We have many customers who prefer or can only afford to purchase a cooperative type apartment and then there are those that only want and can afford the higher priced condominium.
Both have there benefits and detriments and your choice will initially depend on your budget, lifestyle and the amount of time it will take you to finalize the transaction.
Co-ops are usually 60-90+ day commitments, from the point of an agreed and accepted sale price to the actual closing.
You ask, why should it take so long to complete the sale?
I ponder the exact same question and wonder why it can’t be streamlined to be more efficient in completing the process?
First off, the amount of paperwork that each particular building/board requires, sometimes seems to be very excessive and extremely time consuming.
I totally understand the reasoning and thought behind having the paperwork filled out for a purchase; but I feel for a tenant application, it should not necessarily be so intrusive, since the Over Tenant (owner of the co-op) is still obligated to pay his or her maintenance or condo common charges and taxes, whether or not the tenant pays their monthly rent.
Moreover, I can see that the board wants to know as much as possible about the individual, couple or family that wants to rent in their building.
The board is there to protect all inhabitants of their building in the best possible way, not only checking for income, credit worthiness and debt/income ratios of the person(s) that desire to rent, but also a background check to see if there were any negative reports about them.
However, the following are protected classes against discriminatory practices by co-op and condo boards, as well as lending institutions:
1. Race
2. Color
3. Religion
4. Sex
5. Age
6. National Origin
7. Disability
8. Familiar Status
9. Veteran Status
10. Convicted individuals
11. Pregnancy
12. Genetic Information
Please note, the new protected class (No. 10), those that had been previously incarcerated, whether it be one day or 30 years or anytime in between.
One must be extremely careful and cognizant, so the board or management are not subject to a lawsuit, leading to possible monetary damages.
A few years ago, In Suffolk County, a law was passed that when one is turned down to purchase a coop or condo, they have 45 days to respond, as to why they were turned down.
Nassau has yet to pass a similar law, but I believe in the very near future, it will happen and be in effect. My thoughts are that people should be judged by their incomes, credit and debt to income ratios and less on how someone looks, dresses, wears their hair, body piercings, tattoos, etc.
I totally get the fact that some board members might not feel comfortable with someone that looks different for whatever reason, but the law is the law. I am not pointing my fingers at any one building or board, but some of my customers have gone through a very trying interview and felt very “first-degreed.”
The board package consists of questions to be thoroughly answered by the prospective purchaser(s); following all the directions and must generally include a bank check, for their credit check, processing and application fee, as well as the buyers tax returns, W2”s and photo I.D.
The buyer is entitled to get a copy of the offering plan, proprietary lease, and two-years financials. A copy of your contract to purchase must always be included in your application package to be handed into management.
Then they will review the entire package, to make sure everything is in order and completed. Otherwise it will be given back and the purchaser could lose their fees that were paid.
However, if the package is accepted, generally, the board will call the prospective tenant or purchaser to set an appointment for their interview.
Interviews are basically a 15-30 minute interview and some of the questions might be:
1. Why do you want to move to our town?
2. Do you throw parties in your apartment or home?
3. Do you stay up late for any reason?
4. Are you married or single (years ago, one customer had told me this!)
5. What country to you originate from
6.) etc.
Once you pass the board, all the parties to the contract are notified and a closing date will be setup, usually with one to two weeks and will be coordinated by the seller and buyer’s attorneys, title company, if there is an existing mortgage to paid off, building attorney and a management person to facilitate some of the paperwork.
Condominiums are much, much less intrusive and although there maybe a package to be filled out, the process is more simplified.
Obviously, cash deals go faster due to no mortgage contingency. The condo has the right of first refusal to purchase the unit, but 99.9 percent of the time, the building does not purchase.
Sometimes between the time the package is handed into the management company and the board receiving it, reviewing its content and then the appointment is made, can be three to five weeks and sometimes longer.
This is where I feel there can be a lot of lost time, because it may not be performing efficiently. Board appointees are non-paid positions.
Realizing this, there is an obligation to perform for the sake of the building and protect its inhabitants.
Most buildings meet once a month and competed packages, need to be handed in generally by the end of the previous month in order to get a board appointment the following month.
If all is complete, then the board appointment is usually made between the first and second week of the month. Vacations and other situations, can interrupt board appointments and could be minimized, if there are additional standby individuals who can step in for the approval process.
However, some buildings have a practice of “meeting on demand” and is extremely efficient and much speedier than those co-op and condo buildings who provide only a once a month review.
Lastly, many coops are owner occupied and do not allow any subletting what so ever.
More can be said about co-ops and condos (as well as HOA’s-Home Owner Associations.
Lastly, co-op type living can be much easier on the pocketbook, which allows more people to purchase, but then again condominium living is at a higher end of the spectrum and generally accepted by those who want a more investment type rentable situation.
Whichever situation works for you and your budget, it is a great way to begin ownership of a place that you will receive all the benefits of potential appreciation, tax deductions and building roots within your community.
There are no financial benefits when renting an apartment or house.
The choice is yours, but I suggest you sit down with your real estate broker or financial planner (we have three) and pick their brains and provide you an analysis of buy vs. rent.
This will surely determine and ascertain the most logical path one should begin taking.
Lastly, renting today can be much more expensive than purchasing without any benefits.
Philip A. Raices is the owner of Turn Key Real Estate in Great Neck. He can be reached by email: Phil@TurnKeyRealEstate.Com or by Cell, (516) 647-4289 to answer any of your questions. To search for property, see what your home is worth or homes that have sold in your area, go to: WWW.Li-RealEstate.Com If you desire a Free, No Obligation and No Strings Attached, CMA (Comparative Market Analysis) for the value of your home, call me.
