Coop Condos

[seen]

Does anyone have any experience owning a coop condo? What are your experiences with them? I've been running the numbers, and here's my situation.

A rental for a 1BR in this building I'm considering is roughly 1400-1500 /mo.

As a coop shareholder, the price of a similar condo in the same building is roughly $70-80k. I can pay that outright without the need for a mortgage. However, the monthly payment afterwards would be roughly $800 for the bundled maintenance fee which includes prop. tax, utilities, etc.

This basically means, by setting aside (payment of the coop) $70k now, I will save roughly $600 /mo, or $7200 /yr if I went the coop route. If I remained here for 10 yrs, it would be like I picked up this coop at no cost. From an investment perspective (Yes I know I shouldn't consider a living area an investment, but just based on the math), it's more or less a 10% return on the $70k, without having to pay ridiculous prices of full condo ownership.

I've read that selling a coop condo is much more of a hassle than a regular condo since it has to be approved by the board, but I'm not sure I'll ever need to. If I'm not living here I can rent it out. I believe the board only requires me to live here for 1-2 yrs before I'm allowed to do so.

Am I looking at this through rosy glasses? What things am I not considering that I should be? Does the monthly maintenance fee fluctuate greatly from year to year? I've also read about how you need to research the coop board and how they manage their finances, but am I wasting my time? Should I just be considering buying a condo outright instead?

Worst case scenario, I can just rent for another year before deciding. And the whole "Where am I going to be in 5 yrs" thing, I really have no idea. Thanks.

[snafu]

Rules and requirements differ because they are typically set by municipalities. I have friends in Townhouse style, 4 story Co Ops and they particularly like it because they are involved in all the activities and decision processes. The Board has elements of self management and those who help with projects get benefits. Our friend operates the Bobcat Snow Remover in the winter, shoveling out the parking lots and driveways. Tenants sweep/shovel their own walks which are only 3' x 5.'

Co-ops have wa-y more rules than we have at our Condo Complex and it seems people like to watch their neighbor's activities. If you're considering buying any type of Condo get/borrow the minutes and actually read them. [Ask Real Estate agent to make arrangement condition to buying a particular unit] They will tell you all the problems the complex has had and how they were managed/resolved, which units cause the majority of problems, what needs to be fixed, what needs to be updated, the likelihood of 'Special Assessments' [big one time fee], new services/programs being considered, planned increased Condo fees, and new legislation in the pipeline.

[seen]

I appreciate the feedback. I will definitely request the financials and meeting minutes if I put down an offer (no building will let me see the records without one). I did a lot more research on the subject and saw many many opinions on other forums; ie. coop vs condo, coop vs renting, etc.

There's good and bad to everything, but for me since I'm still temporarily working in the US (I'm hoping to become permanent within a couple of years) I don't want to put money down for a full condo and take on a mortgage in case something goes awry and I have to go back to Canada. At the same time, I don't want to pay rent and flush money down the toilet without having anything to show for it. I see coops as a great in-between measure, because although you might be paying more for the HOA fees and whatnot, what you get out of it when the board is properly managed is incredible when you don't need the aid of a mortgage.

The only thing that turned me off was the fact that every single building I saw was full of retirees. There were some younger couples as well, but they were few and far between. I think a coop is definitely in my near future. My front runner right now is a unit that I'm hoping to get for around 100k (maintenance + parking is more expensive, but the building is in-freaking-credible). If not I have no qualms with walking away, there are cheaper backup units I have in other buildings I can offer 75k to 80k on with a maintenance fee that is much closer to my original figures. If that falls though, well I guess I'll be renting again.

Will it be harder to sell if I need to? Sure, but I'll deal with that if/when the time comes. The comps within the past year all sold within a few months. I'm sure there are some things I'm not taking into account which I'll find out the hard way, but everything's an experience and after all the research I've done I think I'm comfortably prepared for the consequences.

[JBL]

Keep in mind that the proportion of coop maintenance which pays your share of the property taxes is likely tax deductible.

I like coops more than condos because coops can insure that only people who can afford the place are allowed to purchase and they can more easily evict shareholders who stop paying their maintenance charges. Condos don't typically do any check on prospective purchasers and the only recourse in the event of non-payment of common charges is to foreclose on the unit, which tends to be prolonged and costly for the association.

At any rate, whether you want a condo or a coop, the most important aspects are the health of the community. Do they have reasonable reserve funds to cover things like elevator replacement, roof replacement, boiler replacement? Are they involved in litigation? Do they generally get along? Do residents feel that the board and/or management agents are responsive to their needs? Is the building well maintained?

After satisfying yourself regarding the above, look carefully at the available units. You want to buy something with a functional floor plan, good closet space, and a quiet location. Buy the best unit you can for the money you want to spend. More appealing units are easier to sell or rent down the road.

Many people will tell you that condos are better because in a coop "you don't own anything." This is untrue, you own a share of the building and have a lease to use the unit you buy the associated shares to. In a condo, you only own an air-space, which is essentially nothing as well. I see both forms of ownership to be somewhat flawed. The advantage to a condo is that more people are familiar with the legal setup and consequently they appeal to a wider audience when/if you need to sell. But you dont really "own" anything more in a condo than you do in a coop. It's just a different legal definition.

I think your proposal is sound, provided that the building you plan to buy in is in good financial health.