What Is A Co-Op
Buying a Fort Lee co-op is different than buying real estate. It helps if you understand what a co-op is.
Let’s start with defining real estate. Real estate is real property. It must be one of the following: a single family home, condominium, 1-4 family or land zoned for residential real estate.
A co-op is an enterprise. It’s a corporation. Because you’re buying part of a corporation, you’re buying shares of its stock. That’s not real property. Fort Lee co-ops are in the form of an apartment. Think of it this way – an apartment building is turned into a corporation with each apartment worth so many shares of stock.
As a result, you are buying the space inside the walls. You don’t own the building because the corporation (known as the Building Association) does. When you close on a co-op unit you receive a proprietary lease. If you buy real estate you get a deed.
Because a co-op unit is really shares of stock in the building, each owner pays their share of the building’s costs. This includes, among other things, the mortgage and property taxes.
Buying A Fort Lee Co-Op
Buying a Fort Lee Co-Op involves getting the Building Association’s approval. This is not publicly traded stock. It’s a private association. Because shareholders (apartment owners) are responsible for their portion of the mortgage and property taxes, qualifying to purchase is very different. If an owner fails to pay their monthly maintenance fee they can throw the building into default. As a result, Association requirements are rigorous.
A co-op buyer must, of course, qualify for a loan to buy the unit. Additionally extensive financial disclosures are required plus an interview by Association members. Typically you need at least a 25% down payment and prove a 4 to 1 ratio (income to all debt/expenses). Sometimes cash buyers are granted a lower ratio of 3 to 1. Each building sets its own rules and has its own entrance document package.
Positives and Negatives
Compare this to real estate. You can buy a residential property with as little as 3.5% down and you need far less income than 4 times your expenses. It’s also quicker to close on real estate. You don’t have to wait for an Association Board to review your document package, schedule an interview and then let you know if you’ve been approved.
While this sounds negative, you don’t have the risk of condominiums. Condominiums suffered terribly due to the Great Recession. Many faced unpaid maintenance fees and high numbers of short sales and foreclosures. This happened because it was so easy to get mortgages. As a result, many people purchased condos as investment property or with dangerous levels of income to debt. When the recession hit, they walked away from investment properties or stopped paying fees. Inflated bubble prices crashed resulting in condos worth less than their purchase cost.
In order to keep a condo complex solvent, fees were raised and/or assessments made to make up the difference. There was a lot of pain out there for some condo complexes. Because of the rigorous qualify standards of co-ops, this rarely happened if at all.
Fort Lee Co-Ops
Fort Lee has more co-op buildings than anywhere else in Bergen County. There are 16 high profile co-op buildings that immediately come to mind as well as a mini city of it’s own. Additionally there are many smaller rental buildings and garden apartments that are now co-operative associations.
You’ll find most high profile Fort Lee buildings to be co-ops. They have concierge doormen and monthly fees that include everything. My experience is that they’re well run beautiful buildings with great personalized services. They range from moderately expensive to high end.
While co-op maintenance fees are higher than what you’ll find in a condo, it makes sense. Remember that your portion of a building’s taxes and mortgage are included. As a result, you can write off part of the maintenance fee. This is usually around 40%. Co-ops, however, cost less than condos so your monthly nut is often nearly identical.
The view is everything too. People come to these buildings for NYC skyline views, great services and the convenience of location. However, western views can be gorgeous too as you can see the Ramapo Mountains. They have been and remain a very popular choice for residential clients.
Because Fort Lee is where the George Washington Bridge meets New Jersey, commuting is a big deal. Buses to New York City stop at these buildings so commuting is a breeze. If you’re thinking of living a lifestyle of convenience on top of NYC consider a Fort Lee co-op purchase. I can help you with this – call me if you’d like to investigate co-ops. I think you’ll be impressed.