Are Co ops a safe option ?

Asked by Nilsa, Brooklyn, NY Fri Mar 1, 2013

Trying to purchase in brooklyn, Co op only choice for me right now. How can I make a smart choice?

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Anna M Brocco, Agent, Williston Park, NY
Fri Mar 1, 2013
Consider working with an agent of your own, he/she will be your best guide so that an informed decision can be made....
2 votes
Rhonda Holt, Agent, New York, NY
Wed Mar 6, 2013
Hello I'm an Associate Broker specializing in selling co-ops for over 7 years in Brooklyn and there are more co-ops in Brooklyn, than condos. Co-ops are an investment like any other property and is great for young people, seniors and couples starting it's affordable (depending on the area ).

If you want any information about ow co-ops work, co-op buying process and co-op qualifications let me know and I can answer all your questions. Call me at 646-725-5941.
0 votes
Michael Rich…, Agent, NY,
Sat Mar 2, 2013
Hi Nilsa,

You need to ask that question in regards to a particular coop. The way you find out about the status of a particular coop is after your offer is accepted, but before a contract is signed, your attorney will review the buildings financial statements and minutes of board of director meeting with an eye for issues that are problems for a buyer. If any are found you will have the opportunity to back out of the transaction.

Michael Richman
Licensed Real Estate Associate Broker
KIAN Realty
450 7th Avenue Suite 1501
New York, NY 10123
212-757-8268 x220
0 votes
Kathryn Lilly, Agent, New York, NY
Sat Mar 2, 2013
Co-Ops are a very good option if your intention is buying a home.
When buying a home your Attorney should read at least 2-3 years financial statements for the Co-Op to see how it is being managed. Also read at least 6-12 months minutes of the Co-Op board meetings to see what is being planned, what social issues there are in the building, ongping issues etc.
When buying a Condo, you do not have access to such information.
The Co-Op board is 100% responsible for the management and maintenance of the building, in a Condo the boaurd does not have such control, so if there are problems all you can do as an owner is take your neighbor to Court, also in a Condo, the board has very little control over how many investers with tenants own in the building and it sometimes gets to the point that there are too many investers and Banks will not finance any re-sale.
When it is time to replace major componants in a Condo; such as elevators, many buildings do not build reserves to take care of that so each owner gets a bill for theire share, each owner has to come up with a large chunck of cash! (Assessments) and a majority of owners need to agree to it, I have seen where a roof does not effect the majority and ...disaster for those owning on the top floor!
A Co-Op constantly builds their reserve funds from the maintenance and the Board is in control of doing so, also they can refinance the underlying mortgage to cover emergencie short falls, this is seen in the financial statements, a Condo cannot put an underlying mortgage on the building to take care of a building wide issue.
So a Co-Op for an owner occupant is a much better option in the long run, for an invester ; a condo is the only option, other than buying a whole building.
Please feel free to call or e-mail me for further information, after spending many years, manageing and sitting on Co-Op and Condo Boards, I would buy a Co-Op for a home.

Kathryn Lilly
Realty on the greene, LLC
0 votes
Thank you for your response and taking the time. I appreciate it.
Flag Sun Mar 3, 2013
Mitchell Fel…, Agent, Brooklyn, NY
Fri Mar 1, 2013
Dear Nilsa:

When you purchase a co-op you are actually purchasing shares of stock in a corporation, not real property. Hence, co-ops do not have to abide by many real property laws such as the Property Condition Disclosure Statement Law. You should speak to your attorney regarding the difference between a co-op and real property.

Having said that, owning a co-op is owning an asset, just like owning stock in any other corporation. There is a certain amount of risk involved. Just like any other stock, the value can go up or down. Just like stocks, if you are looking to hold onto the asset for a while, long term the risk level decreases statistically. Heck, there is always risk associated with any asset you purchase, even real property.

So you ask how can I make a smart choice? The answer is... do the research. It is not that difficult. First visit with a mortgage banker and get yourself pre-qualified to find out how much you can borrow. Once you know that you can prepare a budget and know how much your monthly living expense will be. Then you can speak to your accountant to find out how much money you will save on your income taxes, I bet you it will be quite a bit! Then you will fully understand why it is better to own than rent if you can.

Even if your budget only allows for you to purchase a co-op, if you can afford it you are much better off than renting. You just need to minimize the risk I had discussed above. The way to do that is to make sure that you have a great real estate attorney representing you. Your attorney will review the financial statements of the co-op to see if it is in good financial condition. If the co-op is operating at a profit and has a good rainy day fund, it is a pretty safe bet. Lets face it, the same can be said of any stock you purchase. And like stocks, if you buy good ones and hold onto them for a long time, although it is never a guarantee, you usually do very well!

Important points to take note of when purchasing a co-op:
1) Aside from getting your mortgage, most likely you will have to also submit an application to the co-op board and go on a personal interview with the board in order for the co-op to approve the sale. These interviews are similar to a job interview so be prepared for that.
2) All co-ops have their own "house rules", make sure you know what they are ( i.e. no pets allowed, no subletting). These rule can vary dramatically from co-op to co-op and can have an effect on the value of the co-op and/or your desire to want to purchase in a particular co-op building.
3) Find out if there is a flip tax and if so how much it is. The flip tax is a tax that you pay when you SELL the co-op (not when you buy it). It is a way that co-op developed to bring additional funds into the co-op. In the past 20 years I've been in real estate I have seen flip taxes ranging from $0 to 20% of the sales price (crazy right?). If a co-ops flip tax is too high, it makes it harder to sell and you can get hurt down the road. Plus, if the flip tax is too high, the bank you go to for the mortgage may not want to lend you the money! You have to check with your mortgage banker what their policy is regarding flip tax. Your best bet is to go with a co-op with little or no flip tax.
4) The co-ops house rules and flip tax policies can change over time. As an example, if it turns out that the co-op finds itself short on funds, the monthly maintenance may go up or they may establish a flip tax. Even though it would be put to a vote, if you own in the building you really cannot fight it because if you do not raise the additional funds somehow the co-op can go bankrupt (not a good thing).
5) This is why it is so important that you see the financials and have a qualified person review them to make sure the co-op is in sound financial condition.

Hope that helps, if I can be of further assistance, please contact me direct. Good luck!

Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
0 votes
Jean Paul Ho, Agent, Brooklyn, NY
Fri Mar 1, 2013
Thank you for your inquiry! If you need to reach me immediately please e-mail me
at or call me at the office @ 1-718-875-8899 so we can schedule an appointment ASAP. Otherwise I will get back to you as soon as possible!

For more listing visit:,

All the Best,
Jean-Paul Ho
Licensed Real Estate Broker
Office 1-718-875-8899
Brooklyn Real Property, Inc.

Downtown Brooklyn Office
389 Atlantic Avenue
Brooklyn New York 11217

Canarsie Office
9201 Flatlands Avenue
Brooklyn New York 11236
0 votes
Fajardo Dela…, Agent, Flushing, NY
Fri Mar 1, 2013
Find an agent that works on coops.

Fajardo Delacruz
Licensed Real estate Agent
Century Homes Realty Group llc
Direct Line: 347-932-0609
0 votes
Madeline Pad…, Agent, Brooklyn, NY
Fri Mar 1, 2013
Hi Nilsa
Owning something is always better than just paying rent. If that is what you can afford then that
is what you should purchase. Most coops are a very safe investment because not only do you
need to qualify for the mortgage, the coop must also qualify. If it doesn't we move on to another
coop. Have you started looking yet? Since you state your only choice right now, I assume you
have spoken to a bank to get pre-approved, you will need that for any offer you wish to submit.
If I can be of any other assistance, or if you would like to start your search, please feel free to
contact me directly. either way good luck.
0 votes
Joseph Roraff, Agent, Onalaska, WI
Fri Mar 1, 2013
Co ops are a safe option. I would recommend a co op over condominium.
0 votes
Barbara Ann…, Agent, Brooklyn, NY
Fri Mar 1, 2013
Hi Nilsa,

In my opinion, co-ops are your safest option. Co-ops have stricter purchase and sublet rules than condos, so you property value is better secured. They cost less to buy and less to close than condos. When you live in a co-op you know and have control over who your neighbors are. Please contact me for more info - I specialize in first-time buyers and can guide you through the process.
0 votes
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