In a city with more than eight million people, you will naturally find many different kinds of places to live. In New York, one of the most common decisions home hunters will need to make is whether they want to live in a condo or a co-op… or maybe something that is sort of in between.
The so-called “condop” is a housing option that is somewhat unique to New York City. As the name implies, the conop will have elements of both a condo and a co-op, though it can be a bit misleading when these sorts of residences are described as a “co-op with condo rules.”
Before choosing to buy or sell a condop in New York City, it is crucial to learn about everything that’s involved. Below, we will discuss the most important things to know about condops, including what they are, the pros, and the cons associated.
First of All, What the Heck is a “Condop”?
To understand what a condop is, you should first understand what a condo is and what a co-op is. According to the Washington Post, “A condo is a private residence in a multiunit structure that includes ownership of commonly used property”, while “A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit.”
One of the main differences is that while condo owners own the unit they are living it, co-op members do not own the specific unit, rather, they own a pre-established number of shares in the co-op itself.
In New York, a condop is typically a mixed-use building that includes retail or commercial space on the ground floor, along with one or more residential spaces on the upper floors. The commercial space and the residential space, though part of the same building, are governed by different rules.
In a condop, the ground floor is considered to be a condo, as in, the owner of the property owns the specific space itself. The upper space is a co-op, meaning it contains apartments for the residences who don’t own their specific units but do own shares within the organization.
Effectively, a condop creates a situation in which both condo rules and co-op rules will affect owners. These rules can vary, depending on what the board agrees upon, but will usually relate to monthly fees, the right to modify a living space, basic living standards, among others. Though the owner of the commercial space will often also be a resident of the co-op above, there are also plenty of condops across the city where the main commercial tenant lives elsewhere.
Though condops are the least common type of housing in New York City, they still make up about 5 percent of the housing market.
Benefits of Living in a Condop
One of the most obvious benefits of living in a condop is that it will usually cost less than living in a condo. Closing costs are also usually much lower than you’d find at a condo. Additionally, there is often some financial flexibility when it comes to purchasing the unit, meaning that you don’t necessarily need to have all of the money for your purchase upfront.
Furthermore, most condop owners will also have considerable subletting rights, which will give them more financial flexibility in the future. Owners can benefit from the appreciating aspect of owning property without the full levels of commitment that “traditional” condo ownership will require.
Condops are usually ideal for individuals and families that hope to have a moderate level of commitment (both money and time) and are okay with living in a mixed-use building. If you are considering starting a retail or commercial business that will require physical space, then acquiring the storefront in a condop while also living upstairs might be a great idea.
Drawbacks of Living in a Condop
As is the case with all real estate decisions, living in a condop will also have it share of drawbacks. Though space in a condop will usually be cheaper than it would in a traditional condo, it is still often more expensive than it would be in a standard co-op or, especially, an apartment complex.
Additionally, many people find the entire co-op concept—which certainly applies to those living in a condop—to be simply undesirable. Living in a co-op means that you will need to go through a board approval process and also follow the board’s rules, which can occasionally be rather restrictive. You will also be required to own shares of the corporation which—though these shares could be a great investment, they also carry with them responsibilities (voting, illiquidity, etc.) that you might not want to deal with.
The Bottom Line
As you can see, a condop blends the benefits and drawbacks of living in a co-op and living in a condo. In certain situations and depending on the state of the market, a condop can be a great investment—just make sure you fully understand what you are committing to.