Getting your own property in New York can be a challenge, but it’s definitely doable, especially if you have the right know-how.

Before you make any decisions, it’s best to weigh up your options.  We featured a calculator that can help you check the cost of buying versus renting—you can do the computations yourself, based on location and the size. If you choose to buy over renting, one of the key things you need to decide on in New York is whether you will buy a condo or get a cooperative.

A condo is a multiple unit building where you own a unit but co-own the property’s common areas with other condo owners. Everyone in the condo building has a shared responsibility to maintain the property. Meanwhile, in a cooperative, you don’t exactly own a unit, rather a share in the corporation that entitles you to a long-term property lease. You won’t shoulder the upkeep, as the corporation takes care of that.

Should You Purchase a Co-Op or a Condo in New York?

The New York Times notes the two most common differences include the approval process and the building rules—co-ops are usually stricter but they make up a bigger percentage of New York’s housing stock. Co-ops tend to be less expensive than condos, too. Here is a more detailed look that can help you choose:

The prices

Co-ops tend to be much cheaper than condos, but condos are often easier to finance. You need to put down at least 10% of the condo purchase price, including the closing cost. For a co-op, you need to pay for 20% of the purchase price.

Condo fees are usually lower, too, as it only includes common charges that pay for services and amenities shared by condo residents, as well as, property taxes. Co-ops on the other hand charge for maintenance fees based on the number of shares the tenant owns, which is typically dictated by the apartment size and floor level. When it comes to tax benefits, the advantages are quite similar.

The Rules

Condo owners often have more control over the property than co-op owners do. Rules are less stringent in condo units—there is no limit in subletting and the less financial information is required to purchase. Mann Reports details how most co-ops limit the amount of times a unit can be sublet. The sublessee needs to be approved by the board, too.

The Approval Process

Acceptance in a condo is usually automatic, while co-op applicants have to go through several stages, assessments, and verifications before they are approved. Co-ops are basically guided by three documents: the property lease, which defines the shareholder and the corporation’s relationship, the bylaws, which details how the building is governed, and the house rules.

Co-op boards also closely scrutinize a potential buyer’s application, which, The Balance claims includes a buyer’s financial statement and bank balances. The board also checks the applicant’s assets and liabilities including a review of letters of recommendation from friends and business associates.

James McGrath writing for Yoreevo explains that a co-op board requires two reference letters – a personal letter and a professional letter and both need to convince the board that you’re a worthy investment. When it comes to writing both, the key is to be unambiguously safe, which means you need to leave out anything that can cause anyone from the board to be concerned or offended.

Even something as trivial as having a passion to cook pungent dishes can cost you your application. Be as tasteful as possible, better yet, put yourself in the shoes of the board, how would you convince them that you would be a good shareholder?

Whichever type of property you choose, whether it’s a condo or a co-op, pay close attention to the details; they might be your ticket to successfully buying your own space.

About the Author

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Michael launched Your Money Geek to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.

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