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Subject: Q for Tree or MITH or walk (or any New Yorker)
Posted by: rockafellerskank
- Dude [27652109] Sun, Jan 20, 2008, 21:04
What does it mean to "buy an apartment" in NYC?
I hear this term, but only related to NY. I never hear anyone in St. Louis "buy" an apartment, for example.
In Phoenix, you can "buy" a condo or a town home --- meaning you have a closing, get a mortgage, pay real estate taxes and have a deed. But, if you live in an apartment in Phoenix, you have a Landlord and pay rent and own no part of it; you sign a lease.
I'm curious what is the distinction in NY? Is it just a colloquial phrase that can be interchanged with I bought a condo / I bought an apartment?
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| 1 | CJ
Leader
ID: 499271021
Sun, Jan 20, 2008, 21:41
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From what I have read it seems buying a condo in NY is too expensive so people Buy an apartment (Purchasing a co-op) instead. Somehting to do with the Mortgage fees in NYC?
Here
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| 2 | Mattinglyinthehall
Leader
ID: 01629107
Mon, Jan 21, 2008, 01:49
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As far as I know a condo is a multi-unit residence where seperate apartments can be bought as property. You close on a condo and pay property tax on it like you would a house.
I believe suburban condos are typically two or three story row structures. That's what's tyical on Long Island, anyway. In NYC (and most other big cities, I imagine) many rental apartment buildings went condo and many areas were re-zoned so that owners of commercial buildings could get in on it.
Condos in NYC are very expensive. You'll be lucky to get much more than 500 square feet for half a million dollars. Note one ad boasts "Under $900 Per Sq.Ft.". At $545,000, that's a little more than 600 sqft.
Like CJ's link explains, cooperative apatments are a usually a cheaper option than condos. When you purchase a co-op apartment you're not buying property. You're buying shares in the building. The closing costs are usually much less expensive and you don't pay property tax. Unit owners pay a monthly maintanence fee. From CJ's link:Cooperatives are owned by a coalition that sells "shares" of the residence which entitle the "owners" to a long-term proprietary lease. The corporation itself pays the total building mortgage, real estate taxes, internal employee salaries and building maintenance. The owner/shareholder then pays a percentage of these expenses based upon the value of the shares owned. These shares are commonly dictated by the size and floor position of the apartment.
When you purchase a co-op apartment you are subject to the building's Board of Directors, which reserves the right to approve or reject a prospective buyer’s ownership. In turn, the Board is responsible for protecting the interests of all the shareholders, as well as maintenance of the building’s upkeep, service and security.
Upon purchasing a co-op apartment, you may be able to take advantage of numerous tax deductions, so request comprehensive material from the Board relative to the building’s tax structure. One frustrating thing for people starting out in NYC is that co-op boards often demand a 20% downpayment on the place. Co-ops are also a somewhat trickier investment as the building's financials are a factor in the value of the unit.
I just moved out of an 80 unit co-op building in Brooklyn (which is not as expensive as Manhattan) where I rented an apartment from the unit owner. Wasn't a very good experience, the process dragged on for weeks, during which I was stuck living at my previous residence beyond the end of the lease. We had to show tax returns and paystubs to the co-op board and meet with them in order to rent the place. Now we rent an apartment in a 190 unit condo building about 4 blocks away. I went for a two year lease and I'll consider buying the place when it's up.
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| 3 | rockafellerskank
Dude
ID: 27652109
Mon, Jan 21, 2008, 10:40
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Thanks.
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| 4 | walk
ID: 59027198
Mon, Jan 21, 2008, 10:50
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Sorry, I missed this question, rockafellaskank. MITh covered this very nicely. It's largely semantics that are confusing you, I think. In NYC, you can buy an apartment, if it's a non-rental building (choice of the owner of the building) just like the way you would buy a condo in Phoenix, with a mortgage, closing, etc. We refer to these units as apartments, generically. Apartments in NYC can be rentals, condos or the very common, and very NYC-centric (but found elsewhere, to a lesser degree), cooperatives.
Here's my lucky NYer story. The best investment, based on lucky timing, I have in my life. I quote-unquote, have bought an apartment (uh-er, actually two). Most people live in apartments in big metro cities like NYC, you can rent or buy, depending on the property. In NYC, apartments can be condominiums, which are equivalent in the process of purchasing to like buying a house, or cooperatives ("co-ops"), where you actually buy shares of the building which represent the living space that is your physical apartment. I have a co-op. Most apartments that are purchased in NYC are co-ops. It's a very NYC thing.
I am very lucky. My wife and I were married in 1995 and renting. We realized it made more sense to own than to rent, financially. Back then, real estate prices in NYC were at a low, and we could afford to buy, even a modest 2-bedroom (I paid in the low $200k). Just good timing for us. So, instead of renting, we bought a two-bedroom apartment. This was a co-op. Almost immediately, things started to appreciate. Within a few years, the value of our place doubled. By the early 2000s, tripled. We had so much equity, we bought the studio apt next door when it became available with a home equity loan and combined the two apartments. So, I have shares in two apts with one big living space. It was lottery level luck for me, and the combined place, a 3-bedroom with 3 full baths and a den/office, is worth...a lot. Whacky!
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