So you’re ready to start investing in a new property, which means you have a lot of options. As far as co-ops and condos are concerned, there is a huge difference for the owners. There are different financial responsibilities and even different processes for owning the property.
First, you have to decide on what the purpose of your purchase is: whether you are buying to resell, rent, or sublet. Once you’ve figured that out, you can weigh your options with co-ops and condos. Here are the basics of each.
If you’re thinking about buying into a co-op, it’s important to know that this purchase is not your average real estate purchase. You’re actually buying shares in a corporation, and not the actual real estate itself.
Of course, if you’re looking at a larger living space in the co-op, you’re going to spend more money, but the money just gives you more shares into the corporation. Alongside your initial purchase, you’ll have a monthly fee when you buy a co-op. This fee covers the cost of the mortgage for the property, utilities and taxes.
If you’re planning to sublet or rent out your co-op real estate, don’t update your rental application just yet. There is a vetting process to worry about. It’s not easy to just buy co-op shares outright like you would with regular real estate. This is because there is a corporation board for each building that controls who resides there.
The vetting process for each building is specific to the building and includes an interview process. This lengthy process is necessary because the board is looking out for the best interest of the corporation.
Condos are popping up everywhere across America! When you buy a condo, you’re buying your property outright — unlike a co-op, buying a condo gives you ownership over the physical apartment in the building. But you’re still bound by the rules of the condo corporation.
You also have to pay a fee to live in a condo, but the fees are significantly less because they do not include taxes or the mortgage for the entire property. Condo fees typically cover expenses for the condos, and some condos have facilities like a community pool or a gym.
The fees cover the costs for communal property maintenance, garbage disposal, snow removal, etc. If the condo is located in a community with private roads, the condo fees cover road work as well.
Some condos control the color of the homes in the neighborhood, as well as what you can put in your front yard, including the types of trees. The good thing about this investment is that you can finance up to 90 percent of your condo and pay a monthly mortgage to a broker or a bank with a mortgage loan.
If you’re looking for an investment property that you can rent out, buying a condo is often a better option. Not only can you sublet, but you don’t have to go through any type of vetting process to do so.
Making a real estate investment is life changing, but you are adding to your investment portfolio. It is important to know that you’re making the right choice when you’re choosing between a co-op and a condo. You have to think about the future and how you would like to utilize your property.
Make sure you know everything about the rules and regulations of the property, and how it will affect your present and future before investing!