Questions to ask when buying a co-op in NYC
SUBMITTED BY Highline Residential on November 9, 2020
You may find that coop apartments in NYC are less expensive than condos; and there are real reasons why. Simply, because coops often restrict subletting your apartment in some way, it makes it harder for investors to purchase coops to rent them out. But this can be beneficial for a buyer who is interested in living in a community in NYC, where you know your neighbors, and are comfortable that the board members are protecting the investment of all the shareholders.
So what questions should you ask when buying a co-op?
When coop has higher-owner occupancy, it is statistically more likely that the maintenance payments are paid by the shareholders on time. However if a coop is more flexible on subletting, it is more likely that while it's easier for shareholders to sublet their apartments, the owner-occupancy will be lower.
Coops often prefer that their shareholders have "skin in the game" and require 20% down or more. You should be aware of the requirement so you can make sure you have the ability to purchase the apartment in which you're interested.
This is the same with condos. The coop or condo board want to make sure that the structure of the building itself can withstand the alterations that you might want to make. Buildings are concerned about load-bearing walls, extensive plumbing needs like washer/dryers, "wet over dry" or a bathroom over a bedroom for example. You can ask the agent who represents the seller or the building super what might be allowed or has been allowed in the past, although that is never a promise of what will be permitted in the future.
Many buildings have storage rooms, bike storage, parking, gyms, pools, child playrooms, and if those are important to you, you want to know the other details.
Many people don't realize that maintenance payments in a coop are tax deductible to the shareholder, because those payments include real estate taxes and interest on the coop's underlying mortgage. There are some complications to this in the current income tax rules, so please speak with your accountant.
Since there is no legally required way to measure square footage, coop offering plans don't list square footage for each unit, and therefore square footage isn't a consistent means of comparison from one unit to another. Even with condos, the square footage isn't measured the same way from building to building.
This is just a short sample of the questions that you could ask to learn more about a particular cooperative; and every coop is different. Please contact Stacey Max if you have more questions or would like to know more about cooperative ownership in general, and why coops are so prevalent in NYC. I love talking about coops!
Questions posted by Highline Residential's Sales Manager, Stacey Max. Find Stacey on Facebook.
So what questions should you ask when buying a co-op?
What is the owner-occupancy and what is the sublet policy?
When coop has higher-owner occupancy, it is statistically more likely that the maintenance payments are paid by the shareholders on time. However if a coop is more flexible on subletting, it is more likely that while it's easier for shareholders to sublet their apartments, the owner-occupancy will be lower.
What is the down-payment requirement?
Coops often prefer that their shareholders have "skin in the game" and require 20% down or more. You should be aware of the requirement so you can make sure you have the ability to purchase the apartment in which you're interested.
If you think you want to do renovations, are those alterations likely to be permitted?
This is the same with condos. The coop or condo board want to make sure that the structure of the building itself can withstand the alterations that you might want to make. Buildings are concerned about load-bearing walls, extensive plumbing needs like washer/dryers, "wet over dry" or a bathroom over a bedroom for example. You can ask the agent who represents the seller or the building super what might be allowed or has been allowed in the past, although that is never a promise of what will be permitted in the future.
What are the costs, hours, and availability of the amenities?
Many buildings have storage rooms, bike storage, parking, gyms, pools, child playrooms, and if those are important to you, you want to know the other details.
What is the tax deductibility of the maintenance?
Many people don't realize that maintenance payments in a coop are tax deductible to the shareholder, because those payments include real estate taxes and interest on the coop's underlying mortgage. There are some complications to this in the current income tax rules, so please speak with your accountant.
Why doesn't the listing show the square footage of the apartment?
Since there is no legally required way to measure square footage, coop offering plans don't list square footage for each unit, and therefore square footage isn't a consistent means of comparison from one unit to another. Even with condos, the square footage isn't measured the same way from building to building.
This is just a short sample of the questions that you could ask to learn more about a particular cooperative; and every coop is different. Please contact Stacey Max if you have more questions or would like to know more about cooperative ownership in general, and why coops are so prevalent in NYC. I love talking about coops!
Questions posted by Highline Residential's Sales Manager, Stacey Max. Find Stacey on Facebook.