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Old 04-02-2024, 02:46 PM   #41
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Originally Posted by LateToFIRE View Post
Nope - not true. In NYC it is very common to finance a co-op purchase. Lending rate is slightly higher owing to the structure (collateral is corporate shares vs real property). Sure, there are fancy Park Avenue co-ops that require all-cash, but that is not the norm.

Edit: ok, I see where you're talking about outside NYC, so ignore the above statement.
the problem here in nyc with coops is mortgages are available for owner occupied but very hard to get if not full time home .

coop mortgages are junior to any maintenance charges you owe and any building mortgages the building has .

so banks either charge a higher rate for owner occupied or shy away
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Old 04-02-2024, 03:49 PM   #42
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Typically, condos trade at a premium to co-ops due to flexibility. Condo boards cannot veto sales or rentals unless they agree to purchase/rent the unit at the offer price. Co-op boards can refuse a sale and you may never know why, but that also means there is more scrutiny of potential buyers/renters.

You can finance both purchases, however, a co-op board may have rules regarding the amount of financing permitted, e.g. 20% down to 100% cash. You can get a HELOC with either as long as there is sufficient equity. For tax purposes, if you can itemize (above the standard deduction threshold), you can itemize interest and real estate for both ownership models.

As mentioned before, co-ops can have underlying debt, so pay attention to the financials. Whatever you purchase, make sure there is a reasonable reserve if you don't want to get hit with a lot of assessments.

If things go sideways, co-ops get paid before banks. In a sale, the co-op gets paid any outstandings before a mortgage holder. In condos, banks get paid first, so if an owner has huge arrears and no equity, the condo absorbs the loss.

Co-ops are cheapers. Condos have fewer restrictions. Make sure the building has reserves and is well managed.
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Old 04-02-2024, 04:03 PM   #43
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you have to be careful comparing coop to condo pricing .

many coops have their own outstanding building mortgage holding part of your apartments worth .

it’s like when i bought my first co-op back in 1987 , we paid 77k .

however the building mortgage actually held another 33k which was paid thru maintenance..

so an equivalent condo may have been 110k if you asked how much , while the coop was 77k .

eventually as the building mortgage was paid the equity the building held shifted. to our value .

coop structure is very very popular here in nyc .

many coops were rentals that converted to coop back in the 1980s .

they needed a certain amount of insiders to buy in order to convert .

most renters were renters because they couldn’t afford to buy.

so tp make it easier for tenants to get mortgages the building held a piece of each apartments value . that way the tenants bank wasn’t holding the whole amount and were more inclined to loan
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Old 04-02-2024, 05:11 PM   #44
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Typically, condos trade at a premium to co-ops due to flexibility. Condo boards cannot veto sales or rentals unless they agree to purchase/rent the unit at the offer price. Co-op boards can refuse a sale and you may never know why, but that also means there is more scrutiny of potential buyers/renters.

You can finance both purchases, however, a co-op board may have rules regarding the amount of financing permitted, e.g. 20% down to 100% cash. You can get a HELOC with either as long as there is sufficient equity. For tax purposes, if you can itemize (above the standard deduction threshold), you can itemize interest and real estate for both ownership models.

As mentioned before, co-ops can have underlying debt, so pay attention to the financials. Whatever you purchase, make sure there is a reasonable reserve if you don't want to get hit with a lot of assessments.

If things go sideways, co-ops get paid before banks. In a sale, the co-op gets paid any outstandings before a mortgage holder. In condos, banks get paid first, so if an owner has huge arrears and no equity, the condo absorbs the loss.

Co-ops are cheapers. Condos have fewer restrictions. Make sure the building has reserves and is well managed.
It seems like you have a lot of knowledge on co-ops. Thanks for your insight and responding to this thread. In my area, I'm leaning toward a co-op at the beach as opposed to a condo. The co-op is at the price point that I'm looking for. We have put a contract on a co-op at beach this week. I'm reading the bylaws document which includes the financials right now. We still have time to exist the contract since we have not closed yet.
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Old 04-02-2024, 06:00 PM   #45
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It seems like you have a lot of knowledge on co-ops. Thanks for your insight and responding to this thread. In my area, I'm leaning toward a co-op at the beach as opposed to a condo. The co-op is at the price point that I'm looking for. We have put a contract on a co-op at beach this week. I'm reading the bylaws document which includes the financials right now. We still have time to exist the contract since we have not closed yet.
Look at expense increases on an annual basis. Are they stable? Has anything jumped recently, e.g. insurance, taxes? Look for any deferred maintenance. How old is the roof, the boiler, elevators, etc? How big is the capital reserve relative to expenses? Is there money set aside monthly for reserves or does the co-op prefer assessments on an as needed basis? Is there an underlying mortgage? If so, what is the rate, amortization and maturity? Does the co-op have a line-of-credit? Make sure you or your attorney read the minutes of the monthly meetings.

Is it possible to meet your neighbors above, below, and next to you?
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Old 04-02-2024, 06:09 PM   #46
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Look at expense increases on an annual basis. Are they stable? Has anything jumped recently, e.g. insurance, taxes? Look for any deferred maintenance. How old is the roof, the boiler, elevators, etc? How big is the capital reserve relative to expenses? Is there money set aside monthly for reserves or does the co-op prefer assessments on an as needed basis? Is there an underlying mortgage? If so, what is the rate, amortization and maturity? Does the co-op have a line-of-credit? Make sure you or your attorney read the minutes of the monthly meetings.

Is it possible to meet your neighbors above, below, and next to you?
Thanks for all your insights. I'm looking at the financials now. I do think it will be possible to meet my neighbors above, below, and next to you.
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Old 04-03-2024, 09:05 AM   #47
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I hate having folks live above me.

Get to hear kids jumping, bouncing a ball, dropping something, or a person walking in high heels on a hard floor.
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Old 04-03-2024, 09:23 AM   #48
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I hate having folks live above me.

Get to hear kids jumping, bouncing a ball, dropping something, or a person walking in high heels on a hard floor.
For us, it will be our weekend getaway and most of the time we will be on the beach.
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