Prospective apartment buyers in NYC can be forgiven for feeling a little bewildered by the city’s unique property system. New Yorkers do it differently where apartments are concerned, and the various options available to investors can make the market hard to navigate. We at E&V have years of experience guiding our clients through every step of the buying process, matching them with the perfect type of apartment for their individual needs.
The most common type of apartment will be found in a co-operative building. These account for around 80% of apartments available for purchase in NYC and can be extremely popular among buyers. The high proportion they hold in the market ensures a great deal of choice as well as attractive prices, but they have certain idiosyncrasies that may not suit everyone.
When considering a co-op apartment, it is worth remembering that you won’t actually be buying real estate – you’ll be buying into a corporation whose only asset is property. By buying shares in the apartment corporation, you are entitled to a long-term property lease. Each corporation has its own rules about how much equity you are allowed to acquire, and some put restrictions on how much you can profit from sale of stock if you choose to sell.
When the first co-op was established on West 18th Street in 1876, it was designed to allow financially stable people the economies of home without the responsibilities. Modern co-ops also afford this sort of deal – the corporation is responsible for paying the building’s mortgage, taxes, staff wages and maintenance costs. The tenant-owner contributes to these costs according to the size and floor level of their apartment, which is proportional to the number of shares they own.
Happily, portions of what tenant-owners pay per month towards building costs are tax deductible. All co-ops offer advantages on taxes, and no tenant-owner is billed individually for their apartment. Certain co-ops offer grants and tax breaks, although these are usually more stringent in their equity limitations.
Board of Directors
In order to be permitted to buy shares in a co-op, you will need to go through a rigorous and often time consuming series of checks and interviews by a board of directors. Members of the board are elected by all tenant-owners and selected for their trustworthiness and suitability for the position. There’s no way around the board evaluation process – Madonna and President Richard Nixon had to go through it when applying for apartments, and both were rejected at one time or another. It can be frustrating, but it helps ensure the co-op’s financial and domestic harmony. If you get through this unscathed, most co-ops ask for a 20%-50% down payment on the purchase price, but this can vary.
Engel & Völkers has a proven track record of excellence in providing buyers with the expertise they need to make property buying in NYC as smooth a process as possible. For details of our co-op properties, visit the E&V website. The second part of this guide through the Manhattan apartment maze will deal with the second most popular type of apartment – the condominium.