, but why not pay a little more and be a block or two away and not have to deal with the headaches of a coop. Plus with down payment requirements being higher on a coop I imagine that arb goes away since in some cases you're required to put more money down than for a more expensive condo.
Curious as to why their is no tax on the mortgage for the coop? Is it because you're not buying real estate that is subject to a tax but instead are buying equity in the coop and for some reason that's not treated like real estate?
Sorry I should have been more clear the price diff isn’t small. Depending what metrics you are looking at the price diff is 30-50%. Part of that is that condos tend to be nicer as they are newer and the recent construction in Manhattan has been geared toward high end buyers, but that’s not the full story.
A few reports that try to normalize the pricing say the diff is more like 10-15% but that also makes a bunch of assumptions on the value of amenities, etc.
The supply is also an issue. I believe manhattan is 75/25 co-ops to condos. So finding a condo on the lower end of the market is very tough. And as above the median price difference is usually large, finding a $1mm condo is tough in manhattan. By the time people can afford these units they usually need more space (family, etc) and spending an extra 200-300k on a $2mm apartment isn’t small.
Our anon HF friend is correct on everything. I live in a Manhattan pre-war co-op so hopefully this helps add to the convo:
[quote="Edifice"] * . I've read offering plans from the late 70s / early 80s and it's extraordinary--many West Village units were purchased for
do you have access of the offering plans that you can post? seems interesting to take a look at.
Regarding land leases - what would you look out when searching for a Coop that would make you comfortable/uncomfortable i.e. maturity of the lease, reassessment dates, other? Can these land leases be viewed similarly when investing in a leasehold interest of say, an apartment/office building?
I purchased a coop last year, I am also the Coops treasurer. If you have any specific questions feel free to ask.
Very generally, yes when you first buy they put you through the ringer, you have to collect a ton of info and they will know more about you then pretty much everyone but your spouse. They don't want units going into foreclosure therefore having a gap in maintenance payments that everyone else in the building is then on the hook for. After the initial application, board interview and approval your day to day in large buildings will generally feel the same between coop's and condo's. The building may be responsible for some more repairs than if you were in a condo (coop owners are generally only responsible for everything "inside" the drywall). Coops are also good if you don't want to be living next to a bunch of subleasers or airbnb's.
At the end of the day for most non family money people coops are just a necessity. In the $1M-$3M range there are a ton more coops than condos and coops are about 25% less expense on a PSF basis than condos (this is because of the foreign buyer and absent owner market). Ultimately it is what it is and well run coops (outside of a few technicalities) will feel like their condo counterpart. A poorly run coop has maybe a few more risks than a poorly run condo.
How can you tell what an easy going coop will be like? I feel like it's hit or miss on that front. Also how did you become the Coops treasurer so quickly into living there? I would imagine some old timer would have that role, and there's probably others who work in finance / real estate in the building that could have that role.
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