What does coop maintenance cover

A flip tax is a fee paid to the building when you sell. While flip taxes are sometimes found in condos, they're significantly more common in co-ops. If you plan on owning your apartment for a long time, it's a big positive. Every time someone else sells, that flip tax gets deposited into the building's bank account and as a shareholder, you partially own that account. All else equal, a building with a flip tax will have lower maintenance fees. Smaller Buyer Pool. Between their stringent financial requirements and foreign buyers restrictions, fewer buyers can qualify to purchase a co-op.

Fewer buyers means lower prices all else equal. Advantages of buying a co-op. Co-ops Cost Less. Because of all the reasons above, co-ops cost less than condos. This is without a doubt the 1 reason buyers end up choosing a co-op over a condo.

Lower Closing Costs. Closing costs are much lower on co-ops because personal property is being exchanged shares and the proprietary lease rather than real property. This allows co-op buyers to avoid the mortgage recording tax which only applies to real property. Want to lower closing costs ever further? Learn more here.

After you get into a co-op, the application process works in your favor. As part of their free wheeling allure, most condo applications do not include a background check while co-ops generally do.

As a result, you can be pretty sure your co-op neighbors are going to be squeaky clean. Co-ops often, maybe always, have financial requirements that more strict than the bank.

These elevated financial requirements are part of the reason NYC did not see a housing crisis as bad as the rest of the country in Co-ops basically did not allow banks to make aggressive loans. This is a significant positive as the last thing you want is a forced seller in your building.

When someone needs to sell, especially in a bad market, it will usually be at a low price. A forced sale can reset pricing for the entire building as the transaction will be part of the comps going forward. A co-op's maintenance fee combines property taxes and common charges into one monthly payment. This is contrary to a condo where you receive a separate bill for each. You own shares in a building and the entire building receives the property tax bill, not the individual owners.

At the end of each year, co-op owners get a form from the management company letting them know how much their share of the property taxes was. The common charges in maintenance go to everything required to run the building - paying the doormen, cleaning the hallways, taking out the garbage, etc. Maintenance can also cover planned capital improvements like painting the hallways or a new lobby. All co-ops have a reserve fund. You can think of this as the building's checking account and it's used to pay day to day expenses.

For example if the roof starts leaking, it would have to be fixed immediately and roofs aren't cheap. If there is not enough money in the reserve fund, most co-ops will implement an "assessment. An assessment usually has a specific reason - the roof in the example above - and a clear end date. Here's how to do it Brick Underground's guide to co-living spaces in NYC: How to tell the communal disruptors apart The 7 best ways to find a short-term rental while you renovate your NYC apartment NYC apartment leases with major concessions are coming up for renewal.

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As a reminder, when you buy in a condo building these fees are called common charges plus a separate property tax bill. When you buy a co-op , you are getting a share of a building. This means that you are going to be in charge of maintaining the building and paying its bills. This is where the fees come in. Co-op maintenance fees are meant to cover all the money-related aspects and labor aspects you may incur.

These include:. This all depends on the co-op, but most of them are determined by size. The larger the co-op, the more fees you will have to pay. Of course, they tend to be a little smaller than a typical co-op is.

Like most other things in life, co-op maintenance fee prices increase to keep up with inflation. This means that you should expect an annual increase. Most of the time, the increase is nominal and proportional to both inflation and the needs of the building. Some co-op communities may also choose to do special assessments to avoid the annual increase and still meet needs. If your co-op does special assessments, then fees will increase temporarily for bigger ticket projects. This keeps the price of maintenance down and helps prevent your fees from becoming too high.

Special assessments often happen between two to five times a year. As with most costs in your life, over time these expenses will generally grow with inflation. When auditing historical increases over time, one can look at units in the building on StreetEasy and determine the average annual increase over a long period of time.

Small consistent increases are generally viewed positively verus large changes. For most buildings, this means that your maintenance fee will increase by 2 to 5 percent each year. If your company does special assessments, then they will explain how your contribution will help a co-op goal and price the goal item accordingly. Some buildings avoid permanently increasing common charges by doing special assessments for larger capital projects. This will keep maintenance low and also potentially have beneficial tax implications by increasing your cost basis in the apartment versus normal maintenance will not.