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Condo vs. Co-op: Buying Into a Community

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By : Magellan Development    99 or more times read
A Community Lifestyle
Whether you buy a condo or co-op, you are buying into a lifestyle that includes a built-in community. You can be highly active in your home owners association or simply pay your fees each month, but you are still committed to the building or complex you choose to live in, simply by owning a home there. The type of shared ownership offered by condominium complexes and cooperative living buildings vary, but both of them bind you to the homeowners around you. This is the feature that makes condos and co-ops indistinguishable to many people.

Ownership Differences Between Condos and Co-ops
Although they both involve a level of shared ownership, owning a condo and owning a co-op are distinct.

When you buy a condo, you personally own and are responsible for the inside living area of that unit. The interior walls and fixtures all belong to you, and you are responsible for their maintenance and the expenses involved with their maintenance. The ownership of outer walls and features of your condo and complex, however, is shared between all of the residences. This means that the outdoor landscaping, general building maintenance, and maintenance of special features like a pool or outdoor paths are usually provided by professionals hired by the condo association and paid for by everyone. You cannot opt out of the general maintenance expenses because, technically, you own and are responsible for a part of these shared spaces.

When you buy a co-op, you actually are purchasing shares of the corporation that owns your building; you don't own your particular unit. However, the larger your unit is, the more shares of the corporation you own. Because of this kind of shared ownership, you are invested in the upkeep of your entire building when you buy your share of the co-op. Like owning a condo, owning a co-op means you can't opt out of the associated costs of the building.

Expenses of Buying a Condo or Co-op
The upfront expenses of buying a condo are usually more than buying a similar co-op per square foot; however, the monthly fees associated with living in a condo are usually lower. While the amount you spend on maintenance and repairs in your own condo is entirely up to you, allowing you to be as frugal or lavish as you please, the complex's maintenance and improvement fees are agreed upon by the condo association and divided among the residents. This gives you slightly more control over what you choose to spend on the upkeep of your condo, even though you are obligated to pay for costs agreed upon by the condo association, of which you will be a member. Some utilities are not included, and real estate taxes are never included in condo fees.

In a co-op, the entire building's maintenance is determined by the corporation or property management association, and divided monthly between the residents. Your monthly fees might be higher but they will include the following: building upkeep, real estate taxes, and payment of the underlying co-op loan. The co-op is responsible for providing for repairs to anything behind the walls that affects heating, plumbing or electrical, and pest control is covered. Often times all utilities are covered in the co-op fees as well. A large percentage of your co-op fees are tax deductible as well.

Buying, Selling and Leasing Your Condo or Co-op
Buying a condo is generally easier to do-- you do have to be approved by the condo association, but since the group commitment isn't quite as extensive, this approval is a fairly standard process. Likewise, down the road when you are selling, it might be easier to find a qualified buyer since the approval needed is fairly basic and about what you would expect for buying any property.

Buying a co-op is a little more difficult and might be harder for first time home buyers. The approval process is more in depth, since you are essentially buying a share of a corporation, and co-ops can be choosier about who they allow to live in the building. You must be approved by the co-op's Board of Directors, and to gain that approval, you might need to provide personal-background and personal-finance information, comprehensive employment history and background checks.

Subleasing or renting your condo or co-op, once you own it, might not be permitted at all. Usually if it is allowed, you will be more likely to rent a condo than a co-op. You will probably need to get approval from your association or board in either living situation, but condos are usually easier to rent, since the interior actually belongs to you and any damage caused to it is your responsibility to fix. If a co-op allows you to rent or sublease your unit, your renter will probably have to go through the same approval process that you did, which can make finding a qualified renter even tougher. If you plan to sublease your unit for part of the year or in the future, you may want to choose a condo over a co-op.
Magellan Development Group, L.L.C. is committed to creating premier urban communities that blend striking and innovative architecture with top quality construction. Designing communities of Chicago condos, apartments and parkhomes in prime locations, Magellan Development anticipates the needs and exceeds the expectations of valued residents and commercial clients.

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