Looking for info on co-ops (Nassau: sale, real estate, sublets)

[ali26]

We are relocating to either Queens or Nassau Co next year. We are going to rent for a while just to get used to the area and see what neighborhood I want to settle down into. We may try to buy something within the first year since we will have coroporate relocation assistance available to us for that ammount of time. However, I dont think I will realistically be able to afford anything other than a co-op at this point. So, just looking for input on whether this is a wise choice. Then I would live there for 3-5 years until I am able to move on to a house. Is it a good investment, or would I be better off just waiting until I can afford a house? I'm not really sure how the whole process works, I only know you have to be approved by a board, and you own shares of the building, not the property itself. How does this work out when you sell? Also, I know the common charges are high in co-ops. Do these common fees include utilities or are they billed separately? What exactly do the common charges cover? Thanks for any advice.

[guangwang1983]

I am moving to the NY in a few months time and I have similar plan as well.

This is something I found on the internet about Coop and Condo.

Wahab & Medenica-CONDOMINIUM VERSUS COOPERATIVE OWNERSHIP: A PRIMER

I think the biggest disadvanges about Coop for me is that

1. When you wanna sell it or rent it, the new occupier need to be interview and approved by the cooperation board.

2. If the cooperation's finance is trouble, you can potentialy lose your share i.e. the property.

3. You might need to go through quite a bit of trouble when you claim tax dedcution off your mortgage interest and money you spend on improvement for your Coop.

Above three points are all explained the link.

[NooYowkur81]

From what I hear there isn't much of a price difference between a condo and a co-op is that accurate?

To me from my limited point of view, a condo seems like the easier way to go. Less of a hassle. Although some condos have a requirement that you live in them at least 2 to 3 years.

[guangwang1983]

Originally Posted by NooYowkur81

From what I hear there isn't much of a price difference between a condo and a co-op is that accurate?

I think Coop is much cheaper.

Originally Posted by NooYowkur81

Although some condos have a requirement that you live in them at least 2 to 3 years.

Interesting. I will looking into that as well.

[Henna]

Coops are significantly cheaper than condos and MUCH easier to find, esp. in Queens. A coop for 220K will easily go for 330-350K for the same amount of space.

Maintenance on coops varies widely. Mine (in queens) is quite low - 460/mo for nearly 1000 sq feet. Keep in mind mtn. in coops includes property tax whereas in condos it does not. This is one reason mtn. in coops is higher and one thing you need to factor in when doing comparisons. One reason maintenance on coops varies so widely is that it also includes a share of the underlying mortgage on the building. Some bldgs that "went coop" 40 or more years ago do not have ANY underlying mortgage and therefore the mtn is lower.

With only a 3-5 year time span, if I were you, I would rent rather than buy a coop. There are many costs involved in buying and in selling. Plus if you are buying one that requires board approval, not only will you have to wait possibly 3 months or more to be approved (from the time you make your offer) but you also have to have your buyer approved when you sell. If your buyer is rejected by the board, you are back to square one. Also some coops have transfer taxes or flip taxes to discourage people from buying and selling in a short time frame.

Do your homework!! Read the NY Coop Bible (available on amazon, etc)

[Viralmd]

The major difference for the shareholders of a co-op is that they have control over who moves into the building. Absentee shareholders, who rent out their apartments, are not encouraged. Also, when someone plays music too loud, or sublets to someone who has nightly parties until 3 AM, there's little recourse for neighbors of this person in a condo. This has happened to several of my friends who live in condominiums.

In a condo, I might add, the board STILL has first right of refusal on a sale and the whole condo could be in trouble if many people buy who really can't afford the unit (as we're seeing with the HUGE number of home foreclosures nationwide).

Yes, a co-op board DOES interview you. Yes, they look at your financials. BUT, unless you've got the board from hell or you, personally, seem like the buyer who was just paroled on a murder offense, there should be no problem.

[ali26]

Thanks for the info. In response to Henna- I understand about the costs of buying and selling, but my company will pay closing costs, etc for me since it is a corporate relo. This is why I am eager to buy something because there is a time limit on how long you have to take these bonuses. I own a condo now so I am familiar in the process of buying real estate. I guess I am just concerned about the resale of co-ops- I dont want to get 'stuck' somewhere down the road when I am ready to move onto a larger home. But I will get a copy of the Coop Bible and check the posted links to get more info.

[Henna]

if you find yourself in the position of being about to buy a coop or putting in an offer on the coop, a good question to ask the board is what is the rejection rate for buyers in the building. I know that in my neighborhood, there are some boards that are known to be more lenient and others that are known to be very tough. My realtor told me she had a listing at some coop down the street from us where she had had three buyers lined up and the board had rejected all three. Usually the rejections are based on financial considerations. My coop, on the other hand, seems to have a lenient board since they let me in!! My income is quite low, though I did have a significant downpayment.

would your company pay the costs that are involved in selling as well? You should figure in 8% (I think) for realtor fee, plus any percentage that the coop charges as a flip tax.

[parma127]

Originally Posted by ali26

We are relocating to either Queens or Nassau Co next year. We are going to rent for a while just to get used to the area and see what neighborhood I want to settle down into. We may try to buy something within the first year since we will have coroporate relocation assistance available to us for that ammount of time. However, I dont think I will realistically be able to afford anything other than a co-op at this point. So, just looking for input on whether this is a wise choice. Then I would live there for 3-5 years until I am able to move on to a house. Is it a good investment, or would I be better off just waiting until I can afford a house? I'm not really sure how the whole process works, I only know you have to be approved by a board, and you own shares of the building, not the property itself. How does this work out when you sell? Also, I know the common charges are high in co-ops. Do these common fees include utilities or are they billed separately? What exactly do the common charges cover? Thanks for any advice.

I think that if your company is willing to help you out with certain fee's then go for it. I bought my coop in Queens 5 years ago. Now I am ready to sell and use the profits to put toward my house. The common fees do include security, gas, electric, etc... Also remember that every building is different. They each have their own set of rules. Good luck!

[scatman]

Originally Posted by Viralmd

The major difference for the shareholders of a co-op is that they have control over who moves into the building. Absentee shareholders, who rent out their apartments, are not encouraged. Also, when someone plays music too loud, or sublets to someone who has nightly parties until 3 AM, there's little recourse for neighbors of this person in a condo. This has happened to several of my friends who live in condominiums.

In a condo, I might add, the board STILL has first right of refusal on a sale and the whole condo could be in trouble if many people buy who really can't afford the unit (as we're seeing with the HUGE number of home foreclosures nationwide).

Yes, a co-op board DOES interview you. Yes, they look at your financials. BUT, unless you've got the board from hell or you, personally, seem like the buyer who was just paroled on a murder offense, there should be no problem.

There are tradeoffs in either a coop or condo. I settled on Parkchester, which is a condo, for a variety or reasons, and I like it. One of the reasons was buyer flexibility; I put zero down, and used the deposit I had to cover the closing costs. Also, I didn't want any coop to be snooping in my business. Plus, I thought a condo would be easier to sell, due to less hassle with the coop boards.

With regard to first refusal, the condo has to buy the property if they don't want a buyer. First refusal is rarely acted upon, since buying the property will cost the condo money!

It's common for coop boards to ask for 20$ down. My mom's board wanted 30%. Some boards are lenient, and will settle for 10%. Some sellers will let you in for 5%. Be careful, for too low of a downpayment requirement from a coop board may mean some trouble, and the coop may be begging for buyers. Just investigate.

If you are rejected, ask them why; it doesn't hurt to ask to put it in writing, although they don't have to, and may not. Or ask them orally, right then and there during the meeting. Once again, they may not give you an answer (not required to......yet!), but I still would ask.

Oh, yeah, and banks.......take it from Smokey Robinson's mama..."ya better shop around!" For banks, it's their fees plus your credit! I got a good deal with Wachovia, but I don't know how they would treat anyone else, based on their credit. I personally don't like private lenders, but investigate them, too, if you go that route. And don't let anyone trick you into an adjustable rate, especially for a first time buyer!

That's my take.