Friday, May 1, 2015

Buyers Were Asking: Co-operative Housing


In this strong market, some people are turning to co-ops as an affordable home ownership option.  The key difference in co-ops and condos is the type of ownership.  

With co-operative ownership each owner retains a share of the asset and as such, this forms the partnership with all other owners.  There is a board of directors as is the case with condominium ownership, but, this board will also be the panel of ‘judges’ any shareholder wishing to become an owner must present himself before to secure approval BEFORE moving in.  

Another main difference to ownership is the method to secure financing.  Because this ownership involves partnership, a traditional bank mortgage will not be extended as the bank cannot become a shareholder.  Typical methods to finance are clear out cash or a line of credit backed by other assets.  The units are typically one to two bedroom apartments where each owner pays a fee for exterior maintenance and upkeep of the parking surfaces, lawns and garden areas, similar to a regular condominium.  

Just another alternative to look into. 

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