How to Buy Real Estate in New York
Choose Between a Co-op, Condo, or Cond-op
Most New York apartments – around 80% – are co-ops. Newly built buildings are usually condominiums. Condos are considered real property, while co-ops involve buying shares in a corporation that owns the building. There’s also a third type: cond-ops, which are co-ops governed by some condo rules.
Co-ops are generally less expensive than condos, but buying one requires Board approval.
Co-ops
Unique to New York, co-op ownership means you buy shares in a corporation that owns the building. Residents hold a proprietary lease allowing them to occupy their unit. Essentially, you are a shareholder or tenant rather than an outright owner.
Condos
New York condos function like condos anywhere else or like single-family homes. Buyers usually need Condo Board approval, though it is far less strict than a co-op Board. Rejections are rare, and if a buyer is rejected, the Board may be required to purchase the unit themselves.
Monthly Maintenance and Assessments
Condo owners pay common charges, which cover building maintenance and staff salaries, plus real estate taxes separately. Co-op owners pay a maintenance fee, collected by building management, which includes taxes.
Maintenance fees typically rise about 3% per year. Both condos and co-ops can levy assessments for major repairs or renovations, such as roof replacement, elevator upgrades, or lobby renovations.
Minimum Down Payment Requirements
- Condos: Usually require a 10% down payment.
- Co-ops: Minimum 20% down, often 25%, and in some high-end buildings on Park Avenue, even 40 – 50%.
Buyers must also maintain sufficient liquid assets – typically two years’ worth of maintenance fees—and meet a debt-to-income ratio of 25–29%. A strong credit score is also essential.
Board Approval Process
Old buildings require Board approval for both co-ops and condos. New developments or units purchased directly from the sponsor (developer) usually do not. Co-op Boards can reject buyers for any legal reason.
Condos Are Better for Investment
Condos are more flexible for rentals. Co-ops have strict restrictions: buyers must usually live in the unit for two years before renting, can rent for a maximum of two years, and must return to live in the unit afterward.
For more information about buying an apartment in NYC, call 212-706-8883.
