The Co-op Confessional
Mmm, New York. The Big Apple. The Melting Pot. The City that Never Sleeps. You can’t resist its magnetic draw, and you’re looking to join the 8 ½-million-member club of people who call this city “home.”
Well, the city may never sleep, but the odds are pretty good that you’re going to need a place to get some shuteye, eventually. And if you’re looking to buy a home in NYC, you’re probably going to end up in a co-op.
A co-op isn’t a residence that you actually own, per se. Rather, when you buy one, you own shares in the organization that owns the co-op building. A full 75% of New York City apartments are co-ops. Before you sign on the dotted line, though, here are 6 things you need to know about your future co-op digs.
Bigger price tag, more ownership
The more your new place costs, the more shares you’ll own in the co-op. The average price of a co-op in NYC is $1.2 million – less expensive than your average condo, which runs about $1.8 million.
High maintenance fees
Co-op maintenance fees have shot up in recent years. That means you can expect to pay anywhere from $4,000 to $6,000 a year – for each room in your co-op. The silver lining is that some of those fees are tax deductible.
Before you can finalize your purchase, the co-op’s board of directors weighs and measures you to make sure that you’re up to scratch – almost literally. The board usually requires you to submit plenty of detailed information about your employment, finances, and personal background. On the one hand, that makes your building as a whole financially stable. On the other hand, it can take a long time to clear the screening process, and you can expect to wait about three months after your offer is accepted for the whole circus to run its course.
Down payment blues
Some co-ops require you to make huge down payments. If you’re lucky, you’ll be able to get away with 20%. If you’re less-than-lucky, you could be looking at a down payment that is anywhere from 25% to 50% of the purchase price.
Play by the [really strict] rules
Co-ops tend to have very strict building rules. Subletting is usually one of them: your co-op can reserve the right to approve your chosen renter, and even then, that renter may not be allowed to stay longer than a year or two. Plus, co-op rules in general have a nasty habit of changing at the drop of a hat. Keep your eyes peeled and your ear to the ground.
For all their nitpicking, however, buying a co-op also gets you protection under the New York City landlord-tenant law. That means that your co-op takes on some of the same responsibilities that a landlord would, if you were renting. It can be nice to know that someone has your back in the event of . . . well, in the event of unexpected events.
Is buying a NYC co-op for the faint of heart? Perhaps not. But faint-heartedness isn’t a condition most New Yorkers are known to suffer from. You can do it. Get out there and show ‘em how it’s done.