Cooperative:

Cooperatives seem to be more common in New York City than in any other city in North America. Over 70% of New York City apartments available for purchase are in cooperative buildings, which means less than 30% are condos. From the simple rules of supply and demand, co-ops are generally cheaper since there are far more of them. The more prestigious cooperatives, however, can command the highest prices in the city because of their stringent requirements and exclusivity.

Cooperatives are owned by an apartment corporation. Private owners do not actually own real estate, but they own shares in the corporation. Share amounts are dictated by apartment size, exposure, and floor level. Residents receive a stock certificate and a long-term proprietary lease.

Advantages of buying a co-op:

• Less cost per square foot and more properties to choose from.
• The Board of Directors has the right to “approve” or “reject” any potential buyer, to give them control over who their neighbors are. The board, elected by all of the tenant-owners of the co-op, interviews all prospective owners. There is a less transient population and more of a sense of community in a co-op compared to a condo since subletting is limited.
• A portion of the maintenance is tax deductible. The amount accounts for your portion of the real estate taxes as well as your proportional share of the building’s underlying mortgage.
• Co-ops can be more stable financially because of their strict requirements, often demanding a higher down payment than condos. This protects the building from sub prime borrowers.

Disadvantages of buying a co-op:

• Much more thorough and rigorous board approval process. Also, when you decide to sell, your prospective purchasers must go through the same process.
• Down payment amount is typically at 20%-25% minimum.
• Subletting may be restricted or disallowed.

Keep in mind that most apartments for sale in Manhattan are Co-ops. Prior to beginning your apartment search, please consider the financing and board qualification requirements. Your BARAK agent can provide you with more information.

Condominium:

A condominium apartment is real property. The buyer receives a deed and title and truly owns a piece of real estate. Owners are responsible for paying their own real estate taxes. In addition, there is a monthly common charge, which is similar to the maintenance charges in a cooperative. These common charges are used for the upkeep of the building, staff salaries etc. and are not tax deductible.

Advantages of Buying a Condo:

• Financing is flexible.There are usually no restrictions, except those imposed by your bank. You can finance up to 90% in some cases.
• Subletting is very flexible. That's why condos are the favorite choice for investors.
• Application process for buyers is quicker and simpler, with the chance of rejection minimal. If the board rejects your buyer/tenant, they have to buy/lease your apartment themselves. It's called "the right of first refusal" and generally it doesn't happen.

Disadvantages of Buying a Condo:

• There are fewer condos to choose from. They are more expensive. The extra freedom and smaller supply translate into higher cost.
• Condo owners know fewer of their neighbors. Condos have a greater number of investor units and higher turnover.

Your BARAK agent can guide you to your condo, if that's your choice.