Co-ops and condos are frequently confused with each other because they are fairly similar concepts. However, some distinct differences keep them from being interchangeable. Before deciding on a co-op or condo, there are a few things homeowners need to know.
The Type of Property You Own Differs
In a co-op, you are not legally purchasing any real estate. Instead, you are buying a share in a corporation that owns the building, and then in return, you get a place to live. Co-op fees will include the cost of the mortgage itself. This can result in some differences for various tax and inheritance purposes. In a condo, you own the real estate itself. You are purchasing the condo unit itself, along with part of all the condo amenities.
Levels of Resident Involvement Aren’t the Same
Residents run both co-ops and condos, but the level of involvement changes quite a bit. In a co-op, residents are very involved. Every resident usually votes on decisions, and it takes quite a bit of effort to be approved by the co-op before purchasing the unit. Meanwhile, condos are a little more hands-off. They make it easier for new residents to join, and every owner does not have to get involved in every little decision. Those who like being part of the decision-making process may prefer a co-op, while those who want a more convenient home may prefer a condo.
There are Different Financial Considerations
Generally speaking, co-ops are more affordable than condos. This happens because co-ops tend to be small, historical buildings, while many condos may be luxury high rises. However, the lower overall purchase price of co-ops comes with some downsides. Co-ops tend to have slightly higher fees, and usually, they require a higher down payment.
They Tend to Have Separate Vibes
The differences in condos and co-ops result in a slightly different feel for each home type. Co-ops tend to have more interactions with neighbors and more rules in place for residents. People are more invested in the property and tend to stick around a while longer. Meanwhile, condos typically have a more impersonal feel and more relaxed rules.