Are Co-ops Good Investments

Okay let's get down to the nitty gritty of co-ops and whether they make good investments or not. If you're not aware, I specialize in co-op (click here to see my sales in a down market) sales in Brooklyn and I do all my deals from start to finish. This gives me the insight on what co-ops are all about and why buyers should consider them.


So let's not waste anymore time and get started with why co-ops may be a good investment for you:


Affordability
Co-ops are very affordable depending on location and the lowest interest rates in the last 40 years. This is the biggest opportunity in decades for those that earn $40,000 to 70,000. That means, in most states like New York, you may not earn enough to be in the higher end neighborhoods, but you can definitely look into buying into a cooperative building. Co-ops are great to use as stepping stones to get you in the real estate game so you can get equity in 3-4 years to move to that more expensive condo or home.


For Example, the below available large 2 bedroom co-op in Brooklyn, New York in the Old Mill Basin area is only $189,000, if you earn at least $60,000 with very little debt. DON'T CALL ME, THIS ONE IS SOLD! CLICK HERE FOR MORE OF MY CO-OPS IN BROOKLYN!



Click Here To See More Hot Co-op Deals In Brooklyn, NY


Easy LivingIf you're the type of person that works alot, you don't care to do home projects and don't have the finances to fix a roof, flood in the basement, fix the electrical and heating system then you may want to buy a co-op, it's easy living.


You can invest in real estate without all the time and money it takes to care for a home. With a co-op there is a management team in place that has staff to maintain the exterior of the property, heating, water, snow and garbage removal, painting and cleaning common areas and taking care of the amenities and certain issues in the actual unit.


So instead of buying a home and going to bed praying every night that nothing else will need fixing when you wake up, you can get a co-op and take it easy financially and emotionally.


Now Let's Talk Maintenance FeesThis is the biggest objection I get when it comes to maintenance is that it's too high or higher than condos. But buyers fail to realize all the things that maintenance includes, so your going to get alot of bang for your buck. Let's go through why co-op maintenance is higher than condo common charges.


- Maintenance fees usually include utilities such as gas, water, heat and some buildings include electricity (but your maintenance may increase in the summer due to air conditioners being used). When you buy a co-op you can use unlimited amounts of heat, gas and water. Unlike a condo you most likely will have to pay these items separately.


- Mainteance includes your property taxes which is much lower than taxes for a condo or home.


- Maintenance for the co-op is also tax deductible, sometimes up to 55%, at least in Brooklyn where I do real estaet.


- Maintenance increases every few years, not every year like an apartment. I know maintenance increases are scary but they only go up by 5% to 10%. Within the next increase you may have a better job or an increase in pay at your current job. Cooperatives need to charge the market rate for maintenance to keep a reserve in place for updates, repairs, to pay staff, etc.


So if you are considering a building that has much lower maintenance than most in the area you should look at the building carefullyto see if it's being maintained well because that means the reserve fund is being used in the right way. When you pay less you usually get less and if the maintenance is low now watch out for a huge incease when all the work has to be done.


- Safefy and Care
If you are a single person, single parent or senior then you may want to live in a cooperative with a high percentage of shareholders in a great location where people take pride and care in their surroundings. Also having perks like a doorman, security system, handicap accessible, a management staff available to resolve problems, laundry and storage on-site and amenities (gym, sitting areas, etc.) doesn't hurt either.


- Gain EquityCo-ops are a form of real estate just like a condo or home, the only thing is you will receive a stock certificate stating how many shares you own instead of getting a deed. But with a co-op you can sell anytime on your own or through a real estate company and you earn your equity.


For Example:
If you bought a two bedroom co-op in 2002 for $150,000 in Old Mill Basin, Brooklyn and today you need more space and you need to sell. Your unit has been updated and is in move in condition. Today in 2010, you owe say $130,000 on that two bedroom. In today's markey that co-op should appraise for approximately $195,000.
Here's the formula:(In today's market you have a buyer willing to pay $195,000)
minus ($110,000 your mortgage balance owed to the bank + other miscellaneous closing costs) = $65,000 or so in profits in the buyers pocket, give or take some co-op fees, lawyer fees and if any real estate fees.


*Click Here To See Affordable Co-ops In Great Areas In Brooklyn
The fact is, you will run into people that will give you every excuse why you shouldn't buy a co-op, but there is so much misinformation being passed along. You have to seek a professional that sells co-ops regularly and can knows the ins-and outs of the process and how they work. Think about it, there are so much more co-op buildings that have been in existence for years over condo buildings. That tells you that they are in demand for many of the reasons of above and it's a great way for those that are unable to afford a home and condo to invest in real estate.

**Do you think co-ops are good investments?