Condo or Coop?
I’d love to get opinions on whether people would lean towards a well-managed pre-war coop (24 units total) or a new development condo (8 units). Assume factors like layout, neighborhood, unit price & monthly costs are all relatively equal. I know we’ll have to negotiate transfer taxes on the condo; any other advice? The idea…
I’d love to get opinions on whether people would lean towards a well-managed pre-war coop (24 units total) or a new development condo (8 units). Assume factors like layout, neighborhood, unit price & monthly costs are all relatively equal.
I know we’ll have to negotiate transfer taxes on the condo; any other advice?
The idea of owning the property vs. shares is more appealing, but new construction is certainly a bit scary…they don’t build ’em like they used to.
Thanks Brownstoners!
There’s no one right answer. I can recommend a book called “The New York Coop Bible: Everything You Wanted to Know about Coops and Condos” by Sylvia Shapiro. I’ve been very happy with having gone the prewar coop route, but a brand new condo might be better for others.
Closing on condos will be significantly more (barring extraordinary negotiations/ circumstance’s. And not by a little.
From a sponsor, on the way in (assuming you finance,)in the range of 6-7%. Ive seen them 9-10% (not infrequently). If the sponsor covers the transfer (or you buy a resale) thats about 2% so they go down to 4-5%, but still a lot.
And on the way out you will pay that 2% again irregardless of who paid on the way in.
So… if you buy a condo for $500,000 you will have $30,000 in closing costs. And if your sponsor pays the transfer you will still have $20,000 in closing costs.
And in an imaginary world where you could re-sell this condo for $700,000… at the time of sale (with a broker) you will have $63,000 in closing costs.
Thats $93,000 in closing costs compared to about $10,000 for a coop folks!
The coop in question would have to enforce a 13% (on the total sale price) flip tax just to get those numbers equal.
That’s 10% above, not 10$.
“it’s pretty simple. do you like people all up in your business? then go co-op. do you like to do whatever the heck you want? then go condo.”
I actually agree with *rob* on this one. I’ve had bad experiences with 2 Manhattan co-ops (once as a potential buyer and once renting from an owner), and my recent “No Dogs Allowed” experience with a co-op is really pushing me to find a condo.
quote:
and one could argue that co-ops are for people who cant afford to buy condos!! it’s like the housing projects version of home ownership.
*rob*
Actually, I’d argue the reverse — most co-ops require a much larger down payment and a stronger overall financial condition than condos, which ask only 10$ down (or less if they’re FHA-approved). I’d rather know that my neighbors weren’t deeply in debt and had a financial cushion to fall back on if necessary.
And, BKRed, make sure that your lawyer does a THOROUGH investigation of the condo developer’s past track record (how did those buildings fare post-sell-off?) and goes over that offering plan with a fine-tooth comb — generally speaking the first year’s operating budget will be extremely understated, so expect common charge increases in a year or so. Is there a tax abatement promised? Make sure it’s been approved if so. Also, how many other units in the building have sold or are in contract? Banks won’t issue commitments these days unless it’s over 50% (sometimes 60%), so unless you’re an all-cash buyer you may find yourself unable to get a mortgage commitment at the moment.
I’d prefer a resale if I were buying new development — that way someone else has gone through all the inevitable problems that accompany any new construction and have had them corrected. Look for something built 2 – 3 years ago or so.
Good luck!
What a wonderfully informative thread! I really appreciate it…I think I’m feeling good about the condo; next step, negotiation followed by inspection!
I can also state that it’s a myth that all new construction condos are noisy. I have never heard the neighbor above me and to one side of me. The only one I do hear is across the hall from me and it’s only their crying baby, I never actually hear the parents.
You will have higher closing costs with the new condo but you can negotiate those as part of your offer. I had the sponsor pay half.
Also, I could have gotten a coop, I would have passed board approval on a few places but most of them needed serious updating and I didn’t feel like dealing with a coop board dictating what I could and couldn’t do like not allowing owners to have a dishwasher in the kitchen (which one coop board wouldn’t allow).
There’s absolutely NOTHING inherently wrong with the co-op structure.
Yes, some boards are whacky. But there’s many, many well managed co-ops out there. And while board interviews are a hassle, having some control over what goes on in your building has pluses too. Not to mention tighter oversight of the finances, especially if it’s a small building. Good luck!
You mentioned “monthly costs being equal”
Most new construction condos (and condos in general) have very low monthly charges. Coops tend to have much higher monthly fees. It would be a rare case to have new construction carrying charges be similar to an established co-ops.
The upside to the condo is usually the low fee whereas the rub of a high fee co-op is that generally (but not always) means a good reserve fund.