Condo Vs. Co-Op: Definitions, Differences And FAQs

When you’re buying a house, you might notice that there are several housing styles to look at. Some housing styles and living arrangements are so similar it’s hard to tell them apart. Co-ops and condos are commonly conflated terms.

To provide some clarity, this article will take a look at how co-ops and condos differ so that you can find which option may suit you best.

Condo Vs. Co-Op Definitions

When comparing condos versus co-ops, the biggest difference is ownership of the property. A condo owner has full ownership and control of their unit, while a co-op grants a proprietary lease that allows an owner to live in the building in accordance with their shares.

What Is A Co-Op?

A co-op, short for cooperative housing, is an alternative housing option. What makes co-ops more unique than most other forms of homeownership is how they operate. Unlike simply buying a house that you’ll eventually come to own or renting out an apartment unit, co-op buildings are owned and maintained by a nonprofit corporation. Rather than owning an actual unit in a co-op building, each resident instead owns shares of the building, and the more shares you have, the larger your living space.

This way of living is most frequently found in big cities and metropolitan areas.

Co-ops split the costs of maintaining the building among its residents and typically have a board of directors to ensure a smooth-running community and make decisions on prospective buyers, renovations and common spaces.

What Is A Condo?

The more well-known condominium, or condo for short, is easy to get mixed up with a co-op, since both of these community home styles are buildings with common areas, tenants and some kind of residential association.

Where condos differ however, is in the fact they are indeed considered real estate. A condominium unit is owned by the resident and therefore, the homeowner reaps many of the same benefits as one does owning a house. A condo homeowner can permanently renovate and sell the property as they would a house or any other form of real estate.

Differences Between Condos And Co-Ops: Side-By-Side Comparison

Purchasing a condo grants you ownership of a unit within a multiunit building. By contrast, co-ops require that you purchase shares of an entire building in order to occupy a unit. Being a condo owner gives you full ownership and control of your unit, including renovations and the ability to sell, while a co-op only grants you a proprietary lease that allows you to live there in accordance with your shares in the building. However, ownership is not the only thing that separates these two living styles.

To give you a visual, we’ve created a comparison chart:

Similarities Between Co-Ops And Condos 

Just as there are differences between Co-Ops and Condos, there are similarities. For instance, residents of both housing styles live in separate units and share common areas. Both also typically have homeowners associations (HOAs), which are private organizations that oversee the management of some residential communities.

Pros And Cons Of Co-Ops Vs. Condos

Whether a co-op is right for you all depends on your personal circumstances and plans for homeownership. Let’s take a look at some of the things living in a co-op can offer you and some of the things it’s important to keep in mind:

Pros Of Co-Ops

• Affordable pricing: It can be hard to find affordable housing options, especially in big cities where the cost of living is higher than average. If you can’t afford to buy a condo but don’t want to lose your money to lofty rent payments, co-ops are a cheap option that can still earn you your money back in the long run. Remember, co-ops are not a for-profit corporation, so your money is going directly toward the upkeep of the building.
• Exclusivity: Unlike apartments or condos where you might not know anything about your neighbors, with a co-op you’ll have the peace of mind that everyone in your building has had to undergo the same rigorous screening and interviewing process that you have. In many co-op communities, your neighbors may share similar lifestyles or values to you.
• Less responsibility: Maintaining a home can be a lot of work, which is the tradeoff that a lot of apartment dwellers swear by. With a co-op, not only do you get a share of the corporation, but you also have the luxury very similar to that of a tenant-landlord dynamic. You won’t be personally responsible for common spaces and depending on the co-op, your building could work with a property management company to help with general upkeep and maintenance of the units.
• Tax deductions: Although co-ops don’t technically classify as real estate, co-op shareholders may still qualify for homeowner tax deductions, which can include real estate taxes. Depending on where you’re located, you may also be able to deduct interest on your loan for your share of the property, your share of the interest on the co-op building’s mortgage, and even certain maintenance fees. For better insight, it’s best to get in touch with a qualified tax professional.

Cons Of Co-Ops 

• No ownership/shared ownership: Unlike with condos or a house, you may miss out on some of the benefits that come with actually owning your own real estate. There may also be some risks involved should a co-op member happen to default – though it is on the rare side with the application process in place.
• Strict rules: Before entering into a co-op you should read all their rules and regulations and know them well. Things like pets, subletting, renovations and upgrades, curfews or use of common spaces should all be outlined in your lease. With co-ops, you’re entering into a community, not just an independent unit like you would with a condo, so it’s not unusual for there to be stricter rules in place than with a condo association.
• High monthly fees: Although co-ops typically have attractively low prices, their monthly expenses can be high – things like parking, utilities and other overhead costs are all shouldered by the shareholders.
• Difficulty financing: Most co-op associations have very strict rules regarding financing, and many won’t accept tenants depending on loan financing.
• Difficulty selling shares: It can also be difficult to sell off your shares – you may find an interested buyer, but they could always be rejected by the co-op’s board of directors.

Pros Of Condos

• Low maintenance: Similar to co-ops, many of the labor-intensive chores that come with homeownership – lawn care, cleaning out gutters, leaks or HVAC issues – should all be taken care of by the condo association.
• Amenities: Although you’ll have to pay association fees, many facilities within a condominium community could save you some money elsewhere. It’s not uncommon for condos to provide their residents with swimming pools, clubhouses, gyms or other recreational areas within walking distance.
• Security: If you’re someone who doesn’t like being alone in a house or if you spook easily, condos may be a great housing option for you. Some condo communities are gated to promote safety or may even have volunteer night watch teams or security professionals to keep their community safe. All condos however, do offer the peace of mind that there are plenty of neighbors nearby who can help in the case of an emergency.

Cons Of Condos

• Smaller size: If you have a large family or simply like a spacious home, most condos may not satisfy your needs. Since condos are all connected, you’ll rarely have the same tall ceilings or open-concept designs that you might find in a single-family home.
• HOA fees: While condos are relatively affordable, especially when compared with big city rent or a house, you should expect to shell out a couple hundred to maybe even a thousand dollars on a monthly or annual basis in homeowners association (HOA) fees.
• Difficulty financing and selling: Like a co-op, condos can also face some challenges when it comes to finding a lender to finance a condo, and likewise, selling a condo.

Co-Op Vs. Condos: FAQs

Still have questions about Co-Ops and Condos? A few more commonly asked are:

Is a co-op better than a condo?

It depends on your situation. Both have their respective pros and cons, so the answer is subjective. For instance, if you’re looking own a piece of real estate, a condo may be best for you.

Is it better to buy a condo or co-op in New York City?

There is no one-size-fits-all answer to this question, either. When you’re buying a house in New York City, it’s important to consider all factors, including location, cost, and upkeep requirements.

Which is a better investment: a condo or a co-op?

Again, it depends on your goals. If you’re looking to own a piece of real estate and call that asset your own, purchasing a condo might be best. If you’re looking for partial ownership of a shared community, co-op living might be best.

The Bottom Line

Although they have their similarities, there are some distinctions to be made when it comes to co-ops and condos. Depending on where you want to live and what kind of plans you have in store for your home – renovations, selling, subletting, or even just making friends with your neighbors – one might be better suited for you than the other.

Before taking the plunge with buying a condo or buying a co-op share, you should consider whether you want to buy in a suburb or city and do your research on the rules for each housing type in your area. Whatever choice you make, just be sure that it’s informed and best for you and your needs.

Get started on your home buying journey today by matching with an agent at Rocket Homes^SM.

Rocket Mortgage^® offers co-op loans only in select areas of New York state. If you're interested in financing a co-op, contact one of our Home Loan Experts for more information.