The Difference between  a Co-op and a Condo

The Difference between a Co-op and a Condo

  • Claudine O'Rourke
  • 01/17/22

Several years ago, I recorded a short video on the difference between co-ops and condos.  Get a head start and watch this first:


You could google the difference between a co-op and a condo, but I think it’ll make your head spin.  The technical “on paper” difference is that when you own a co-op, you own shares of a corporation.  When you own a condo, you own real property.  But what does that really mean? 


What are the REAL differences? 



This is a big one. And if you say “HOA fees” you aren’t from around here…but it’s kind of the same thing.  


In a co-op you pay a monthly maintenance that is all inclusive — like a Jamaican resort but without the free drinks.  Co-op maintenance always includes common charges and real estate taxes.  Always.  


In a condo, you’ll pay your common charges (HOA fees) and your real estate taxes separately.  NYC real estate taxes are typically billed quarterly.  When you see a condo listing, be sure to add both the common charges and (monthly) real estate taxes to reflect your true monthly expenses or when comparing condos to co-ops.


 In a co-op, heat and hot water are always included.  Other than gas & electric, your expenses are set!  In some rare finds, co-op maintenance could include utilities like gas, electric and/or basic cable.  #Totalscore if you find this to be the case.  Just remember that the inclusion of gas & electric are not the norm, but you can always count on the fact that maintenance in a co-op includes common charges and real estate taxes as well as heat & hot water.  So, take that long hot shower…it won’t cost you any more.    


In a condo, most likely heat and hot water are also included, but not always, so just be sure to ask.  As a condo owner, you own real property, so depending on how the condo is metered, you may be responsible for more than you think.  


Because a condo is “real property” you own your walls and the pipes behind those wall.  So if there’s a leak and damage - congratulations!  You are a homeowner! You will be responsible for the cost of that repair.  This goes the same for the A/C unit, electrical, hot water… own it so you repair it.


Unlike a co-op where you technically don’t own the property; you own shares in the corporation.  So anything outside those 4-walls is the building’s responsibility.  You pay your maintenance that is all inclusive to cover the cost of any repair or damages that might arise.  This is similar to a tenant / landlord.  As a matter of fact, when you own a co-op, you are considered a tenant of the corporation. So if there’s a leak, the building staff will fix it and the cost is covered in your maintenance. Most everything within your 4-walls you do own however, so things like your appliances are your responsibility.  However, if you own a co-op with an HVAC air conditioning unit, that is property of the building, so if there’s an issue the building has you covered!  


There are no surprises in a co-op when it comes to expenses unlike a house when a tree falls on your property, the boiler breaks down or you need a new roof. Your expenses are set. I love that about a co-op!


Maintenance is directly proportionate to the square footage of the apartment. As a basic and broad rule of thumb, maintenance is approximately $2 per square foot although up to $3/sf is typical and common place.  Remember, this isn’t an exact science and there are reasons behind higher or lower maintenance.  (Oooh, that’s so fun to determine! Please let me be your personal geeky real estate detective - please!)  If you double the square footage, you’ll be able to gage whether the maintenance is within normal range or not. 


*For a more in-depth understanding of maintenance, reference my blog post: Maintenance: Size Matters


 For a condo, I calculate $1/sf for common charges and $1/sf for real estate taxes - it’s essentially the same ratio for your basic condo resale.  But, if you like the shiny and new luxury condos, get ready to cough up $3-$4/sf for common charges plus your real estate taxes.  Cha-Ching!  Why?  Because they have every amenity under the sun.  It sounds great to have a spa, on-site massage therapist, valet parking, pool and personal concierge etc.…  But just remember, you’re paying for it in your common charges one way or another. 



The reason condos are a minimum of 30% more expensive than co-ops is the flexibility to  always be able to sublet / rent out the apartment for income. This is called investor friendly or income producing property.  One pays a premium for that.  Like I mentioned in my video, the only downside to living in a condo would be your transient neighbors.  


Not to say that co-ops don’t allow you to rent out, because they do.  Most co-ops allow subletting!  Did you hear me? You can rent out your coop!  Having said that, it is typically only after a period of 1-2 years of owning and occupying the apartment.  But EVERY CO-OP IS DIFFERENT, so don’t assume.  I’ve seen plenty of investor friendly co-ops - while rare, they do exist.  The important thing to remember is that most co-ops do allow subletting.  Here are some typical structures:

  • 2-3 years of subletting allowed out of every 5 years of ownership.  Tenants don’t have to sublet consecutive years or back-to-back years, but an owner can only have the apartment rented for any 2 years out of every 5 years for the life of ownership.  
  • unlimited subletting after 1, 2 or 3 years of ownership.  WooHooo!  This means that your co-op becomes investor friendly after the initial holding period of ownership and one could use this as an income producing investment.  
  • 3-5 years maximum subletting period during the life of ownership.  Well, that’s it.  You can rent it out at any time, but it will cap out.  
  • On a case by case basis.  This is a board saying that they will allow flexibility to the owner should they get relocated or if there is some life circumstance that is taking them away from living in the apartment, and they don’t want to sell right away.  How often or the length of time in which the board will allow is on a case-be-base basis. 


Most coops want to offer their shareholder flexibility while preserving the exclusivity of the building.  If the thought of exclusivity makes you want to barf, then pay a premium and be one with the people.  



The ability to renovate

There is no difference here!  This is such a myth that if you own a co-op you can’t renovate the way you want!  Totally untrue!  Some of the biggest most elaborate renovations happen on Park & Fifth Ave —hello?! Co-ops!  Just as any condo board would require, a co-op board will want you to submit an alteration package describing the scope of work and disclose who the contractor and subcontractors are including their license numbers.  Of course this is all to protect the building and its owners from Uncle Fred puncturing a gas line and costing the building $1,000,000 in damages because you wanted to save a buck renovating your kitchen.  Save Uncle Fred for your fixer upper house in the burbs.  



Ok, this is the biggie.  This is the one topic that has got everyone up in arms.  This is the part of the story that has been retold with hyperbole to hide the embarrassment of rejection (which should never happen with the right broker), or to seem like you know it all because you “heard” from a friend that co-ops are a certain way.  


Let me say it again: Every. Single. Co-op. Is. Different.  So you cannot, under any circumstance, think that one co-op experience is going to be like the next.  Boards change constantly, so even the same building has an ever changing personality of its own.


In a co-op, the only discrimination allowed is financial discrimination.  Each co-op will have its own financial requirement, (*Read my blog on Qualifying Buyers for deeper dive) but a basic rule of thumb is: 

  1. A debt to income ratio of 29% or less (based on gross income) and
  2. 2.5 years worth of expenses in liquid funds, post closing


A condo won’t care if you have zero income and one penny left to your name post closing, just as long as you have enough money to actually close on the apartment.  A condo board has the first right of refusal, which means the board would have to purchase the apartment in order to exercise that right to deny you.  Since that would likely wreak havoc on the financials, it’s never done. 



Again, google this and your eyes will roll back in your head.  What you should understand is that a condop is actually a co-op (meaning you are buying shares of a corporation and you’ll pay your all inclusive maintenance) but with relaxed condo rules!  True to form, each one is different.  But in most cases, they’ve established an easy approval process and flexible (perhaps even unlimited) subletting policy.  


There aren’t many in NYC, but if you’re looking for a bargain with the flexibility of a condo then condops are great; the best of both worlds.  Only a seasoned broker who knows her shit, knows where they are and to never rule them out.   


But let’s not give up on co-ops either. Most allow subletting and there are even some co-ops which are investor friendly!  Remember, EVERY SINGLE COOP IS DIFFERENT.  



Another big one.  And guess what?  Closing costs are far less in a co-op.  They are also different for buyers and sellers. Want to see the breakdown?  Read my blog on Closing Costs. 


I’ll wrap this novel by saying: In the conclusion, co-ops rule. The End.

Work With Claudine

Want a no B--S-- agent who knows her stuff and is nice?? Yah, nice. I love my job and I calculate debt to income ratios in my sleep! Nobody knows a co-op better than me. If you want someone shrewd who uses her kindness as a weapon, then I’m your girl.

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