While co-ops and condos function in similar ways, in that residents own a unit within a block, the finer details are actually quite different. If you’re trying to choose between the two, this two-part guide is for you. While part one focused on the benefits and disadvantages of co-ops, this second part will take a look at how condos compare.
All about condominiums
Condominiums, or condos, differ from co-ops in that each unit is an individual property in its own right, whereas in a co-op, there is only one property, one deed, and one tax bill, which is divided into shares. Each unit in a condo has its own deed and tax bill, and when you buy it, it’s your name on the deed, and your responsibility to ensure tax is paid.
Residents are still subject to the rules of the condo association, though these are typically less stringent than in a co-op. As a condo owner, you also have access to any common areas and facilities, such as a pool, gym, or lobby.
Numerous advantages await the condo owner, many of which pertain to greater flexibility as to what they can do with their unit, compared to a co-op owner.
- It’s typically easier to buy a condo than a co-op, as you’re not subject to the rigorous approval process associated with co-ops. Additionally, the condo association are unable to dictate terms such as how much you’re allowed to put down as a down-payment. The buyer will communicate directly with the seller or their agent.
- In direct relation to the previous point, it’s also easier to sell. Selling a condo is much the same as selling any other property, with the seller able to set the terms rather than the association.
- Condo associations generally impose fewer restrictions on residents as to how they can use their unit. As a result, it’s more likely that you’ll be able to sublet, making them more appealing to investors. It is, however, worth reading the rules, as different associations impose different regulations.
- Foreign buyers will find it easier to purchase a condo as the restrictions are not so tight.
As always, there are two sides to every story, and it’s important to check out the negatives when it comes to owning a condo.
- Everything that makes condos more attractive to buyers also makes them more expensive. Since they’re more flexible and easier to buy than co-ops, they’re more popular, especially among investors, which reduces the stock and increases the price. However, this gives you more selling power if you do own one.
- There are higher closing costs associated with condos compared to co-ops. You’ll need to pay for title insurance, mortgage insurance (if under 20% down payment), and other fees.
- You have no control over who your neighbors are, and since it’s easier to rent condos out, you might find you have new neighbors on a yearly basis.
- Condo associations have the right of first refusal, which means when an owner wishes to sell, the association can block a sale by offering to buy the unit themselves. This is a rare occurrence, however, as few associations have the financial means.
There are pros and cons for both co-ops and condos, and it comes down to your own circumstances and preferences as to which is the best choice for you. Take time to understand both in order to make a more informed choice. Whether you choose a co-op or a condo, it’s really important to take the time to read over the rules and restrictions set by the board or association. If you don’t bother, you might find yourself faced with warnings or fines for breaking rules that are often counterintuitive.