If you are considering investing in a co-op in NYC, you likely know that it is a big decision. Your research should start with figuring out the best questions to ask when buying a co-op. As with any real estate investment in NYC, it is essential to research the type of property you are purchasing before investing in a co-op.
New York co-ops are much different from a traditional apartment, condo, or home. They have unique rules, fees, and ownership frameworks to consider.
With an apartment, your purchase includes your space and an ownership share in the building’s common spaces. On the other hand, owners of co-ops are buying shares in a corporation that owns the co-op’s building. Owners of a co-op have a right to a proprietary lease for their apartment in the co-op.
While you will receive information about the building from your agent or broker, it is essential to ask the right questions. To help co-op buyers in their quest to purchase the perfect property, we created a list of important questions to ask when buying a co-op.
1. What Maintenance Needs Does the Property Have?
Unlike when you purchase a home, buying into a co-op (or any type of apartment for that matter) leaves you exposed to the costs of the entire building. If there are maintenance issues, costs can quickly add up. Whether it is the roof or the plumbing, you might end up with an unexpected bill when repairs are needed.
If you are planning on buying a co-op in New York City, be sure to ask about recent maintenance upgrades. Roofing, tiling, elevators, and a host of other property elements are important to consider when you ask these questions.
2. What Are the Monthly Maintenance Payments?
While it is essential to have a firm understanding of the most recent maintenance updates and repairs, you will likely have monthly maintenance fees to consider. This is one of the primary financial requirements to consider when buying an NYC co-op.
Make sure to ask about your maintenance obligations in the co-ops that you are touring. It is also essential to ask if the maintenance price has increased substantially over the past few years.
3. What is the Sublet Policy at the Cooperative?
Unlike when you buy land or a single-family home, you will likely need permission from your co-op board to rent your property to someone else. If you are planning on subletting in the future, be sure to ask about the board’s sublet rules.
Even if you’re not planning on subletting your unit soon, being able to lease your NYC co-op apartment can increase its value. Also, if your plans change, you do not want to be stuck with a unit in a building that does not allow leasing.
4. Is It Hard to Sell Apartments in the Co-Op Building?
In many cases, co-op boards will set the rules for selling apartments in the co-op buildings. If you are trying to sell an apartment in your co-op building, it needs to be easy for newcomers to complete a purchase.
Unfortunately, a co-op board might be interested in making it difficult to approve a buyer for your unit. Unlike with a condo, house, or land, you do not have sole discretion as a seller. Co-op units with strict selling policies are not very liquid assets.
There are legal measures in place to make selling units difficult in some co-op buildings. Understanding your building’s rules upfront is the best way to avoid unwanted surprises if you’re seeking a buyer in the future. Also, if it is easy to sell a co-op unit in your building, it could increase the price for the seller.
5. Is There a Flip Tax?
In some situations, a co-op board may impose a flip tax whenever you transact any real estate in the building. This is essentially a tax on the sale price of your unit in the building. The buyer sometimes pays this financial obligation, but in other cases, the seller may be responsible for covering the flip tax.
If you are adding up numbers and determining if you can afford your mortgage and other financial costs, be sure to factor in this flip tax.
6. What Is the Co-Op Board Interview Process?
After your broker finds you the perfect co-op and you get approval for a mortgage with a good interest rate, you may still need to jump through a few hurdles to buy your dream co-op apartment. One of the legal steps that you may need to undertake is a board interview.
This is intended to gauge your suitability for the co-op. One of the essential questions to ask when buying a co-op is: What is the interview process?
7. Are Pets Allowed?
If you are a pet owner in New York, NY, this is one of the most important questions on our list. Many co-op buildings do not allow buyers to own cats, dogs, and other pets. If you plan to bring a pet to your building, it is essential to ask if your board has any policies in place.
Alternatively, if you cannot stand animals, it might be best to ask your agent if there are NYC co-op buildings that ban pets.
Do Your Research Before Buying a Co-Op in NYC
Now that you understand the questions to ask when buying a co-op, you can use these topics to guide your research. It may be wise to speak to a real estate attorney for further clarification before any major investment. While the process of buying a co-op can seem daunting, there are plenty of excellent co-op investments available to those who take the time to do the necessary research.
If you’re ready to buy a co-op, consider Lincoln Towers, which offers modern and convenient condos in the thriving Lincoln Square neighborhood. Contact Adam Kapner today at 212-787-1214 to learn more.