Many purchasers today are not in a position financially or it may not fit into their lifestyle at the moment, having ownership of a single-family residence. Instead their choices are to stay with family, rent (dead end street, no equity), or buy a co-op (owning shares in the corporation) or condo (you physically take ownership of your unit through a deed).
It all comes down to basic affordability with the down payment, and monthly expenses.
Co-ops generally are much more affordable than condos.
However, the luxury aspect of a condo can be quite dramatic, since most condos come with a doorman, inside parking, square footage is usually greater; and sometimes with an exercise room, tennis and a pool.
It all depends what you are looking for and what you can or want to spend and the location of where you want to plant yourself.
Also, some individuals and families sometimes have a certain time line to live in a particular area and then move somewhere else to buy a home, or it could be due to a multitude of other reasons such as finances, job relocation, retirement, divorce, etc.
So a condo might sell faster, or you could keep it as an investment, and rent it out, whereas normally a co-op can not be rented out for more than one to three years maximum, if at all.
Some co-ops are 100 percent owner occupied and do not allow any subletting!
However, the rules that go along with buying a coop are more intrusive, albeit necessary, because there usually is an underlying mortgage on the building and land and the board wants to make sure that the prospective purchaser is financially sound with the necessary income and with solid credit.
There are a lot of items that have to be paid for through the maintenance (which a percentage of it is tax deductible) from each coop owner: underlying mortgage, a portion of the real estate taxes, daily maintenance of the building and grounds, the super’s salary, heat, hot water, etc.
If any co-op owner can’t pay, then the costs for that co-op owner would be taken out of the general or reserve fund. Assessments and/or increases in maintenance (co-ops) and common charges (condos) are necessary and can come about when capital improvements, for such things as boiler and hot water heater replacement, roofs, windows, brick pointing and redoing the lobby and hallways have to be made.
The board can also dip into the reserve fund as needed.
Condominiums can also assess the unit owners too, for those previously mentioned improvements, but generally, in the long run, the perceived and actual value of a condo is considerably higher than a co-op.
I might suggest that a 700+ credit score and debt to income ratios of 32-36 percent should help you pass most co-op boards, but I cannot guarantee this.
Ask your agent and he or she might be able to provide you more information, on a specific building, if at all possible.
One last note, is that in Suffolk County, if a prospective purchaser is turned down by a co-op board, they have a law on the books that within 45 days to let a buyer know why.
However, in Nassau County and other counties there is no such law, which allows those co-ops to use their discretion as to their qualifying and turn down procedures.
It would be very desirable and a time saver, if co-ops would have some kind of consistent standard that brokers could be educated and guided by in advance, to determine the qualification of purchasers for a particular building.
Not all buildings have the same rules and regulations.
I believe this would be a great benefit for all involved parties.
Philp 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
