The choice of home you buy or rent can impact your life for years. Typically, you have three primary options when buying or renting a residential building; apartment, Condominiums, or Co-op. But which should you choose?
Knowing the key differences between the types of housing will enable you to make better decisions.
Apartment vs. Condominiums vs. Co-ops
What is an apartment?
An apartment is a residential rental property that’s usually owned by one person, corporation or single entity, and rented out to tenants.
The tenants report to the same property manager who assists the owner in maintaining the properties.
The buildings within an apartment are usually the same, and all tenants are required to follow the laid-out guidelines.
Pros and Cons of Apartments
Pros
- Most apartments have various amenities like good linking roads, adequate water supply, and others.
- Experienced Management: Apartments are managed by estate management firms that are experienced. So your concerns, if any, arises will be quickly resolved.
Cons
· Apartments are smaller compared to other types of housing.
· There’s less opportunity to customize your apartment, as you will need to get approval from the management.
· Most apartments don’t allow pets.
What is a Condominium
Condominiums often shortened as “condo” is a type of real estate property that consists of various units of residential or commercial properties. A condo is a multi-property that is divided as individual units. It can be attached to other units or be a collection of individual units.
In a condo, ownership of each unit is confined to only space where the unit is and a boundary to allow the owner to make minor adjustments without affecting the common areas. Each property has its tax bill and deeds. Residents are responsible for the maintenance expenses of their own units. All residents of the condo share common charges like management fees and other costs of maintaining common areas. The buildings are managed by the condo association, which also sets the terms, rules, and regulations.
Pros and Cons of Condominiums
Pros
- Less Restriction: You own the property, with your own deed and tax lot; hence there will be fewer restrictions. You can do whatever you wish with it. However, it’s essential to review the condo rules and regulations and abide by it.
- Condos make a good investment; you can rent out the unit to earn monthly rent. Most condos boards, however, disallows short-term rental of fewer than 30 days or a year.
- Most condos have been sold or rented out are new buildings, so you will have to access the basic amenities like swimming pools, basketball pitches, and more.
Cons
- Condominiums are more expensive. They cost about 20% to 40% more than coops because you are buying the property compared to buying shares. Condos also come with various modern facilities that may cause the price to rise.
- Condos have higher costs consisting of mortgage tax and title insurance. There can also be additional fees for the deed and recording fees.
- There’s no screening for new occupants. Anyone with the financial means who can meet up the criteria can buy into the property.
What is a Co-op
Co-ops or Coops is short for cooperatives. This refers to buildings owned by cooperations who sell shares of stocks in return for long term propriety lease. Owning the shares entitles you to occupy the building, have equal access to the common areas, and also vote for members of the board of coops board.
The larger the apartment occupied, the higher the maintenance cost the shareholder will have to pay.
So when you pay for a unit, you don’t own it, rather you are investing in the shares of the cooperation that owns the building.
Pros and Cons of Co-ops
Pros
- They are less expensive. The buildings are usually older and hence make up about 75% of homeownership.
- Since you are purchasing shares in cooperation instead of buying up specific properties, expenses like mortgage recording tax and title insurance do not apply.
- Unlike in condos where you don’t have control over potential neighbors, shareholders in coops can screen potential neighbors through the coop board interview process.
- If you prefer old buildings with historical attachments, then coops will be your best bet.
Cons
- Some cooperatives don’t allow financing at all. Those that do may have a higher down payment of up to 50%.
- The coop board screening will require providing confidential documents like your financial statement, net worth, debt-to-income ratio, tax returns, and other information.
- You may not be allowed to sublet the unit, especially a short let. Even if you sublet, the coop board may have to screen the sub-lesse.
Difference between Condos, Co-ops, and Apartments
Ownership
Condos are owned by various individuals. So if there are 50 units of properties in an area, for instance, it may all be owned by various people. While co-ops are owned by cooperatives, who sell shares to individuals to access individual units. Apartments, on the other hand, are either owned by a single individual, entity or corporation who rent it out to tenants.
Property management
Condos are managed by the condo governing board that set the rules and regulation guiding occupants. Co-ops are managed by the members of the Co-ops board, while apartments are managed by estate management companies hired by the property owner.
Size and Customizations
Condos provide ample opportunities to renovate the property as you deem fit. Co-ops, however, offers fewer opportunities, any plans have to be reviewed by the coop’s board. Apartments, on the other hand, have fewer opportunities for renovation.
Cost
The cost of condos may be higher as it includes that of tax, and title insurance, and recording fees. Co-ops are cheaper compared to condos, as you are just buying shares from cooperation. The cost of rent for an apartment and a Condo is almost the same.
Available facilities
Condos are usually new properties and come with various basic amenities, while co-ops comprise of older buildings that may not have basic amenities. Apartments, on the other hand, may not be new but have the necessary basic amenities and are well maintained.
Apartments, Condos, and Coops – Which should you go for?
There’s no definite answer to the question of which to choose between all three. What you choose is dependent on your budget, location, and available property. While condos are a natural entry point to homeownership, it’s challenging to find one, so it makes no sense insisting on getting one.
BigCityPodCast on Anchor Apt vs Condo vs Coop
Helpful Links