A broker dishes on why some buyers should go condo, while others should steer co-op

Nothing is easy when it comes to New York City real estate. So you want to buy an apartment, but what kind of apartment do you want? Co-op or condo?

The Dakota, 8 Spruce Street (Photo: David Shankbone/Wikimedia Commons, Jim Henderson/Wikimedia Commons)

In the simplest terms, a co-op is an apartment building thats owned by a corporation. To own a co-op apartment is to buy shares in the corporation, which gives you the right to live in a particular unit within the building. Co-ops are self-governed, often self-maintained and can consist of just a few apartments. A condo, on the other hand, is an individually owned apartment much like a single-family home. Condos are usually newer, larger buildings and come with access to common facilities such as rooftops, gyms or movie rooms.

Both co-ops and condos require board approval, hold regular board meetings and come with an ever-changing set of rules for living. Co-ops, however, tend to have a more tedious approval process. A co-op board can and will ask for the most intimate details—financial to familial. There will be a face-to-face interview, which may include pets, and applications can be denied for any reason. Condo boards, on the other hand, only have the right of first refusal, which means members can stop the sale by offering to buy the apartment on the same terms.

Co-ops make up about 75 percent of New Yorks real estate market, and they are generally in buildings built before the 1980s. The combination of older buildings and units, fewer amenities and the hassle of board approval mean they tend to be cheaper than condos. However, youll usually have to pony up 20 percent or more for a co-op down payment, while with condos you can sometimes get away with less.

Despite the financial differences between the two, it can often be hard for first-time buyers to decide which one is a better fit. To help clear the waters, Mukul Lalchandani, broker with The Modern Agent (themodernagent.com) weighs in on two prospective buyers and their best bet—co-op or condo. In todays market, Lalchandani says there is a shortage of good value condominiums; therefore we have been seeing a higher increase in sale prices for condominiums, especially new developments. On the other hand, for co-ops, there is a surplus of inventory, hence the lower asking price compared to condos.

Dan Nainan

Occupation:  Comedian

Income:  Between $150,000 and $390,000 per year

Price range for home. Up to $1,700,000

Planning to finance or buy in cash:  Finance

Down payment:  20%

Marital status. Single

Children:  No, but hoping to have them

Pets. Not yet, but would like to have a place that accepts dogs and cats

Area of Manhattan youd like to stay in:  Chelsea, Flatiron

Approximate size of space youre looking for:  1,000 to 1,500 square feet

Must-have new home feature:  Washer and dryer in the unit

Favorite way to relax at home:  Reading, playing musical instruments (all electric and silent with headphones)

How long do you plan on living here:  Indefinitely

Lalchandanis verdict for Nainan. Condominium

The reason: Nainans job as a comedian would worry most co-op boards, says Lalchandani. Thats not necessarily a steady income. He might want to entertain at home, and hes only planning on putting down a 20 percent deposit, he says. As well, a washer and dryer, which Nainan said was a must-have, is not common in co-ops. Since condos in New York City tend to be newer, most have washer/dryer units in the apartments. It also wouldnt be a problem if Nainan wanted to get a pet or rent out his condo, something that could be a problem in a co-op as many have pet restrictions and ban or limit rentals. In terms of budget, Dan can afford a nice two bedroom/two bathroom in a luxury building in Chelsea, Lalchandani said. It would probably be around 1,200 square feet with a washer and dryer and would probably be a midsized boutique condominium with a fulltime doorman, probably even with a fitness center/rooftop.