Condominiums and Cooperatives

Real Estate Sales Representative SP98372516

In SW DC, Cooperative housing is commonplace.  Often slightly undervalued, and thought of as second rate, there are significant adavantages to owning and living in a Coop as compared to a Condominium.  

Let me start by saying most if not all Coop's have some sort of rules set up about Membership qualifications and restrictions on leasing out the unit.  So if a rental investment is the point of the purchase, these do not apply.  Usually an owner has to live in the unit for at least 2 years as a primary residence before the unit can be rented out, at which point a cap on rental term for life of ownership is typical as well. 

But if the purpose is to live in the Coop, then life is streamlined and easy going.  

- Though Coop fees are usually higher than Condo fees, they almost always include Master insurance policy, property taxes, and utilities.  The point is, its a bundle package.

-Maintenence is taken care of by the building managment, almost always at no charge.  As well as exterminator and security.  Because all owners own equal shares of stock in the company that is their building, any damages that occur from one unit to the other is covered by the master insurance policy.  Where as, if you own a condo and your bathtub leaks, you are responsible for any damage to any other units caused by the leak.  

-Because there is a much higher rate of owner occupancy, the common grounds tend to be more taken care of.  

-Coop Buildings can more easily take out a large loan for maintenence, and spread out the payments over many years, whereas a condo building would have to make a one time "special assessment" to each owner for say, a roof repair.


Yes there are problems with coops.  The restrictions and interviews to even buy one, the lack of lenders that work with coops, the rental restrictions, the typically lower resale value.  But there are some really wonderful coop buildings and communities that are great places to own and live, and significantly more bang for your buck. Contact me now for more information on coops in DC

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Comments (31)

Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Chris... as someone who grew up in New York City and sold real estate there, I'm very familiar with coops... and I much prefer them to condos. Fortunately, in NYC they are not considered "second class." In reality, the "best" buildings in NYC are typically cooperatives.

Dec 02, 2013 08:05 PM
Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Good Morning:  This is some great Info for all in the business,  keep up the good work and good luck with your business in 2014,  E

Dec 02, 2013 08:17 PM
Bill and MaryAnn Wagner
Wagner Real Estate Group - Ocean City, NJ
Jersey Shore and South Jersey Real Estate
Chris, Excellent explanation describing the differences between co-ops and condos.
Dec 02, 2013 08:35 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Chris, buying into a corporation has its advantages. Families need to know what they are getting into though.

Dec 02, 2013 09:54 PM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

I am not aware of any Co-ops in St. Louis but that is good information to know. 

Dec 02, 2013 10:17 PM
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

We do not have Co-ops here except in the farming industry.  Same concept though.  I can see some distinct advantages but for would have to be single family housing. And although I did spend time visiting in DC while my son worked for a US Senator this past year...I must say that there are way too many people for this old country boy.

Dec 02, 2013 10:51 PM
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Chris - thank you for the great explanation about the differences.  There are certainly advantages and disadvantages to both condos and co-ops.  There aren't many in my neck of the woods but I would think that financing is the most difficult.  HUD will not allow financing for co-ops as you described above which puts such restrictions on leasing (violates the CFRs).  Co-ops are the most interesting form of homeownership to me.

Dec 03, 2013 12:22 AM
Chris Heller
Washington, DC

WOW!!! thank you everybody for all the great responses.  I agree condos are made or broken by the tenants renting the absentee owned units.  

Dec 03, 2013 01:43 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

We have neither coops nor condominiums in this small town. Only a few apartment houses. Could be we old mountain folks want more space around us? 

I'm glad to live in the middle of 20 acres. 

Dec 03, 2013 01:58 AM
Chris Heller
Washington, DC

the country is nice too, thats why we city folk camp in Front Royal 2-3 times a year.  but then... right back to civilization, where you can hear your neighbors washing their dishes.

Dec 03, 2013 02:21 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I don't see a lot of coops.  One debate we have is the difference between a condo and a town home.  Legally in CA I do not think there is one.

Dec 03, 2013 02:22 AM
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY


Cooperative unit common charges are typically higher than those for condominiums due to the fact that most cooperative developments have "balloon" (also known as interest only or non-amortizing) mortgages - I would estimate that over 90% of the cooperative developments I've performed appraisals on in the NYC metro area had balloon mortgages.

Also, purchasing a cooperative unit differs from a condominium unit in the form of ownership - the owner of a condominium unit has a fee simple interest in real property.  The owner of a cooperative unit owns shares in a corporation and has a leasehold interest in their unit.  This form of ownership has some disadvantages; for example, it may be difficult or impossible for the owner of a cooperative unit to obtain a reverse mortgage.

I disagree that cooperatives are "undervalued" - the market determines their value.

Dec 03, 2013 04:10 AM
Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

Thanks Chris, I knew very little about this and have enjoyed the intro to coops and condos.

Dec 03, 2013 07:47 AM
Chris Heller
Washington, DC

Thank you for your comment Jesse and the clarification on differences in ownership between the two entities.  I will do more research on how many coops in DC actually do have a non amortizing loans.. Sometimes  those that do have these "balloon" loans pay them down and the very fees that made the unit so wonderfully affordable are now gone raising the actual value of the unit or property.  The ownership of a unit in a coop only comes into play as far as value if the whole building is sold to a developer for instance.  In which case everyone would get an equal share.

As far as undervalued, i mean because of lack of understanding and the knee jerk reaction to the thought of not owning the actual property itself.  But for quality of living, the prices can not be beat.  Certainly there are problems with all buildings of all kinds all over the world.  But we all have to live somewhere, and coops can be an affordable option.

Dec 03, 2013 11:38 AM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Informative post, so thanks for the summary of distinguishing the pros and cons about coops and condominiums.

Dec 03, 2013 03:59 PM
Debbie Baker
Premier Realty Associates - Los Angeles, CA
from the Hollywood Hills to Slauson

Los Angeles has very few coops.  Generally a coop will sell for half the price of a comparable condo.

Dec 05, 2013 02:03 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Chris thanks for the overview on coop's ! Most of us only deal in condo's and aren't all that familar. Are most buyers cash ? Does the coop offer any form of owner-like financing with large down payments ?

Dec 05, 2013 06:53 PM
Chris Heller
Washington, DC

Thank you Michael.  Because most coop owners are not investors, there are rarely all cash deals for coops.  coop ownership is funny because you own a share in stock of a company and not your actual unit. However the buying, owning and living process are very similar

Dec 05, 2013 07:55 PM
Tony Busanich
TD Bank - Freehold, NJ

Chris, Great post on the differences of the two, on the financing side a co-op a better deal as will. 

Dec 06, 2013 03:50 AM
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Chris, your informative article is helpful for all buyers considering a condo or coop. It's important to understand current fee structures and possible future fees.

Dec 06, 2013 06:10 AM