Co-ops in NYC pros and cons? Do you still see a return?

Question

I love living in NYC. Most of the real-estate in my budget are co-ops.

Does anyone else live in a co-op in NYC on this site? What have been the pros and cons of investing in one? What are some things I should look out for? Is it case by case with the board to get approval for home repairs? Would love any guidance on this. Thanks!

Jason Lee · Answer

It's pretty typical.

Raul R. · Answer

Julie

I agree with  @Basit Siddiqi  challenges that he stated. I lived in 2 Coops in NYC & currently reside in one..

Although I'm aware people do rent their Co-op apt, remember every year boards change 1 year to the next the rules might be different on renting your apartment. I met someone that when they bought no board approval was required when finding new tenants, a couple of years later with a new Board in PLace board is required to interview all new tenants. Having the board interview the tenants may not be a bad thing but keep in mind it might take longer to get a tenant in place if you need to wait for a board decision. Not to mention all the red tape, moving rules, flip tax when you sell which are very common in NYC Coops.

Living in a Coop is fine as a Primary Residence, but if you want to invest & have a tenant I would be hesitant..

Julie Verardi · Answer

Question for everyone who lived in a co-op in NYC. I'm looking over the process to do repairs in the building. Is it normal for a board to charge processing fees to review your plans? Apparently this one board charges $1,000 processing fee for major remodel repairs, just to look at the plans. $500 for medium repairs and $200 for minor. I don't know that sounds insane to me but maybe this is typical?

Also is it typical for them to require a company to have million dollars in insurance?

Jason Lee · Answer

Does the board allow adding w/d in the unit? Most do not. Most co-ops have an alteration agreement that outlines all the rules and fees. Boards typically review all major alterations and have to give approval. If you're taking down walls, or doing extensive plumbing (like adding w/d) they might get the building architect or engineer involved. They also typically have minimum requirements for contractor's insurance. Though this is common in condos as well. They often limit work hours to M-F 9-4 with no work on major holidays, etc. And depending on the building you'd have to reserve an elevator to bring in appliances or millwork. All of this can add time and cost to the renovation that you wouldn't have to worry about in a house. GC's will charge more for working in the city... parking, parking tickets, the higher insurance, limited work hours, etc that all adds up and so you can expect to pay more than outside the city.

If the apartment needs updating then you can certainly add value by renovating the kitchen, or bath, or refinishing the floors, swapping out some finishes and fixtures, or even just painting. If you keep things neutral and tasteful it should hold up and add value for resale or sublet down the line. Just don't go overboard.

Julie Verardi · Answer

Is it extraordinarily expensive/ difficult to make upgrades in your unit in a co-op or is it the same as other places in the tri state area?

Steve Kontos · Answer

@Julie Verardi

Unfortunately it's not as easy as you think.  I have seen one of my friends become a member on the board and that helped jump start some much needed improvements to the overall building which that mixed in with his own improvements to his unit, brought the value up.  If you go the co-op route, I highly recommend going to one where the common charges are fairly low because if it's not you will have a tough time getting rid of it.

Julie Verardi · Answer

I want to live in it and over the next 3 - 5 years update the kitchen, add a washer dryer things like that. This current board doesn't seem to be too bad but still going through attorney review. I'm just trying to think how I can increase the value with me living in it and doing some updating.

Basit Siddiqi · Answer

@Julie VerardiThere are a couple challenges with investing in Co-ops in NYC.

1) The bylaws may forbid you to sublease or require you living in the property for a period before subleasing it.2) The Co-op may charge you a sub-lease fee in addition to monthly maintenance3) The co-op may require that they have to interview your tenant before they can move in.4) The co-op at anytime can require you to make a payment for any special assessments they plan to build upon.Pro is that the Co-op will take care of all exterior repairs like common areas, roofs, repairs.Co-ops are also cheaper than their condo counterparts.

Co-ops in NYC pros and cons? Do you still see a return?

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