A. Quite often people interchange the terms co-op and condo. They are really two different types of ownership.
In a condominium, you own real property, much like a house. There is a Board of Managers that keeps the building running, but generally there is no board approval required before you buy.
Condos also allow rentals more freely, although there may be varying amounts of fees involved. In addition, condos have the “right of first refusal.” This means that they have the right to buy your unit before the deal goes through.
In a cooperative building, you don’t technically own your apartment. Instead you own shares in a corporation, in exchange for which you get what is called a proprietary lease for your actual apartment.
Whenever an apartment is sold, the purchaser must go through board approval. Here they will scrutinize the financials of the prospective purchaser and meet with them before approving the purchase. Additionally, subletting is controlled by the board, and in some buildings, it’s not permitted or restricted.
So what does this difference mean to you? A condo is a better choice if you plan on purchasing the apartment as an investment. In a condo, you pay a monthly carrying cost plus real estate taxes, while in a co-op, you pay a monthly maintenance charge, which includes real estate taxes.
Condo monthly charges usually run a little bit lower than in a co-op. However, condo selling prices average 25 to 35 percent higher than co-ops. Thus, if money is a factor, then you might choose the co-op.
Further, in this area, the majority of the apartments offered are co-ops, so there is a greater selection. Both co-ops and condos, however, appreciate in value at the same rate.
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