difference between condo'd & co-ops - Posted by Shawn Michael

Posted by Frank Chin on September 15, 2003 at 10:47:37:


The difference is you have a deed for your condo, and you have ownership of common areas thru the HOA.

In a coop, you own shares for the building or complex, and your monthly charges may include an underlying mortgage. The loan you get is secured by shares of stock in the coop, and thus rates are higher compared to loans secured by RE.

The other difference is if the coop has too many owners with bad credit, the entire building can go into default. Problems had arisen where the developer or converter owned large blocks, and failed to pay its share of the common charges.

Here in NYC, you go thru an extensive interview when buying coops, and they want to make sure your credit is excellent. The other owners would have to pick up the tab if you fail to pay your share of common charges so they wn’t go into default, and have utilities cut off, and get foreclosed on the underlying mortgage.

There’s no such requirment as to condo’s.

The long and short of things is you’ll have less issues with condo’s if you have credit problems.

Frank Chin

difference between condo’d & co-ops - Posted by Shawn Michael

Posted by Shawn Michael on September 14, 2003 at 18:27:07:

any responces would be truly helpfull…i was really considering a 1 bd co-op as a place to live and a starting investment(aprox 55K) After having invested and owned condos a few years ago (2), I lost it all(@ 28 years old) and after admiting I made mistakes(now 31) , I now realize what it takes to become a Real Estate investor…credit is not sparkling…and have an yearly income of 30 K …no downpayment avail…condo/co-op ???
thanks Sm/NJ

Re: difference between condo’d & co-ops - Posted by RichV(FL)

Posted by RichV(FL) on September 15, 2003 at 12:02:11:


I used to live in the NYC are myself. There are many co-op’s there. As a matter of fact I used to own one years back.

Frank is correct that you will have less issues with a condo board than you will dealing with a co-op board.

Also keep one thing in mind when dealing with co-op’s, many buildings stick a “flip tax” on you when you sell.

(A flip tax is a percentage you have to pay back to the co-op upon selling, my old building had a 3% flip tax).

If you are a resident/buy and hold person it should not be a problem. But if you decided to sell in a year or two the flip tax could eat into your profit.

Just some thoughts,