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You also do get an annual statement from the co-op stating your share of pass-through tax benefits. At my building, that included property taxes paid on my behalf, interest on a mortgage the co-op has, as well as a share of energy efficiency improvements. Interest on your personal mortgage ("share loan") is also tax deductible from federal taxes.
As for interior things, the legal difference is that I technically rent my apartment from a corporation that I partially own. Thus, repairs to things entirely inside my apartment, like a leaky faucet, are their problem, not mine. In a condo, I'd own everything inside my walls, and I can't ask the condo association to take care of them.
That said, there are certainly aspects of co-op life that are not for everyone: rules are stricter, particularly for renting out the unit; amenities might be overkill for some; the usual quotient of busybodies are seemingly more numerous and more empowered.
One thing about co-ops is the mortgage is very hard to get because it isn't for a piece of property, rather it is for a shares of stock with usage rights. Most co-ops have deals with financing companies for the mortgages, but the rates are likely to be higher. Because of this, co-ops have the right to evaluate your finances (in addition to the mortgage lender) and they may have arbitrary standards that could lead them to deny your right to purchase the shares.
So if you barely can afford a particular property and it is a desirable co-op, you may get rejected even if you qualify for a mortgage. This weird financing stuff is one of the reasons why a lot of people avoid co-ops, so often their market value is less than if it just had a condo structure.
This is an advantage if you want to buy, as you may get a better property, but it is a hassle when you want to sell. So before you buy into a co-op, make sure you want to live there for a while.
Also, make sure there isn't any weird land lease issues (i.e. the co-op not owning the underlying land where the building is located and rents it from the owners of the land). Those are very complex situations where the value of your co-op shares may become worthless overtime (i.e. depreciate) if the land lease expiration gets closer and if there is no residual value provisions.
One thing about co-ops is the mortgage is very hard to get because it isn't for a piece of property, rather it is for a shares of stock with usage rights. Most co-ops have deals with financing companies for the mortgages, but the rates are likely to be higher. Because of this, co-ops have the right to evaluate your finances (in addition to the mortgage lender) and they may have arbitrary standards that could lead them to deny your right to purchase the shares.
So if you barely can afford a particular property and it is a desirable co-op, you may get rejected even if you qualify for a mortgage. This weird financing stuff is one of the reasons why a lot of people avoid co-ops, so often their market value is less than if it just had a condo structure.
This is an advantage if you want to buy, as you may get a better property, but it is a hassle when you want to sell. So before you buy into a co-op, make sure you want to live there for a while.
Also, make sure there isn't any weird land lease issues (i.e. the co-op not owning the underlying land where the building is located and rents it from the owners of the land). Those are very complex situations where the value of your co-op shares may become worthless overtime (i.e. depreciate) if the land lease expiration gets closer and if there is no residual value provisions.
Co-op loans used to be hard to get, but nowadays, they are just as easy to get (or hard to get, depending on how you look at it) as a condo mortgage. And most banks don't even charge a higher interest rate on co-ops vs. condos. When I was shopping for a mortgage last year, I was qualified for financing on a co-op and a condo (ended up buying the co-op), but the interest rate and hurdles to getting approved were no different for either loan.
You may have a harder time qualifying for a co-op, however, because many co-ops require a minimum down payment of 10% or more, which is usually absent in a condo, and co-ops are not eligible for FHA financing.
Thanks for the responses. I called Potomac Place Tower in SW and they are all sold. I'm also familiar with that el-cheapo building at 14th and W st. NW. The monthly co-op fee is $1,000! No thanks.
There's a large 1 BR WAY up still in DC but near the Fort Totten Metro station that is dirt cheap. The condo fee is $500/month and the place is only $75,000. So it would be under $900/month with a 20% down payment. I wonder what the catch is? I guess because it's OLD, with NO perks, and way the help up away from the action it will be difficult to resell. Can someone take a look at this listing and tell me if I'm missing something? I think it's a money pit because that building is so old that condo fee is surely to go up and up and UP!
Thanks for the responses. I called Potomac Place Tower in SW and they are all sold. I'm also familiar with that el-cheapo building at 14th and W st. NW. The monthly co-op fee is $1,000! No thanks.
There's a large 1 BR WAY up still in DC but near the Fort Totten Metro station that is dirt cheap. The condo fee is $500/month and the place is only $75,000. So it would be under $900/month with a 20% down payment. I wonder what the catch is? I guess because it's OLD, with NO perks, and way the help up away from the action it will be difficult to resell. Can someone take a look at this listing and tell me if I'm missing something? I think it's a money pit because that building is so old that condo fee is surely to go up and up and UP!
^^^Not yet. I've only just started searching. But I think it will be easier to resell a property in the SW Waterfront area than it would way the hell up in extreme NW. I don't anticipate immediately turning around and reselling, but I don't see living there for 30 years. I might be back in MN (where I am originally from) sometime in the distant future. I don't want something that will be harder to sell.
I think the condo fee is high. Add cable or dsl service and that's more expense. The idea that you can walk to Ft. Toten Metro is a bit extreme. Yes you can but you probably won't with any regularity, it's a long walk and not the best streets to walk on after dark. 700 sq ft is a lot of space though for a 1BR Shared laundry rooms are a pain. It's a short sale too so there will need to be other approvals so it may not be easy to get.
I know this post is a month or so old, but I came upon it looking for something else and thought I might be of help in case the poster is still thinking about the buying option.
Definitely, finding a place on a 200k budget (and which doesn't require massive repairs) can be difficult. But, its not impossible. In the original post, you mentioned looking at various areas of NE. As a resident of NE, I would definitely say take a look. Many of the areas aren't nearly as well established as some of the neighborhoods you've lived in before. So, you might have to deal with neighborhood "growing pains". But, the upside is that the prospect for increase in value of the property is much higher than in more well established neighborhoods.
As for specific recommendations on NE neighborhoods:
Brookland is good, Woodridge is experiencing a lot of renewal in its main street along Rhode Island Ave, and Brentwood is walking distance to the metro, which is great, but it is further behind in terms of building up amenities and such. I know much less about Trinidad except to say that there has been a lot of growth and renewal there as well, even though it didn't used to be a very safe neighborhood.
I've had to table my plans to buy until the summer, but SW is out of the question as I'm not willing to pay $600/month in HOA dues, even if it "includes everything." That's unreasonably high which is probably why many of the units in SW have been on the market for months and months. I am thinking about RI Ave.
I've had to table my plans to buy until the summer, but SW is out of the question as I'm not willing to pay $600/month in HOA dues, even if it "includes everything." That's unreasonably high which is probably why many of the units in SW have been on the market for months and months. I am thinking about RI Ave.
Were these the co-ops you were looking at? Because I pay $310 and it includes all utilities and the maintenance work.
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