If you are debating between cooperatives (co-ops) and condominiums (condos), it is essential to understand that these distinct properties each come with their own set of pros and cons.
Here is everything you need to know about co-op vs. condo advantages and disadvantages so that you can better weigh your options to find the perfect home.
Responsibilities of Living in a Condo
Many people chose to live in a condo because this property offers residents major convenience.
The list of owner responsibilities is minimal compared to other properties, but here are a few standard expectations of condo residents:
- Adhering to HOA’s governing documents– As a member of HOA, condo residents must follow the rules and regulations that HOA mandates. These governing documents commonly contain rules dealing with matters such as leasing the units and altering the interior of units.
- Paying HOA dues– Condo residents enjoy convenient living because HOA manages most of the maintenance and upkeep of the external area of the building, including shared spaces. To fund the service provided to residents, all unit owners pay monthly or annual fees.
- Paying HOA assessments– Occasionally HOA will need to charge residents additional fees to cover for special projects or unforeseen expenses not covered by regular HOA fees.
- Insurance and taxes– Just like any property ownership, insurance and taxes are required.
For a closer look at condo responsibilities, check out the Illinois Department of Financial and Professional Development.
Responsibilities of Living in a Co-Op
When it comes to living in a co-op, tenants must follow all of the duties laid out in their proprietary lease.
Similarly to condo requirements, those living in co-ops are still responsible for abiding by the governing documents, as well as paying monthly fees and any additional assessments. However, instead of paying HOA, these fees go to the cooperative. The fees that each co-op resident pays is dependent on the number of shares that a person has in the company that owns the building.
Co-op residents are also responsible for paying taxes and providing insurance. However, they do not need to worry about covering title insurance because they are not purchasing ownership of the physical unit.
Pros and Cons of Condos vs. Co-Ops
Here is a quick look at the major pros and cons of living in condos and co-ops.
- Less extensive buying and selling process
- Less expensive HOA fees
- Leasing out or flipping property is generally allowed by HOA
- A better investment
- Many property listings on the market
- Higher owner turnover rate
- Higher entry costs
- Additional costs for title insurance
- Residents do not have a say in who lives in the building
- Low entry costs
- A better deal per square feet
- Residents often have a say in who moves in
- Long-term residents which promote close-knit communities
- Known for being well-managed
- Extensive and often long buying/selling process
- Higher monthly fee (these fees include property taxes)
- More difficult to obtain financing
- Do not make good investments (generally no leasing)
- Not as many co-op listings on the market
With more insight into condos vs. co-ops hopefully you can feel more confident in making the big decision! Keep in mind that an experienced broker can also help streamline this process.