Have you been thinking of downsizing and moving to Manhattan? Or, is one of your children spending thousands of dollars a month renting and you’re of thinking of buying an apartment for him/her? Recently, I have been working with several Teaneck/Englewood area residents who are interested in buying property in Manhattan. So, you might ask, where do you begin? This article is the first of three that will attempt to explain the basic mechanics of buying property in Manhattan by discussing the two types of property, co-ops and condos, and the pros and cons of each. This article will discuss co-ops.
When buying a co-op, you are buying shares of stock in a corporation, not real property. These shares entitle you to a proprietary lease and a stock certificate. Co-op shareholders pay a monthly maintenance fee to cover building expenses and upkeep like heat, hot water, insurance, staff salaries, real estate taxes and a portion of the mortgage debt of the building.
The approval process in a co-op is more financially invasive than in condo buildings. A typical board application package includes two years of tax returns, three months of bank and asset statements, a financial statement, reference letters and more. Think of this process as submitting an application to a social club; the co-op board wants to ensure that you are a good fit personally and financially for the building.
Most people have heard nightmare stories about the “infamous” co-op board. Every building sets its own standards in terms of the approval process as well as how the building is managed. Given that everyone owns shares in the building, the board is more concerned with who the building does or does not allow into the building. Co-op boards also require a personal interview. In my experience, I have found that generally if you get called to meet board members, it is a “meet and greet” as they have already approved you “on paper.” However, boards can approve or deny any applicant they choose for any reason without disclosure.
Co-ops discourage renters, and every building establishes its own rental rules. This being said, most buildings will permit some level of renting, though it is usually allowed after one or two years of occupancy and usually only for one year at a time. The owner must also pay a surcharge to the management company for renting, up to 15–20 percent of the year’s lease.
One of the biggest benefits of co-op living is that you know your neighbors because of the restrictive rental rules. The building has more of a cooperative spirit and residents see themselves as part of a whole community. Many buildings plan social events and building staff greet you by name. Another benefit is that co-ops per square foot are less costly than condos.
More about this and the pros and cons of co-op living in future segments.
Amy Elfman is a Teaneck resident and a licensed Real Estate Salesperson for Klara Madlin Real Estate in Manhattan. Contact Amy at [email protected] or visit her webpage http://klaramadlin.com/brokers/Broker_bio.asp?id=98
By Amy Elfman