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Weigh pluses and minuses of owning co-op

Dear Real Estate Adviser, I am looking to buy a co-op condo in Florida, but I am still not sure if this is the way to go. What do you think? -- Yvette

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--> Dear Real Estate Adviser, I am looking to buy a co-op condo in Florida, but I am still not sure if this is the way to goWhat do you think? -- YvetteDear Yvette, In this case, I'm pretty sure you're referring to a co-op (short for cooperative housing project) since there's really no such thing as a "co-op condo" combo.While co-ops and condos can be identical in look, size and function, their financial structures are totally differentUnlike condos, which are individually owned by buyers, a co-op is owned by a small corporationWhen you buy into a co-op, you're purchasing shares of that corporation that entitle you to an exclusive leasehold on your unitTypically, the larger the co-op unit, the more shares you own.Unlike condo owners, co-op resident shareholders pay monthly maintenance fees (which are tax-deductible) that cover their complex's upkeep and operating expenses such as real estate taxes, mortgage payments, heating and air conditioning, hot water, insurance and staff wagesWhen you buy a condo, on the other hand, you own real property and a deed, pay your property-tax bills directly to the city and pay a monthly common charge that's lower than a co-op maintenance chargeThat's because you're paying the mortgage directly to your lenderThe purchase of a condo is known as a "fee-simple" purchase. Share this story displayLikeBtnWText() (function () { var po = document.createElement('script'); po.type = 'text/javascript'; po.async = true; po.src = ''; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(po, s); })(); LinkedIn Delicious Reddit Stumbleupon Email story More On Co-Ops: Win over an HOA, condo or co-op board How does a condo differ from a co-op? Shares in a co op unaffected by the market Create a news alert for "real estate" Unlike a condo buy, in which a condo board may lightly weigh in on your desirability as a resident, a co-op board typically will thoroughly vet you with an extensive personal interview, background and employment-history checks and a detailed examination of your personal financesThat's because co-op buildings are operated more as collectives where everyone owns a piece and gets a say, in effectTypically, co-op neighbors are more community-minded and neighborly, say their owners, while condo owners tend to be more individualistic and investment-minded.Co-ops also tie your hands a little more because they're much harder to exitSome co-op boards even levy a "flip tax," should their occupant decide to sell his or her shares in a minimum period of, say, one or two yearsSubleasing is usually not allowed at co-opsThe trade-offs to these potentially inconvenient co-op rules are less speculation and price peaks/valleys than the more mercurial condos, plus resident stability -- desirable things if you plan to stick around for a whileCo-ops are also a bit cheaper per square foot than condos but offer fewer tax deductions.But there could be one big sticking point: Some banks, particularly in Florida, are still gun-shy about backing such non-fee-simple purchases after getting burned in the market crashUnlike New York City, where about three-quarters of for-sale multifamily units are co-ops, only about 10 percent of Florida units are.As you can see, your personal comfort zone and short- and long-term needs will dictate your choice, though it does sounds like you're sold on one specific co-op complexIf you can get preapproved for the necessary financing, ideally from a lender who understands co-op financing (ask co-op management for the most accommodating ones), and gain acceptance from that picky co-op board, it may suit your lifestyle objectives betterFirst, you may want to consult with your accountant or financial planner for advice on whether such a co-op best fits your fiscal profile.Good luck!Ask the adviserTo ask a question of the Real Estate Adviser, go to the "Ask the Experts" page and select "Buying, selling a home" as the topicRead more Real Estate Adviser columns and more stories about real estate.Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisionsThe content is broad in scope and does not consider your personal financial situationBankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategyPlease remember that your use of this website is governed by Bankrate's Terms of Use.advertisementRelated Links:Top 10 states for foreclosure: FebruaryCondo owner ambushed by shift to rental5 emotional mistakes made by homebuyersRelated Articles:Before you buy a homePick a real estate agentTop 10 states for foreclosure in February Steve McLinden, who writes Bankrate's Real Estate Adviser, has written about the industry for 20 years and is a correspondent for National Real Estate Investor and former real estate beat writer.'s editorial,

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