Halstead Property

Jill Sloane
Exec. Vice President
Westside Office
Tel: (212) 381-2206
jsloane@halstead.com

Freedom Resale Value Key In Condo Ownership

Condominiums make up most of the inventory on the market these days, but there is a lot to know before you buy one. NY1's Jill Scott filed the following report.

Michael Marino uses his one bedroom condominium as his office. He also owns a studio in the building that he rents out. But his home is actually in a co-op nearby. Having owned both, he says he likes the freedom a condo offers.

"My preference is for the condo because of the different options in terms of what you do with that piece of property. So it's a better investment over the long term. It's less about which is better or worse but what fits my needs as an investor more," said Marino.

The main difference between a condo and co-op is ownership. In a condo, the owner actually owns the space in which he lives, whereas in a co-op the owner owns shares in a corporation. Since most new developments are condominiums, there are now a lot of them on the market.

Jill Sloane of Halstead Property is Marino's broker and says there are pros and cons to condos.

First, as Marino said there is the freedom -- fewer restrictions on what you do with your space. Condos are also a little more liquid because approval is easier. Unlike in a co-op, the condo board rarely refuses a buyer.

Monthly fees in a condo are generally lower, but since it's full ownership, condos are usually more expensive and have higher closing costs.

"They are substantially higher that coop closing costs. For example, there is a mortgage tax if you are financing your condo purchase and that ranges from 1.8 -1.925 percent of the purchase price. That's very important to know," said Sloane.

If there's no tax abatement, taxes are usually a little higher too, but buyers will find that condos tend to allow for more financing.

"In the last many years you could put down 10 percent which made buying a condo very attractive. Right now, because the banks have changed the criteria and changed the rules and regulations, most banks want 30 percent down," said Sloane.

Michael Slattery of the Real Estate Board of New York says if you are buying in a new development, find out how much of the building is sold before you sign.

"Lenders are refusing to lend particularly in new condominium developments until perhaps 70 percent of those unit are under contract. Thats making it more difficult for sponsors to close units and thats delaying closings and putting some of those buildings in jeopardy," said Slattery.

Experts recommend evaluating all possible financing options to avoid placing your investment in jeopardy.

Friday, April 17, 2009