Co-ops are kind of a polarizing phenomenon in NYC. When you’re on the outside, not fully grasping what it means to own a co-op, they can seem intimidating. It is only when you purchase or sell in one, that you can begin to understand the incredible potential they offer to enhance your life.
When I first started out as an agent in my mid 20s, I will admit co-ops were a source of trepidation for me. The whole process around selling in a co-op from its grandiose board packages, strict rules, selectiveness, to the money you need to buy in — made me feel like running the other way! But eventually, as I made more and more transactions in co-ops, I learned more about their purpose and how they work, and realized that they aren’t to be feared! No, in fact, they are one the best things about Manhattan — as long as they are approached and utilized the right way.
An Investment in Your Lifestyle and Home Value
A co-op is not meant to be bought, flipped or rented out as you may do so with other properties. No, a co-op isn’t such an investment in those terms or should be looked at in that way. No, rather it is an investment in your life! When you buy a co-op, first and foremost, you are buying a home that you intend to live in for some period of time, and for it to enhance your life and lifestyle. You shouldn’t buy a co-op with the intention of just flipping it and leaving or filling it with tenants. Buy it with the understanding that this will be an important asset and commitment that will add value to your life.
Joining a Community With the Same Objective
The concept of a community is a kind of a dying thing in today’s world. So, the way I see it, it’s nice to take advantage of one when you have the opportunity to, anyway. When you buy a co-op, you are not just buying a property, you are joining a community of people with the same goal — to enjoy their home and keep its value at the highest and best value possible, so other apartments in the building will be sold to other potential co-op owners who can also pay their bills and afford the same lifestyle. The reason why co-ops care about the amount of money buyers have after they close, is because this way they are able to hedge their bets against the possibility of them not being able to afford their mortgage and the building’s maintenance.
Show Me the Money!
This is where a lot of people’s fear comes into play. Many buyers are wary of showing their money to co-op boards, worried that they will end up overpaying once they prove they have the funds to afford more. This is one of the most common misconceptions that can keep people from considering co-ops altogether. But it couldn’t be farther from the truth! Showing money is how you will get into the co-op. Old money, new money — as long as it’s green, it’s good from the perspective of the co-op. Co-ops like the idea of their potential buyers being financially stable. This pressure to buy in and afford a co-op’s lifestyle is actually what helped NYC retain its property values, as compared to the rest of the country during the most recent economic crash. And it’s one of the reasons NYC continues to dominate in its property values today.
You’re Choosing Each Other
Think of purchasing a co-op as similar to rushing a sorority. You’re choosing them as much as they are choosing you. When you rush a sorority, you are looking for the right fit, maybe a nice house where you will have a fun, long-term experience — and well, they just want to make sure you’re not crazy, right? Same with buying a co-op! Don’t approach it from the standpoint of “will I or won’t I get in?” When you apply to a co-op board, you should be pretty confident that you will get in. If it feels like a gamble, walk away because you and your broker are probably making the wrong decision. I would say throughout my career, maybe 1% of all my transactions in co-ops, led to rejections that were surprises. Otherwise, it was always pretty clear whether the union was meant to be or not.
The Club Can Become More Cool, But You’re Already In
This is one of the best things about owning a co-op! Just like a club that you get into, it can get more cool and increase in its desirability over time, but if you already bought it, well then you’re already in, baby! In fact, as the value of a co-cop increases over time, it can become such a high-value and posh place that owners who had been able to get in before its appreciation in value may not even be able to get in now. But, no worries because once again, once you’re in, you’re in and they can’t kick you out!
Remember, just because you should purchase a co-cop with the intention of making it a home and living there for some period of time, you don’t necessarily have to stay there for life. You can of course still grow out of it and decide that you would like to move on to a new chapter of your life with a different property. But again, don’t buy it for just or a quick flip. Purchase a co-cp with the understanding that you are making a home and joining a community that will add to and enhance the value of your life, while helping maintain the value of your most important asset.
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