So do you want to buy a co-op in New York City? We'll help you answer this
topic in the following video. My name is Nick at Hauseit, the largest for sale
by owner and buyer agent commission rebate company here in New York City
established in 2014, so let's get started. So the question of do you want to buy a co-op in New York City is a rather
complex topic but we'll simplify it into a couple of considerations for you to
digest. The main consideration when buying a co-op is whether or not you're
on board with the idea of restrictions on subletting, so if you intend to buy a
property with the idea of keeping it forever and eventually when you upsize
keeping that original property as an investment home well a co-op is not
really the best fit for you. Most coops expect you to live there or if you do
sublet it it's for a limited period of time and in certain cases if you sublet
too much the building may even require that you leave the unit empty or you
sell it. So in summary, you really only want to buy a co-op if you understand
that you're going to be living there and you accept the fact that you'll
eventually have to sell it whenever you want to buy a new home or a larger place
to live. The second thing to consider is whether or not you want to go through
the ordeal of what is a co-op purchase application in New York City.
Now before we launch into a tirade about why the co-op board process is difficult
keep in mind that even condominiums in New York do you have some sort of
application although they don't have an interview in most cases the list of
requirements that you need to submit for a condo are going to be substantially
similar to what you'll have to present for a co-op. So really the main question
for you is not about transparency. The truth is you will have to disclose
financial information and other sensitive documents regardless of
whether you're buying a condo or a co-op. If you're looking for transparency you
really do need to buy a house. So the question to ask as to whether or not you
want to buy a coffee is whether you want to take the risk of going through the
ordeal and negotiating the contract submitting an application only to
possibly be rejected. On a similar note, when you buy a co-op are you okay in
practice with the idea that your neighbors could one day reject your purchaser and
possibly cost you additional time and money through an extended period on the
market. The third consideration as to whether or not you want to buy a co-op
is whether you're open to just putting up with additional rules and
restrictions on your daily life. Now again as is the case with the
application process both condos and co-ops have rules, so if
you buy a condo you're not allowed to just bring in a handyman and but
renovate your apartment without going through the appropriate procedures, but
in general it is fair to conclude and assume that coops have a little bit more
red tape and more rules more restrictions possibly more fees
associated with doing things in your home such as certainly renovating it and
of course renting it out. There may also be a more strict interpretation of the
house rules in a co-op versus a condo although keep in mind it's tough to
generalize here because there are co-ops that act like condos and unfortunately
there are condo buildings that think they are coops, so really it does depend
on the particular building that you're looking at but as a generalization you
can really assume that a co-op you'll be expected to play by the rules a bit more
frequently than you would with a condo. The final question as to whether or not
you want to buy a co-op is whether you're okay with perhaps paying a flip
tax when the time comes, so now most coops in the city have an additional
seller closing costs called a flip tax and it does vary by building, but the
flip tax can be a few percent of your sale price or it can be a percentage of
your profits. There are a number of ways to calculate it etc. but the vast
majority of coops have a flip tax whereas the vast majority of condos do
not. Now the flip side of this is actually that coops have lower buyer
closing costs, so there is a benefit to you initially buying a co-op the buyer
closing costs are lower so in theory you need to essentially spend less cash
upfront in terms of getting the deal done, but keep in mind that coops do have
a higher down payment requirements and of course they have buyer financial
requirements, so this can negate some or all of that liquidity benefit of
possibly having a lower buyer closing costs in the case of a co-op we hope you
found this video helpful. I'm Nick at Hauseit. Visit our website www.hauseit.com
to learn about ways to save money when you're buying and selling in New
York, and if you like this video do us a favor hit like subscribe send us a
comment or send us an email and we'll get back to you right away.