U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 11-22-2017, 10:50 PM
 
Location: Portland, Oregon
9,345 posts, read 14,729,432 times
Reputation: 5671

Advertisements

If you want to purchase a condo the process is much like that of a single family dwelling. You need to look at condition, not only of your unit but the condo as a whole. You pay property taxes either through your mortgage lender or directly. You can get a mortgage. You will, however, need to look at the covenants because they may limit your ability to rent your unit and you will need to deal with a Home Owner's Association who administers the covenants. You need to look for a reserve study and evaluate its adequacy. Read the HOA Board Minutes and correspondence going back several years.

If you are considering a co-op you need to look at it like you are buying shares in a real estate firm where you they will give you a proprietary lease. You pay property taxes through the co-op corporation. The co-op can reject buyers; they typically review a potential shareholder's financials, references and often a background check. Even after you are an owner you can be evicted, see: https://cooperator.com/article/pullm...onths-out/full Thus if your behavior is notorious you are at risk of eviction. Co-ops are less expensive because it is difficult to get a loan to buy shares, basically cash sales. Read the Board Minutes and correspondence going back several years.
Reply With Quote Quick reply to this message

 
Old 11-23-2017, 12:44 AM
 
5 posts, read 915 times
Reputation: 10
Thanks, Nell.
Yes, When you purchase a home in a condo building, you are buying the actual home and a share of the common elements of the building. Those common elements can include yards, garages, rec rooms, lobbies, or gyms.

But when you buy into a co-op, you don't technically buy (or own) the property at all. You are purchasing shares of stock in a corporation or other legal entity that owns" the building.
Reply With Quote Quick reply to this message
 
Old 11-23-2017, 02:57 AM
 
55,324 posts, read 58,033,986 times
Reputation: 35661
Quote:
Originally Posted by Nell Plotts View Post
If you want to purchase a condo the process is much like that of a single family dwelling. You need to look at condition, not only of your unit but the condo as a whole. You pay property taxes either through your mortgage lender or directly. You can get a mortgage. You will, however, need to look at the covenants because they may limit your ability to rent your unit and you will need to deal with a Home Owner's Association who administers the covenants. You need to look for a reserve study and evaluate its adequacy. Read the HOA Board Minutes and correspondence going back several years.

If you are considering a co-op you need to look at it like you are buying shares in a real estate firm where you they will give you a proprietary lease. You pay property taxes through the co-op corporation. The co-op can reject buyers; they typically review a potential shareholder's financials, references and often a background check. Even after you are an owner you can be evicted, see: https://cooperator.com/article/pullm...onths-out/full Thus if your behavior is notorious you are at risk of eviction. Co-ops are less expensive because it is difficult to get a loan to buy shares, basically cash sales. Read the Board Minutes and correspondence going back several years.
co-ops are not always less expensive because of that reason . many co-ops have building mortgages for the rest of your apartment cost so while your personal mortgage is less (aka purchase price ) you still have another mortgage and costs held by the building mortgage .

at the end of the day the price is what both parts equal out to . it is only a question of if it is all in your purchase price or part is still held by the building in their mortgage which you pay through maintenance .

when we depreciate our co-op rentals we have to include both what we paid and what the value is in what the building holds in value in their mortgage. together the price is within spitting distance of the condo's in the area .

co-op structure lent itself well to the mass co-op conversions we saw here in nyc in the 1980's as it became the light at the end of the tunnel for landlords to get out from under being stabilized .

in order to go co-op most conversions had to get a certain amount of insiders to buy in order to go through .

with so many renting , and having lower incomes and assets , the co-op structure worked well since it did not leave the co-op buyers bank on the meat hook for the whole amount. part of the purchase price was held by the co-op's bank so banks were more inclined to lend to these tenants who likely could not get a mortgage for the full amount . .

the combination of generally a lower insider price coupled with the fact the insiders mortgage did not have to cover 100% of the value really helped push these conversions through .

Last edited by mathjak107; 11-23-2017 at 04:26 AM..
Reply With Quote Quick reply to this message
 
Old 11-23-2017, 04:29 AM
 
55,324 posts, read 58,033,986 times
Reputation: 35661
Quote:
Originally Posted by mayrakelley View Post
Thanks, Nell.
Yes, When you purchase a home in a condo building, you are buying the actual home and a share of the common elements of the building. Those common elements can include yards, garages, rec rooms, lobbies, or gyms.

But when you buy into a co-op, you don't technically buy (or own) the property at all. You are purchasing shares of stock in a corporation or other legal entity that owns" the building.
in many condo's and co-ops you rent the land but own the structure so be careful . banks tend to dislike these deals .

there are also quite a few co-ops that take interest only loans and so their side of the mortgage never gets paid off and you never see that equity transfer over to your value .

one thing you have to be careful of in both situations is this:

while condo's and co-ops carry their own insurance for liability , if someone is awarded more than the developments insurance ,each owner or shareholder is personally on the hook for it .

but that is not the issue . the issue is your own insurance and umbrella policies will not cover you . that is because they will not cover acts done by non insured . so while anyone in your household is covered if they do something , the policies do not cover others doing something and making you liable . we only recently learned this .

i called my insurer to confirm and they said ,YES! that is the case . some insurers may sell a rider for 3rd party liability protection in condo's ,hoa's and co-ops but geico said they do not and most don't .

Last edited by mathjak107; 11-23-2017 at 05:46 AM..
Reply With Quote Quick reply to this message
 
Old 11-23-2017, 06:29 AM
 
Location: Minnesota
759 posts, read 200,834 times
Reputation: 1363
Would an association be the same definition as a co-op. My parents bought into a association at a campground. It's only seasonal, as would a summer cabin would be. It was once a privately owned campground that only allowed campers that had bathrooms and showers in them.

When the owner decided to sell they sold each person a a "share". The more desirable camper spots sold for more. You were responsible for your own camper as was before. If you want to improve your spot, ie: new poured cement patio, or wooden deck, you had to follow size requirements and such. They have yearly dues for improvements and upkeep and vote for board members and on projects that will be over a certain dollar amount or affect all owners. They do a very thorough background check on any new prospective owners, which is nice because there are a lot of young kid there. They so far have not had any issues with liability, they are very well insured, but it can just take one thing that could cause a issue, that sometimes concerns me.

It sounds like the meaning of co-op and association is similar.
Reply With Quote Quick reply to this message
 
Old 11-23-2017, 07:54 AM
 
55,324 posts, read 58,033,986 times
Reputation: 35661
yes , it is the same .

your liability policy only covers household members , not acts that get you sued caused by others .

it came up in our home owners association where locals volunteer to do a safety patrol . the question came up as to what happens if they chase some kids on rv's out and they are injured ?

that is when we found out that if the award exceeds the development insurance our own insurers would not cover our personal claims since it was not an act caused by us .
Reply With Quote Quick reply to this message
 
Old Yesterday, 03:13 AM
 
5 posts, read 915 times
Reputation: 10
Great Job Nell. A condo has a higher value than a comparably sized coop; however, a condo buyer has additional closing costs for title insurance and mortgage recording taxes. Depending on the coop building, the tax deductibility percentage of the monthly maintenance charges may differ.
https://www.youtube.com/channel/UC0L...hqrvNXzMGPrwXw
Reply With Quote Quick reply to this message
 
Old Yesterday, 03:53 AM
 
55,324 posts, read 58,033,986 times
Reputation: 35661
a condo does not always have a higher value . it may require more money on your behalf up front for a condo . the co-op can have two components to your total value .

it has the part you see when you lay out the money , but it has the part of your value in a mortgage held by the building .

when i depreciate my co-op rentals i have to use both parts added together to determine my actual value .
Reply With Quote Quick reply to this message
 
Old Yesterday, 10:35 AM
 
Location: Portland, Oregon
9,345 posts, read 14,729,432 times
Reputation: 5671
My co-op does not allow rentals.

Banks do not loan on co-op purchases in Oregon, few do in Washington, no co-op lends to a buyer to purchase shares so to buy shares you need cash. This suppresses purchase prices of co-op units as compared to similar condo units.

There is not favorable property tax treatment of housing co-ops in Oregon or Washington but because values are established by the value of shares the valuation is lower.

Last edited by Nell Plotts; Yesterday at 10:50 AM..
Reply With Quote Quick reply to this message
 
Old Yesterday, 12:47 PM
 
55,324 posts, read 58,033,986 times
Reputation: 35661
we held 9 rentals in our co-op in manhattan . i owned as many as 12 co-ops in my life , both personal and rental . never had issues as far as loans or rentals . but many co-ops do not allow rentals so i stay away from them . i still have 3 apartments left . 2 in manhattan and 1 in kew gardens queens .
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate

All times are GMT -6.

2005-2017, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32 - Top