As a first time home buyer in New York City it is very important for you to know the differences between condo and co-op monthly carrying costs. Besides the purchase price, your monthly carrying costs are also an important factor to consider when trying to determine what you can afford to buy. At the end of this video you’ll know the important differences between condo vs co-op monthly fees, what do those fees cover and how they are calculated.
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If you are looking to buy an apartment in NYC, 2 most popular types of properties you’ll see are co-ops and condos, and since those are 2 totally different type of ownerships, the monthly carrying costs for both are also a little different.
No matter if the building has a few apartments or a few hundred apartments, the building itself needs a budget in order to operate and this budget is what every apartment owner pays every month. The monthly fees for condos are called common charges, which is also known as HOA. Moving forward I am going to use the term common charges, since this is what we use here in NYC.
So common charges are what every apartment owner in the condo building pays in order for the building to operate properly.
Common charges cover all operation and maintenance cost of the building, such as the elevators, mechanicals, and there are buildings where some of the utilities, might be included in your common charges. It also covers the maintenance of all the amenities in the building. Typical amenities that the buildings offer can be gym, yoga room, bike room, laundry room, kids playroom, common lounge area, rooftop, outdoor terrace, pool, some condos might even have sauna, golf simulation room, hot tub and things like that. The common charges also cover the staff salaries, which can be the doorman, porters, super, the management company fees and any other building’s expense, such as all the building’s insurance polices, supplies, services like landscaping, pest control, window cleaning, etc.
These payments go directly to your condo association every single month.
Condo associations are run by the board of managers. Each year the board with the management company create a projected budget for all the building’s maintenance and operating costs for that year.
The budget will also include a portion that will be contributed to the building’s reserve fund each month. The reserve funds are usually used for any emergency repairs or to cover any planned maintenance cost.
So the building’s operating and maintenance budget will be paid collectively by the unit owners every month. And the bill for each apartment depends on the percentage of common interest that the apartment has.
With co-ops, this monthly fee is called a maintenance.
Since here you are not buying a real property, each apartment has a specific number of shares allocated to it. That means when buying a co-op apartment, you are buying the shares that are allocated to that apartment. So instead of the deed and title, which are what you get when buying any real property, you’ll get a stock certificate, showing your ownership of those shares and the proprietary lease will allow you to occupy your specific apartment in perpetuity, as long as you continue owning those shares.
With co-ops, you don’t own a real property, instead you own shares in a corporation, and the real property in this case is the whole building and the cooperative corporation itself is responsible for paying the real estate taxes for the entire building.
So with co-ops, the maintenance bill not only covers the operation and the maintenance of the building, amenities, staff salary, and for some buildings even utilities, but it also covers your portion of the real estate taxes.
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