New York City First time home buyer and Investor MUST READ!

Real Estate Agent with Douglas Elliman Real Estate

This is Part 1 in a 5 part series focusing on what a first time buyer or investor should know before they purchase an apartment in New York City and the most common mistakes to avoid.

We will cover- Know What You Are Buying, Know Your Buying Power, Financial Report of the Building, Who is Managing the Building, Buying with your Head and your Heart, and more!

Understanding the Products: (Co-Ops, Condos, Condops, Townhouse)

Buying an apartment in New York City will be an exciting and also daunting experience.  Because New York City offers a unique buying experience with many of its own quirks and differences the first step for any New York City first time homebuyer or first time investor is to become well informed and educated about the different real estate products you will be looking at to ensure your experience will be as calm and rewarding as possible. 

1. Co-Op:

A phenomenon that's almost unique to Manhattan, the Co-Op Apartment, has been the traditional form of ownership in New York City for the last century.  About 80% of all apartments available for purchase are in co-operative buildings.  Co-ops are owned by an apartment corporation.  When you purchase within a co-op building, you're purchasing shares of the corporation that entitle you, as a shareholder, to a "proprietary lease."  The bigger your apartment, the more shares of the corporation you own. 



Standard Co-Op apartments:

Board approval is required. You are buying shares of corporation, you are required to put down 20% or more of down payment, there will be a full financial disclosure, debt to income ratio requirement and board interviewing process. Each Co-Op building has their own financial requirements and criteria, some are more flexible than others, such as allowing guarantor, co-purchase, gift money from parents, pied-a-terre, your debt to income ratio, work history, down payment required...

Subleasing a co-op can be difficult.  The board of directors will have to approve the prospective tenant subleasing your apartment.  Each building will have their own rules regarding for how long you can lease your unit and other criteria. 

All prospective purchasers must interview with the Board of Directors.  Prior to the interview, prospective purchasers  prepare a detailed "Board Package" which usually contains personal and professional letters of recommendation as well as a great deal of personal information concerning income and assets. 

Sponsor Co-Op apartments:

NO Board approval is required.  These are Apartments that are held as an investment by the sponsor , the original developer who built the building or converted the building to a co-op. Sponsor units command a premium because people who might not pass a board or don't want to go through a board approval process can buy them.

For example, a sponsor unit would be a good choice for parents who want to buy an apartment for a child who is a student. A sponsor unit may be the best apartment for someone who is not working, or only has a short job history. Buyers of a sponsor unit should take note that they will need to pay NY State and NY City transfer taxes, and often the seller's attorney fees.  You still have to submit a board package (Homeland Security! The management company needs to know who is moving into their building) and you almost always have to abide by the building's house rules as far as sublet requirements and pets.

2. Condominium:

Unlike Co-ops, you are buying Real Property. You hold title to your apartment unit plus a percentage of the entire project in common with all other owners.

Resale condo apartments:

These apartment units are previously owned.  The sellers are individual owners. There is still a monthly common charge similar to the maintenance charge in a co-operative.  These charges don't include your real estate taxes and are not tax deductible.  They also tend to be lower than in co-ops because there is no underlying mortgage for a condominium building. 

There is no board approval process like a co-op, typically you can finance up to 90% of the purchase price and sublet them at will.  Condominiums are the number one choice for flexibility.  Because there is more scarcity and flexibility owning a condominium there is a premium paid to own a condominium compared to buying a co-op apartment.

New Development Condo apartments:

These apartments are brand new construction or pre-construction. They are being sold by sales agents of the developer.  Buying into new construction has its perks such as being able to pick out the best apartment unit that suits your need, particular floor apartment, or apartment built to your specification if you get in early... Some of the disadvantage of new development would be, uncertain on closing date, not able to know exactly what the apartment looks like, the building management track record, and the possible higher closing cost than resale condo apartments.

3. Condop: Co-Op with Condo rules.

The special hybrid of a Co-Op and a Condo, the Cond-op.  When buying into a Cond-op, you are buying shares of corporation, as you would be if you were buying into a standard Co-Op, but the major difference is that the policy and the rules of the building will be Condominium rules.  These rules would be unlimited sublet policy, able to resale the apartment unit immediately with no board package and interview, investor friendly, a lot more flexibility.

4. Townhouses: 

Townhouses are sometimes bought as hey are non-uniform units in certain neighborhoods or streets in New York City that are designed to mimic detached or semi-detached homes. The distinction between dwellings called just "apartments" or "condos" is that these townhouses usually consist of multiple families, usually multiple floors. The price range of the townhouse is usually higher than single unit of condo or co-op apartments.

Which is Best for YOU??

That really depends on your specific situation and what your goals for purchasing are.  If you are looking to buy an investment property and rent it out immediately then a condo or condop would give you the most flexibility.  Are you a first time buyer who has fallen in love with prewar apartments with their high ceilings, fireplaces, ornate details, well then a co-op will probably be in your future.  Are you looking for privacy, a house in the city, more square footage than in a high rise, looking for an exclusive property, a townhouse might be a good option.  What type of property is best for you depends on your personal preferences, your financial situation, your long term goals, and many other important factors.   If you have just started thinking about purchasing it may be in your interest to contact a real estate agent for a free consultation regarding what type of property in New York City might be right for you.

This is part one in a series centered on first time buyers in New York City, our next post will focus on the next step in your process, KNOW YOUR BUYING POWER!

If you are first time homebuyer or investor and would like to receive more free reports and information about New York City go to

New York City First Time Home Buyer Series:

For more information, please contact Morgan Evans or call  917-837-8869 

Disclaimer: All information in this post is subject to change without notice. Subject matter: is an opinion, is not guaranteed, may be time sensitive, and may be based on information collected from several sources which may or may not be reliable at the time of sourcing.

Posted by


Morgan Evans is a Licensed Real Estate salesperson in Manhattan New York specialize in neighborhoods such as: Greenwich Village, Soho, Union Square, Upper East Side, Upper West Side, Chelsea, Midtown West, Midtown East, Nolita, Lower East side, Financial District in Manhattan. Morgan specialize in working with international buyer, high net worth buyers,  parents buying for children and investors buyers. Contact him today by calling (917)837-8869.
Dorchester Towers Condo


Comments (13)

Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Morgan This is a great local post which will be appreciated by those unfamiliar with the process.  Are you getting many foreign buyers?

Nov 21, 2008 12:55 PM
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY

Jennifer-We are still getting some foreign buyers, but not as many as we use to.

Nov 21, 2008 12:56 PM
Jean Powers
Kane & Associates call 510.908.9002 - Alameda, CA
CRS,e-PRO,HAFA,SFR Broker, Northern California

I love Manhattan. Although, I could never afford the prices.  Thank you for the information.

Nov 21, 2008 12:59 PM
Marie Meyer
Keller Williams Realty - Central Valley, NY
Orange County New York Realtor

Hi Morgan ... The Dakota!  What a wealth of info you have put together ... terrific!  Before moving to Orange County, I owned a co-op in Brooklyn Heights.  I bought it directly from the owner, a judge, so it was the simplest of purchases.  Selling it was another story ... the shares make it a more complex process in good old NYC.  Anyway, where co-ops are concerned, buyers/sellers need all the help they can get.

Nov 21, 2008 02:02 PM
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Always am interested in information about New York City and things going on there. Thanks for posting. All the best.

Nov 21, 2008 03:26 PM
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY

This is very useful information for someone who is not familiar with New York City market and is interested in buying. The variety of products and inventory can be often confusing. I think the 5 part series is a great idea!

Nov 22, 2008 12:06 AM
Laurie Mindnich
Centennial, CO

Great explanation for anyone looking for condos/co-ops/condops. You made it very clear- thanks!

Nov 23, 2008 12:44 PM
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY

Happy holidays to all. I think this is also key information for the brokerage community to get familiarize with. All the best. thank you!

Dec 11, 2008 03:09 PM
Svetlana Stolyarova
Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH
Local-n-Global Realty, Broker 216-548-4663

Excellent information! Very well structured and absolutely a-must read for any first time or foreign buyers.

Feb 15, 2009 02:26 AM

This was very helpful and well written.  Thanks!

Feb 18, 2009 09:38 AM
Deborah Sasser
Sasser Realtors - Beavercreek, OH
Realtor With A Reputation For Results!

Great Post!  It was interesting ready about the different, and confusing, types of ownership.  I love New York, but don't imagine that I could every afford to live there.  I look forward to more from your blog.

Feb 22, 2009 12:14 PM
Amy Bly
Great Impressions Home Staging/Interiors - Montville, NJ
Styling Homes for Selling and Staying

My sister-in-law an brother-in-law plan to start looking in Manhattan soon for an apartment. I'm going to see if I can copy this and send it to them -- great info. They have to sell their house in Fair Lawn, NJ first, though. 

Nov 12, 2010 05:35 AM
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY

Fantastic post about Condo vs Co-ops and different housing inventory Manhattan New York has to offer. Great job.

Sep 01, 2011 01:59 AM