February 17, 2011
By Staff Reporter
When you purchase a co-op you are in fact purchasing a share in a cooperative. The boards are notoriously specific and require large amounts of financial and personal information. Letters of recommendation are a must and you must meet with the board face-to-face before approval.
The sting of co-op rejection is one that follows you — just ask anyone who’s been there. In what could be a good or bad thing, depending how thick your skin is, the New York City Council recently passed a bill that will force co-op boards to disclose why a rejection was made. On top of that, the board only have six weeks to act on an applicant — after six weeks and no decision, they are automatically approved. This should open the door to more people applying, not that the requirements will change.
This is a harder investment for a foreign buyer, as it would most likely not work as an investment, since co-op boards usually forbid subletting entirely, or at least for the first couple years of ownership.
Not only that, but all the face time you have to put in with the board would require near-constant travel.
On top of that, you can usually decorate as you choose, but most renovations will need to be approved by the board.
This board also manages the finances of the cooperative, which owns the building and is responsible for maintenance, insurance, taxes and other expenses. A monthly fee, paid by each member of the co-op, pays the building expenses. This fee is usually higher than the monthly common fee for a similar-sized condo. On top of this, they may not allow you to finance much of the home’s cost, meaning a large amount of cash up front is a must.
More expensive but less stressful would be the condominium option. They offer liberal ownership, and are usually favored by foreigners for the ease of subletting.