Condo vs Coop: the money difference between hoa fees and mortgage?

Asked by Difrazier54, Brooklyn, NY Thu Sep 5, 2013

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Mitchell Fel…, Agent, Brooklyn, NY
Thu Sep 5, 2013
Dear Difrazier54:

There are some distinct financial differences between purchasing a condo and a co-op, they are as follows:

1) Condos are real property and are protected by ALL real property laws. Co-ops are not real property, hence they may not be protected by traditional real property laws. You have to speak to an attorney to fully understand the difference. Basically, when you purchase a co-op, you are buying shares of stock in a corporation that allow you the right to live in an apartment as if you owned it (similar to real property but different).

2) Based on that fact, condos typically sell for higher prices because there is less risk associated with owning real property as opposed to owning shares of stock in a co-op. I just want to add that owning your primary residence, even a co-op, is always better financially than paying rent to a land lord.

3) With condos you pay monthly common charges, these fees pay for the upkeep of any and all common aspects of the condo. With co-ops you pay a monthly maintenance fee, these fees also pay for the common aspects of the co-op but also cover the real estate taxes and most of the time some or all of the utilities (gas, heat, water and sometimes even the electric!). Based on that, maintenance fees for co-ops are usually higher as opposed to condos, but again, co-ops do include the utilities.

4) With co--ops you have more rules and regulations you have to abide by (not laws) such as flip tax fees and restrictions on move-in/move-out times, subletting, pets, etc, etc. Plus when someone purchases a co-op, the co-op may require minimum down payments which can restrict some purchasers from buying and usually the buyer also has to go through a co-op approval process which adds another contingency to the deal that does not exist with condos. The fact that co-ops can be more restrictive, tends to lower their values as opposed to condos. (again, owning a co-op is better than renting!).

5) You have to make your best decision based on your budget.

6) The mortgage is basically the same with both a co-op and a condo. In the end, your mortgage banker will want to review thew financials of the condo or co-op and have the condo or co-op also fill out a bank questionnaire. Your mortgage banker wants to make sure that the building(s) are financially viable to make sure that you are making a sound investment. This protects you as well.

If I can be of further assistance, please contact me direct. If you are looking to buy or sell a co-op oir condo in Brooklyn, I can help you as well! Good luck!

Mitchell S. Feldman
Associate Broker/ Director of Sales/ e-Pro Realtor
Fillmore Real Estate
Office: (718) 252-2000/ Cell: (917) 805-0783
5 votes
Don Tepper, Agent, Burke, VA
Thu Sep 5, 2013
Just from my observations--and each building and each situation will be different--in a condo the mortgage often is higher but the HOA fees are lower. The reverse is true of coops--the mortgage is smaller but the coop fees are higher. That's due to the difference in ownership in a condo and a coop. Remember: In a condo, you actually own your unit. In a coop, you have shares entitling you to occupancy in a building.

I would expect--though I've never seen any studies done on it--that the overall cost to the owner (condo or coop fee, mortgage) should be approximately the same for comparable buildings with comparable costs. So: Choose based on whether the unit is right for you; don't automatically exclude one just because it's a condo or coop.

Hope that helps.
3 votes
are any part of the 'high' monthly payments to a co-op tax deductible?
Flag Thu Nov 3, 2016
Anna M Brocco, Agent, Williston Park, NY
Thu Sep 5, 2013
Be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously, therefore if you haven't done so yet visit with any licensed loan officer. Your loan officer can better answer your question as it applies to the specific property....
3 votes
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