CONDOS
A condominium is a type of property where condo residents own their individual condo units—these are separate units—within a larger building or complex. Each owner has a deed for their apartment and also owns a share of the common areas. This structure distinguishes condos from co-ops, as condo residents have outright ownership of real property, which can positively affect resale value and mortgage options. Closing costs for condos are typically higher due to additional fees like title insurance and mortgage taxes.
Condo owners pay property taxes to the city and monthly fees called condo fees to the condo association, which is a type of community association responsible for maintenance and amenities. Amenities often include features like a fitness center, swimming pool, lounge, or even a tennis court. The Condo Board manages the operation of the building and instructs the condo association on what to do. Rules and amenities set by the association can directly affect residents' daily lives and decisions.
U.S. Residents can buy condos with traditional loans by putting down 20%, however, some banks require only a 10% down payment for professionals, such as doctors and lawyers. Foreign buyers are required to pay 30% upfront. Title insurance is also part of the closing costs for condo buyers. Financial considerations, such as monthly fees, property taxes, and potential resale value, are important factors when evaluating a condo purchase.
For many, the pros of buying a condo unit will outweigh the cons. Purchasing a condominium is much more democratic than purchasing a coop, as condos are much less restrictive and open to anybody who has funds to buy one. Using liquid assets as a part of the application process is often a requirement for co-op buyers, unlike most condos.
Condo residents can often personalize their living space, subject to community guidelines, allowing for greater customization compared to other property types.
Generally, condos allow a condo owner to sublease their apartments with few restrictions. In addition, condos allow for foreign ownership, have fewer restrictions, require lower down payments, and are easier than coops to finance.
Most condos have been built in the last 30 years and include many amenities that current owners and tenants expect, including fitness centers, swimming pools, lounges, and tennis courts. Many newer condominium buildings focus on expansive amenities like fitness centers and security services. These amenities are not found in most coops. All these features make a condo more marketable, increasing its saleability and desirability. The rules and amenities available in a condo can significantly affect residents' lifestyles and financial outcomes.
NYC condos comprise only 25% of total residential properties for sale in Manhattan. This supply constraint and the desirability of new condos that have many amenities make condos more expensive than coops. When comparing value, condos often have a higher price per square foot than co-ops, reflecting their market desirability and ownership advantages.
Condos are typically easier to finance because the owner will have physical property as collateral.
Another big selling point for Manhattan Condos are the tax deductions that some of them offers like the 485, 421G, and 421A tax abatements. In the 70’s, the city launched a program to incentive developers to build on vacant lots while receiving 10 year exemption on paying taxes. The program expired but has been revived with the addition of the 485 abatement in 2024.
Homebuyers and investors who bought units in a condo with tax abatement would also benefit from these 10 year tax breaks. Recently we saw the return of these tax abatements on a handful of Manhattan condos and you can learn more on the blog below:
When deciding between either a condo or another property type, it's important to weigh these factors carefully.
Investors and foreign buyers, therefore, should focus their property searches on condos.
To recap, condos are/have:
Few restrictions
Investor friendly
Easily access financing
Pro foreign buyers
COOPS
Housing cooperatives, or co-ops, are a unique type of community living arrangement where the building is owned by a corporation, and individuals become co op owners by purchasing shares in that corporation rather than owning their individual units outright. As a co op shareholder, your ownership stake determines your right to occupy a specific apartment and your share of the building’s costs. The proprietary lease allows a shareholder that is buying shares to use a particular apartment in the co-op building. The larger the co-op apartment is, the more co op shares the shareholder will hold and the higher share of building maintenance costs the shareholder will pay.
At first glance, it looks like one might pay higher monthly fees when buying a coop. However, that's because property taxes and HOA fees are combined into one maintenance amount. This amount contains property taxes and maintenance fees to the corporation, which include their share of real estate taxes, building expenses, and sometimes mortgage interest if the corporation holds a mortgage on the building. This is different from condo owners, who pay property taxes directly on their units and have separate fees for utilities and property taxes. Sometimes co ops have higher maintenance because of mortgage interest if the corporation holds a mortgage on the building. Comparatively, condo buildings are prohibited from obtaining mortgages, so condo HOA fees can never include mortgage interest.
There are many coop pros and cons to buying a co-op apartment. In terms of pros, condos are usually more expensive than coops because cooperatives are older and they represent 70% of the market. Co ops tend to be more affordable upfront and have certain financial advantages, such as inclusive costs in the maintenance fees. Also, Co-ops tend to have lower closing costs compared to condos because there are no expenses like title insurance.
Coops can make up any rules they want and their shareholders must adhere to those rules. Co-op boards often forbid renting and can make selling difficult due to their approval process. The co op's board often imposes strict regulations and has a rigorous approval process for prospective buyers, making the purchasing experience more complex. When comparing condos vs co op, it’s important to note that co-ops typically involve a more complicated approval process with board restrictions, while condos offer a simpler transaction.
Under cooperative ownership, shareholders are generally required to occupy their apartments as their primary residence. In addition, coops have rules sharply limiting or prohibiting subleases, so investors beware that a co op is not considered a good investment. Most co-op boards have strict rules regarding subletting, with some not allowing it at all. Both condos and co-ops differ significantly in ownership structure and costs, with condos typically having simpler and more flexible arrangements.
One common co op New York rule is the prohibition of foreign ownership. Generally, coops prohibit foreign buyers since it may become impossible to sue a foreign national who has the bulk of their assets and sources of income outside of the United State. Even if the cooperative corporation obtained a judgment against a foreign owner, it would likely be uncollectible if the owner’s assets were sitting 4,000 miles away in another country.
Using liquid assets as a part of the application process is often a requirement for co-op buyers, unlike most condos. Coops may or may not allow financing. Those that do allow financing usually require a higher down payment compared to condos. Co ops require stricter financial qualifications and down payments that can range from 20% to 50% of the purchase price, making the process more demanding for buyers.
Obtaining co op loans can be challenging, as lenders face stricter requirements and co op loans differ from traditional condo financing. Financing of a co-op apartment requires using a personal loan rather than a mortgage. The cooperative corporation will dictate the amount of purchase price that can be financed, equal to 50% - 75% of the property value. As with a mortgage, interest on the personal loan is deductible for tax purposes. One common feature of coops is a flip tax, which is actually a transfer fee, generally 2-3% of the sale price of the apartment, paid by the seller to the cooperative corporation upon the sale of co op shares.
Potential co op owners (and tenants, if allowed by the Board) must be interviewed by the Co op Board of Directors and present formal applications to the Board for approval. The co op's board is responsible for reviewing and authorizing buyers, and this process can take months, not weeks, as with a condo. While condos also require an application, buyers and renters are not interviewed by the condo board and the approval process is much easier.
A management company is often hired by the co-op to oversee daily operations, including maintenance, fee collection, and approvals, which is different from individual landlords managing rental apartments. Because of the unique financial structure of co-ops, having strong personal finance knowledge is important for buyers to understand budgeting, loan options, and long-term financial commitments.
Co op pros and cons include the following:
Co op boards
Restrictive
Not investor friendly
Prohibit foreign ownership
Usually prohibits or limit subleases
Prefer primary homeownership
More likely to have luxury amenities
When analyzing a co-op or condo, it's important to consider the differences in ownership structures, financial implications, and approval processes. Co-ops typically have more restrictive approval processes and financial requirements, while condos offer more flexibility and are often easier to finance.
Co op boards
Restrictive
Not investor friendly
Prohibit foreign ownership
Usually prohibits or limit subleases
Prefer primary homeownership
More likely to have luxury amenities
When analyzing a co-op or condo, it's important to consider the differences in ownership structures, financial implications, and approval processes. Co-ops typically have more restrictive approval processes and financial requirements, while condos offer more flexibility and are often easier to finance. Condo owners receive a deed to their unit, while co-op owners receive a proprietary lease. In co-ops, the approval process can be rigorous, including background checks and financial reviews, whereas condo purchases are typically simpler.
CONDOPS
The term condop is used in new york city real estate circles as a coop with condo rules. Technically, however, a condop is defined as a residential coop that has sold its ground floor as a commercial unit. In practice, however, the term is used as meaning a coop with condo rules.
Under condo rules, condops allow subleases and foreign ownership. Often buildings built on land leases will fall in the Condop category.
A building with a land lease requires owners to pay rent on the underlying land over a long period, usually 99 years (like property in London). These leases, in practice, are usually renewed before the land lease expires.
To recap, a Condop building are/have:
Few restrictions
Investor friendly
Pro foreign buyers
Difference Between Condo and Co-op: Understanding the Key Differences
When comparing co ops and condos, a major difference is the ownership structure. An apartment is a rental property that is owned by a company that is in the business of managing property to generate rental income.
In addition to apartments, it’s important to compare co ops vs condos. Condo owners have full ownership of their individual unit through a deed, while co-op residents own shares in a corporation that controls the entire building, rather than owning an individual unit. Both co ops and condos consist of separate units within a larger building. This difference in ownership structures and governance also affects amenities, monthly fees, and the approval processes for buying into each property type. These distinctions can significantly affect residents by shaping their daily experiences, community dynamics, and the level of rule enforcement.
Generally, in an apartment building, all the units are the same and the owner is the same. In contrast, a condo is a private residence that can be rented out to tenants. When you rent a condo, the individual owner is your landlord. When you rent an apartment, the company that owns the building is your landlord.
Condos are higher in quality than apartment buildings, as many primary homeowners live in condo buildings. At first glance, many of the amenities in condo and apartment buildings may seem the same, but you are more likely to find more upscale versions with condos, since better amenities help raise property values.
Financing and Down Payment: What Buyers Need to Know
When it comes to purchasing a home in New York City, understanding the financing and down payment requirements for condos and co-ops is crucial. The key differences between these property types can significantly affect your buying experience, monthly costs, and long-term financial planning. Condos usually require a 20% down payment, but it's less of an industry standard compared to co-ops, which often demand higher upfront payments.
Condos tend to offer more flexibility in financing. Condo owners can typically choose from a variety of mortgage options, and some lenders may allow down payments as low as 10%, especially for qualified professionals. This flexibility makes condos appealing to a wider range of buyers, including those who may not have a large amount of cash available upfront. However, condo buyers should be prepared for higher closing costs, which often include title insurance, mortgage recording taxes, and other fees that can add up to 2% to 5% of the purchase price. These higher closing costs are a key difference to keep in mind when comparing condos and co ops.
Co-ops, on the other hand, are known for their stricter financing rules. Most co op boards require a larger down payment—often at least 20%, and sometimes as high as 50%—and may even prohibit financing altogether in some buildings. Co op buyers must also submit extensive financial documentation, including proof of income, assets, and a detailed breakdown of their debt to income ratio. The co op board will carefully review this information as part of a thorough vetting process, which may also include a personal interview. This process can be lengthy and is designed to ensure that new co op shareholders are financially stable and a good fit for the community.
Unlike condo associations, which have limited say in who can purchase a unit, co op boards have significant control over the approval process. This means that even if you are financially qualified for a mortgage, the co op’s board can still deny your application based on their own criteria. While this can make co op living feel more exclusive and community-oriented, it also means that buyers need to be prepared for a more rigorous approval process and potentially higher down payments.
Another important distinction is how closing costs are handled. Co op buyers generally do not pay separate title insurance or mortgage recording taxes, as these costs are typically included in the monthly maintenance fees paid to the cooperative corporation. This can make the upfront costs of buying a co op lower, but the ongoing monthly fees may be higher compared to condos.
Ultimately, the choice between a condo and a co op will depend on your financial situation, your comfort with the approval process, and your long-term goals. If you value flexibility in financing and a faster, less restrictive purchase process, a condo may be the better fit. The mortgage approval process for condos is simpler than for co-ops due to the lack of board approval requirements. If you are comfortable with higher down payments, a thorough vetting process, and value a sense of community, co op living could be ideal.
Before making a decision, it’s essential to review your finances, understand the ownership structure and rules of the building, and consult with your real estate agent or financial advisor. By doing so, you’ll be better equipped to navigate the key differences between condos and co ops and find the property type that best suits your needs.
TOWNHOUSES (AND FREE-STANDING HOMES)
Owning a Townhouse, or Brownstone, as some are called, is like owning a single family home. The owner receives title by deed and is the sole party responsible for paying taxes and building maintenance. Many people use the terms of Townhouse and Brownstone interchangeably, however, a Townhouse can be sheathed in red brick, limestone, brown sandstone, or wood, whereas a Brownstone is sheathed in brown sandstone.
A Town house is a multi-story dwelling (attached or detached) built close to the street and scaled similarly to surrounding houses. Manhattan has many types of townhouses.
These include Federal, Greek Revival, Gothic Revival, Italianate, and Second Empire styles from the 1800s. It also has Neo Grec, Romanesque, Renaissance Revival, and American Colonial Revival styles. Townhouses (and Freestanding Homes).
SINGLE-FAMILY OR MULTI-FAMILY TOWNHOUSE
A Townhouse buyer has two options – a single-family Townhouse or multi-family Townhouse. Deciding which to choose will depend upon the owner's needs for freedom and privacy, as the former would offer the most of each. Buying a multi-family, however, can make homeownership more affordable as an owner will collect rent from tenants.
PRIMARY FACTORS THAT IMPACT THE VALUE OF A TOWNHOUSE:
PROPERTY TAXES
The primary factors that provide value to a Townhouse are 1) whether or not there are existing rent-control tenants, 2) location, 3) the condition of the building, and 4) frontage, or width of the building.
RENT CONTROL
If you decide to go the multi-family route, remember that New York City has formidable citywide rent controls (or price controls) that may apply if there are six or more units in the building. It would be wise for a buyer to steer clear of buildings with rent control or rent-stabilized tenants in place since once the property transfers to the new owners, so do all the rent controls.
The new owner likely won't be able to evict tenants of the property if the owner decides to make a single-family home. Rent Control favors the tenant, so landlords must know these rules inside and out.
In searching for New York City townhouses, buyers should search for buildings with “Market Rate” or “Free Market” tenants. That is not to say that an investor should never purchase a property with rent control tenants. However, the investor must know that his freedom will be severely restricted by NYC rent control laws and, therefore, the value of the property will also likely be impaired if rent control tenants are in place.
LOCATION, LOCATION, LOCATION
New York City Townhouses are valued based on which block they are on. In addition, each block's configuration impacts value, since there is more perceived value in a block that has rows of uninterrupted Townhouses than a block with a large building smack-dab in the middle of the block that is interrupting continuity.
On both the Upper East Side and Upper West Side, the most expensive Townhouses are generally those blocks adjacent to in the 60s and 70s. On the Upper West Side, Townhouses that are on blocks adjacent to Riverside Park in the 70s and 80s are more expensive than those adjacent to Central Park in the 80s and 90s. On the Upper East Side, Townhouses on blocks adjacent to Park Avenue in the 60s, 70s, 80s and 90s are more expensive than the remaining Townhouses in the area.
CONDITION OF THE BUILDING
Most New York City Townhouses were built in the 19th Century, so they are the oldest buildings in the city. Accordingly, a buyer will have to decide how much renovation and reconfiguration that he or she is willing to make in getting the Townhouse in condition to meet the buyer's needs. While many Townhouses have been completely restored or renovated, many have not.
FRONTAGE
Generally, frontage, or width of the building, has a great impact on the value of a Townhouse. A buyer would pay much more for a 24-foot-wide Townhouse than for 15-foot-wide Townhouse, all things being equal, including the total square footage. If you want us to prepare a search of Townhouses for you, please go to our Tailored Search.
To recap, townhomes:
No Restrictions
Investor Friendly
Starting Prices are Much Higher than a Condop, Condo or Co op
TOWNHOUSES FOR SALE
Condo vs Townhouse
A townhouse refers to the style of construction. Townhouses usually have at least 2 stories and are connected to one another in a row. While it is like a house, where the owner owns the structure and the land, it is not free standing.
A townhouse shares one or more walls with other independently owned units. Maintenance costs for the home is determined by the community's homeowners association.
In contrast, a condo building is a building with separate unit owned by individual residents. Residents own and maintain the interior of their unit, but don't directly own the property on which the building sits. Condo owners have financial responsibilities such as monthly maintenance charges and property taxes, but they also benefit from the ability to sublet their units and personalize their living spaces.
The Return of the Single Family Mansion
Investors are buying up apartment buildings in NYC and converting them back into single-family homes. Manhattan townhouse NYC sales, in particular, are becoming increasingly popular. In the last three years more single to triple family units have been bought than in the previous three years combined.
But why is this happening? It appears that luxury real estate changing hands amongst wealthy investors is more profitable than dealing with smaller sales from the ordinary homeowner, who is buying property for completely different reasons.
Long-term buyers are finding it so difficult to find a single-family home in Manhattan that they are creating their own. Ironically, many of these townhouses were initially single-family homes to begin with. Now, townhouse owners are investing millions to renovate and re-build them back to their original layouts from their current multi-family state. This often involves redoing the plumbing, wiring and tearing out walls placed in after the fact.
Manhattan real estate agents estimate that the average complete townhouse in the Upper West Side costs approximately $10 million. Renovations to revert the building to its initial layout can set them back an additional $3 million to $5 million.
On the flip side, multi-family rentals are becoming more popular in the city. The post 2008 employment environment is still uncertain, meaning that more and more people are renting, sometimes with several other families.
It is not the ideal scenario for an owner. With every new member on the contract, the odds of rent being missed, or problems arising increases. In light of a tenuous rental market, the idea of renting out individual units in one's townhouse becomes less appealing, perhaps indicating why more owners are opting to convert multi-family townhouses into single dwellings, and catering exclusively to the luxury market in Manhattan, as opposed to the general population.
It is one thing to own a residence for your family to put down roots, and another to analyze the current status of the housing market in terms of the rental potential and ease of resale down the road. With multi-family rentals becoming more popular, it looks like the renovations to convert to a single-family home may be well worth the investment.
Conclusion
Now, hopefully, you'll now understand the difference between co op vs condo buildings, townhouse vs condo, as well as other type of properties available in NYC. If not and you want to delve deeper into the differences between a co op vs condo, reach out and we'll guide you through the pros and cons of each.
Selling Your Home
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