Convo vs. Co-op in Washington, D.C. (I specify DC because other markets like NYC have many more co-ops and therefore they aren't as difficult to resell)
Condos: When you buy a condo, you are purchasing individual ownership of a specific unit, along with a shared ownership interest in the common areas of the building (like the lobby, gym, etc.). Your ownership is "fee simple," meaning you hold a deed for your unit, just like you would with a traditional house.
Co-ops: In a co-op, you do not own your individual unit outright. Instead, you purchase shares in a cooperative corporation that owns the entire building. These shares give you the right to occupy a specific unit in the building. Your ownership is not a deeded property interest but rather a share in the corporation.
Financial Considerations
Condos: Financing a condo is typically straightforward, similar to financing a single-family home. You get a mortgage, and your monthly payments go towards the loan, property taxes, and HOA fees.
Co-ops: Financing can be more complex for co-ops. Instead of a traditional mortgage, you might need a co-op loan. Additionally, the cooperative often has a blanket mortgage on the entire building (normally referred to as an underlying mortgage), which shareholders help pay through their monthly maintenance fees. These fees also cover property taxes and building maintenance.
For example, here is one coop that I toured recently: A Co-op fee showing $2188.00 Fee breakdown ($2188) is $939 (underlying mortgage payment on the $167,385.51), $406 for taxes, and $843 for the association fee.
Monthly Costs
Condos: Monthly costs generally include mortgage payments, property taxes, and HOA fees, which cover shared amenities and maintenance of common areas.
Co-ops: The monthly maintenance fee for co-ops typically covers your share of the building’s underlying mortgage (if it exists), property taxes, and building maintenance. These fees can be higher than condo fees because they bundle more costs together.
Rules and Board
Condos: Condo owners vote on matters related to the condominium complex, typically through a homeowner's association (HOA). Each unit owner has a say, often proportional to the size or value of their unit aka percentage interest.
Co-ops: In a co-op, the cooperative board, which is usually elected by the shareholders, makes decisions about the building. Because all residents are shareholders, they often have more control and say in how the building is managed. However, the board also has the power to approve or reject potential buyers, which is uncommon in condo associations. Additionally, co-ops tent to have stricter rules when it comes to allowing rentals and investor ownership.
Resale and Marketability in Washington, D.C.
Condos: Generally easier to sell, as they are more straightforward in ownership and financing. Condos are often preferred by buyers looking for a simpler transaction.
Co-ops: Selling a co-op can be more challenging because potential buyers must be approved by the co-op board, and the financing process is different. However, co-ops can offer a strong sense of community and are often more affordable upfront compared to condos.
Summary:
Condos offer individual ownership with simpler financing and resale, making them more appealing for those who want ownership similar to traditional real estate.
Co-ops involve shared ownership of the entire building with a more communal decision-making process and potentially lower upfront costs but can be more complex to finance and sell.
Comentarios