Buying an apartment in Manhattan: Condo or Co-op?


Deciding to buy an apartment in Manhattan is the easy part. Among the most prestigious real estate in New York City, choosing between a condo or co-op building can be a challenge.

But, fear not! In this article, we define these two types of property ownership for highly sought after real estate in New York City and help you determine which is the right choice for you.

Condo vs. Co-op: An overview

First thing’s first, this division is a feature unique to the New York City real estate market. While approximately 75% of real estate in New York City are co-ops, more condos are active on the market. So even before drafting up their criteria, it’s necessary that potential buyers know the answers to these two fundamental questions: What is a condo? And what exactly is a co-op?

A condo or condominium allows buyers to acquire full ownership of an apartment in addition to a percentage of the building’s shared areas. At closing, buyers receive a deed, as if buying a house.

A co-op or housing cooperative only allows buyers to acquire shares in the corporation, which functions as the residential building. Keep in mind that the size of the share reflects the size of the unit that the shareowner will occupy. At closing, buyers receive a proprietary lease, detailing the share owner’s right to live in a particular unit or apartment.

Luxury condos and co-ops do not differ physically and offer the expected amenities: doorman, in-building superintendent, concierge, storage, etc. However, the more upscale the building, the more upscale amenities, such as daycare centers, spas, gyms, dog facilities, etc. Of course, these factors will depend on the Manhattan (or perhaps even Brooklyn) neighborhood you choose to buy in and your budget. A crucial differences lie in the fact that a condo is considered “real property” and a co-op share personal property”.

Should you buy a condo …

Long story short, condos are a relatively new invention of the New York City real estate market and most often found in Manhattan’s new hip neighborhoods—such as the West and East Villages. As a result, they tend to benefit from recent construction and a more modern layout and design.

When compared to the co-op application process, potential condo buyers face much less scrutiny. There is a board of directors, but they only have the “right of first refusal”. In a nutshell, this means that they only have two options: 1) To approve the buyer or 2) Buy the condo themselves. Additionally, condos are much more open to international investors, as there are much fewer restrictions on foreign funds financing the acquisition. Though each association is different, condo owners are more or less permitted to put their unit on the rental market, to be leased and subleased.

When it comes to spending, condos are on average more expensive than co-ops; yet, they offer more lenient down payments of only 10% of the purchase price. Also, consider closing costs and additional fees: title insurance for both lender and purchaser; title searches, recording fees, transfer tax, mansion tax, etc. And since condo owners purchase a portion of the communal areas, they are also subjected to common charges, covering landscaping, paying staff, and some utilities.

Conclusion: Buy a condo in New York City if you are looking for flexibility and limited regulations, you have a higher long-term budget, and a revolving door of new neighborhoods won’t worry you.

… or a co-op?

Conversely, co-ops are concentrated in historic, often pre-war, buildings in older yet more centralized residential neighborhoods, like the Upper West Side or the Upper East Side along Park Avenue, for example.

You might have already heard the rumors, co-op boards are notoriously tough as applicants are held to the highest standards. Potential buyers are required to share financial information and employment verification, as well as a background check. Co-op building’s rules and regulations are every bit as rigorous though varied, with heavy restrictions on renting out apartments for long periods of time. International buyers, we’re sorry to say that co-ops are known to reject oversee funds.

The down payment for co-ops can reach anywhere from 20% to 50% of the purchase price. Don’t fret, these prices are generally lower than condos. Additional costs to consider are overall much lower than condos, however, shareowners are still subjected to the mansion tax and relatively high mortgage fees. Co-ops are not excuses from maintenance charges, which are nearly the same as condos.

Conclusion: Buy a co-op apartment in Manhattan if you are looking to plant roots or for long-term investment and pride yourself in being an open book.

In any case, contact a BARNES New York consultant to buy an apartment in Manhattan and decide which type of property ownership is ideal for you.

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