Every condominium community has an Airbnb horror story, even though the short-term holiday rentals are often strictly prohibited. Seeking a more peaceful place to co-exist with neighbors, more condo shoppers are taking a closer look at cooperative housing (coops). Many condo owners have avoided coops for their strict rules governing the security and the community.
In the era of social distancing, these coop restrictions are starting to look like attractive amenities. If you're considering investing in a coop, consider these pros and cons.
Condos vs Coops: Which One is Best for You?
Like condos, coops are multi-unit residential properties. Condos sell separate units to buyers. Coops sell one share in the shareholding company in exchange for a leasehold on one unit. Although condo boards are governed by unit owners and coop boards by shareholders, they both set resident obligations for:
- monthly property maintenance fees for common areas.
- the proportional share of expenses for repairs and upgrades of the common property.
Coop return on investment
Coops have higher capital appreciation potential. They:
- Are cheaper per square foot than condos.
- Have lower monthly coop fees.
- May be cheaper to finance through home loans versus mortgages.
Coop Rules on People Movement
Coops are known to more strictly control who moves into the community. In this way, they provide the advantages of a strict gated community. Stricter approval processes regarding the movement of people within the coop community govern:
- new residents seeking approval to become a shareholder
- roommate rentals
- short-term rentals, which in some cases are restricted even if you need to temporarily relocate for work. Renting to someone in the community may be allowed.
- If rentals are allowed, the percent of rentals allowed per building.
- Selling within a specified time of the purchase, to prevent flip sales
Under the stricter governance structure of coops, you can choose a community that upholds your standards of living. Leisure World Properties Seal Beach, for example, a community of almost 10,000 residents in California, has a minimum age limit of 55. The community welcomes residents approaching retirement rather than young families. Golf courses, full health facilities, a medical alert system, and lots of social clubs are some of the amenities enjoyed by residents.
An Airbnb holiday rental would have a hard time passing through the gates of a coop. For this reason, you may see fewer Leisure World property for sale, or coops generally, on the market. In search of peace and security, homeowners are willing to accept more restrictions in exchange for the more exclusive, gated community of coops.
