Is a co-op a better option for a 1st time home buyer?

Question

I currently rent and am tired of "throwing my money away" every month on my crappy little apartment. I'm looking to buy my first home and am trying to weigh all of my options. I have great credit and do not have any debts whatsoever (no car payment, credit card bills, etc), however I only make around $40k annually.

I've looked at regular condos and townhouses, but they all seem out of my price range at the moment. A decent one in my area sells for at least $200k. I've noticed that co-ops are much cheaper, but I don't know if I'm sold on the whole idea that I would own stock as opposed to an actual piece of property.

So my questions is: Is a co-op a good option for me or would you recommend that I stick with my crappy apartment a few more years, continue to save, and then try to BUY a condo/townhouse?

Answer 1

Co-ops are fine investments and good places to live but you have to check the co-op rules carefully before you buy. Some of the rules might make it difficult for you to sell. For example, my sister has a co-op and their rules say that, after owning the co-op for two years, you can sell it for "market price" and establish the price yourself, but if you sell it before 2 years, the co-op board sets the sales price at the price you paid plus the rate of inflation for however long you have been there. This is done to protect the co-op from property "flippers" who purchase property cheaply, make some repairs, and turn around to sell at a big markup. Anyway, this rule worked well for my sister--- she actually bought way below market from someone who was forced to sell in those first two years--- but worked against the people she bought from. So check the rules very carefully to make sure you can live with them.

In general it is a good way to go, though.

Answer 2

A co-op can be good in that as a shareholder it would take the project value divided by percentage ownership interest to lower your units value. On the minus side that can also be a detriment if the rules are overtly restrictive and other units aren't as nice. Read the rules carefully as in many co-op's the members must approve you. The real issue will be when you become a seller the best buyer might not get board approval. Co-op's are designed that way to help insure a standard of residents that might otherwise be a unwelcome addition to their building. They can leverage their discriminatory selection of new owners in a way that would violate the fair housing laws that apply to condo's or townhouses. I can never recommend renting when by doing such you are already buying a home for someone else. Should you decide to purchase a common wall home such as a condo or townhouse read their rules and try to purchase where there is a high owner occupied percentage.

Answer 3

When yo buy a CO-OP you are not really purchasing the property that you are living in...... You are purchasing shares in the co-op corporation. CO-OP's usually have very strict rules regarding whom they will give housing to regardless to if you can afford it or not. I personally would go for a condo. Do a little research between the two as condo's can be a little more expensive but you actually own the property.


Just something to think about.

Answer 4

I am in the situation as you. I live in NY where there are alot of co-ops for sale. Co-ops are much cheaper than condo's because you don't own real property. They still appreciate but not as quick as condos/townhouses do. My main concern with co-ops are that you have to get approved through a board and have to abide by the co-op rules such as making improvements, pets etc. If you plan to sell your buyers must be approved as well. My fiancee's uncle could not sell his co-op for two years because the buyers were not approved by the board. Also, you must take into consideration if there is a flip tax as well. I've heard about them being as high as 10%. Co-ops can be good if you have a good building with a lenient board but if not it can be a real nightmare if you have to sell quickly.

Answer 5

If after all of this advise, you decide not to opt in for a co-op, why don't you contact me and I'll see if we can get you approved for financing for a condo or townhouse. We may even be able to get you approved for a detached Single Family Residence if your income is high enough.

We have the ability to do 100% financing.

If you're interested, email me, or check out our website.

[e-mail]

http://aapexfund.com

Answer 6

Buying a co-op is an excellent idea! We don't have them in Georgia, but I learned about them in real estate school. Yes, you never own the home, but stocks are just as good. Think about it this way, you never really own your home until you pay it off, and even then the government will always get their share.

Answer 7

immediately is a brilliant time to purchase in case you propose on residing in the domicile for 5 years AND in case you do it precise. even nonetheless it is likewise the WORST time to purchase in case you fail to understand your interior of sight industry. customer's industry basically means that shoppers have greater capability and could get greater effective deals because there are greater sellers then shoppers. A broking could sell THAT domicile yet a customer can %. from thousands of residences. the 1st element you're able to do is flow talk with a number of banks and notice how sturdy your credit is, how lots domicile charge you could cope with to pay for, how possessing the domicile will impact your AFTER tax earnings, what components are utilising your interior of sight industry. Is the inhabitants starting to be? Are jobs starting to be? What furnish and demand themes do realtors see? What are the taxs interior of different neighborhoods the place the choose arises to stay? What are the colleges you or whoever buys the domicile from you do they desire their teenagers in? do you desire to be in a householders affiliation and function those further expenditures or no longer? What are the crime costs of the aspects you're observing? as quickly as you be attentive to those kinds of solutions then you certainly are arranged to start up observing guy or woman residences. do no longer basically start up observing residences and are available to a determination which you like the paint shade and fall in love with the 1st domicile you spot. procuring a house is between the biggest investments you will make on your existence so cope with it as such and spend WEEKS learning the interior of sight industry, then drill all the way down to neighborhoods, then look at guy or woman residences. i could PLAN on strolling via 50 residences till now questioning approximately putting an furnish in on ONE. definite, this could be your "domicile" even nonetheless it may additionally be an 'investment' so please do no longer %. it in line with how the vegetation in the front backyard look, or the way it somewhat is "staged", or how lots relaxing your infants could have playing in the pool. purchase a house based on the fee of return on the investment and allow the vegetation and pool be a unfastened bonus in line with clever making an investment. And constantly , constantly look on the numbers from an AFTER tax base. the main improtant individual to debate procuring a house with isn't the realtor, that's yet another call for "salesclerk" yet your accountant.