When deciding to purchase a second home, or “pied-a-terre” in New York City, it’s important to consider whether you want to purchase a condo or co-op. Each has its benefits and difficulties, but both are viable options for buyers looking to get a “foot on the ground” in NYC.
If budget is important to you, then you may want to go with a co-op, as condos are generally priced higher than similar co-op units. Co-ops also make up the bulk of available inventory in New York City (around 70% of all available units are co-ops), so if you decide to go with a condo your choices will be more limited. Should you choose to purchase a co-op, it’s important to check out the building rules before you even go to see the apartment, as many co-op boards are only willing to sell to full-time residents and will not even consider pieds-a-terre. A co-op in New York City cannot be purchased without approval of the board. The co-op board may also have rules about how you can use your apartment (i.e. no guests while you’re out of town, no tenants, etc).
While more expensive on a per foot basis than comparable co-ops and not as abundant in inventory, condos offer many attractive benefits. Perhaps the most important upside to purchasing a condo is the fact that no board approval is required, and condo rules are less restrictive than co-ops. Condos are more likely to allow you to loan your apartment to friends and family or rent it out when you’re not using it. Condos also have lower down payment requirements than co-ops, which makes them appealing to people with an acceptable income level but not a lot of liquid assets.
That said, there are exceptions. Some co-op boards are open and welcoming to pied-a-terre buyers. And it’s becoming more common for condos to adopt boards and more restrictive policies. With these points in mind, it’s important before any purchase to be certain of building policies and look at total monthly outlay in addition to up-front costs and make an informed decision that works for you.