Purchasing a home in a city often comes down to choosing between a condo or a co-op. Both systems usually mean living in an apartment and having ownership of something, but there are some key differences.
Here are some tips that can help you decide which option is the best for you.
What’s the Difference?
Condo ownership means owning an actual apartment while with a co-op, you own a share of the building itself and then sign a contract that leases an apartment to you. For the most part, the number of shares you’re buying depends on the size of the unit you lease.
Which is Better?
There’s no answer to this. Co-ops tend to be less expensive to purchase and usually involve fewer closing costs. However, co-op boards are much more influential than their condo counterparts, and the co-op approval process can be more complicated.
Both condos and co-ops involve monthly fees. Co-op owners pay what is known as a maintenance fee, which is put toward the building’s upkeep building and maintenance projects. This can change from year to year, and there’s a possibility of a “sticker shock” factor if the building needs a major renovation project while you live there. Monthly condo fees cover maintenance issues and often utilities. Some of your fee may go to a reserve fund for emergencies.
Living by the Rules
Remember when we said co-op boards have more power than condo boards? That can mean more rules and regulations you have to follow. For example, if you ever decided to lease your apartment, any prospective tenants would need approval from the board. Many co-op boards prohibit leasing altogether. And just as you need to be approved by the board before buying into a co-op, whoever buys your shares will have to go through the same thing, which can slow down the selling process.
In the end, one way isn’t better than another, it’s a matter of preference, and both condo and co-ops are generally more affordable than comparable houses. For many people, the apartment itself and the neighborhood they’re moving into are far more important factors than the ins and outs of condo and co-op living.