Anyone ever purchase a co-op?

I'm thinking of purchasing a co-op. The unit is in a nice complex that I'm very familiar with and know how well it's managed and maintained. I see the pros are the cost, and the fact that the co-op takes care of most of the maintenance, including plumbing, heating, hot water heater and even appliances. I pretty much just live there. I lost my shirt on my house so I'm gun shy about purchasing anything, but I can buy into a co-op and get a nice unit for less money than what I'm paying in rent. I'm not familiar with co-op's so I'm wondering if anyone owns one and could give me advice or some pros and cons.

I would ask to see the co-op's financial statement. They should have a hefty reserve fund, should be well insured and if they are planning any special assessments soon. A re-roof or parking lot replacement could be a big surprise to your wallet. You should also ask if the place is being sued.

I had a friend who bought into a condo only to later discover the condo president was suing the association over a slip and fall. A special assessment was tacked onto his dues six months after he moved in.

There are tax differences and legal differences between a condo and a co-op. I'm not sure how they work in Michigan, but in NY, a co-op actually owns your apartment and you own a share of the co-op which gives you a right to live there. There is usually a board that has to approve your membership. I would check with a real estate attorney to understand the differences before purchasing

I agree about the reserve fund and the fact that the Board and residents get to review all your info before you can be considered. In our case everyone was very responsible with confidentiality, as everyone has to go through the same thing. My mother lived at Casa Balcona, and she loved it. Everyone is encouraged to take a turn on the Board. The reserve fund is a huge consideration because massive repairs can come up as the building ages. The roof MUST be fixed, and if there is insufficient money to do so, the Board may vote a mortgage of the property, which cost will then be added to your monthly maintenance fee. At Casa Balcona, a six story building, the elevator went out, parts could not be found to repair it, and a new elevator was purchased. It took many months, while the residents climbed the stairs, which I am sure was very healthy for them, but very inconvenient, especially with the laundry in the basement. When the time came, it was difficult to sell, as many people really do not understand co-ops.

This realtor's page was very helpful to us both in purchase and in sale:

http://www.vasileffrealtydetroit.com/condo_vs_coop.htm

I have a good idea how a co-op is run. I know this complex very well because my family lived there a long time ago and I have friends who still live there. Back when my family lived there, it was run by HUD for low income families. About 15 years ago it converted to co-op. I know all the units have had new furnaces, windows, and siding. My biggest concern is getting out of the co-op if I wanted to. The cost to buy into one is less than some new cars so I guess I can't lose too much money. I'm finding the process to not be really too difficult. The credit check doesn't bother me. I had to pass a credit check to rent my current place.

Shollin,

Consider whether you are likely to get involved in the management of the co-op, or whether you more likely to pay your monthly assessments and not get involved in decision making.

If you join the co-op board, are you prepared for decision making by group consensus?

if you don't get involved, are you prepared to live with the board's decisions, like what gets repaired and what doesn't?

If the co-op board functions well now, this may not always be the case in the future. What would you do if the co-owners all expected others to run the place.

Resale cannot be predicted. It will depend on the economy, and on the fashionability of the place at the time you want to sell. With my mom's place, she bought in a stable market at a reasonable price. As the real estate bubble kept expanding, her dreams of profit expanded as well. When she moved, it was still an up market, but her building was not in a fashionable area, so she could not sell. As years went on, she stubbornly held to her profit dream, but the market fell out from under her. Gradually the area became somewhat fashionable again, and that continues to increase, for now. Her estate was pretty well drained and I was paying the monthly fees, which I could no longer do, and I let it go for just a few thousand more than she paid twenty years ago. The small profit did cover my expenses, most of them. That is the story of real estate and co-op living near downtown Detroit.

Hey Shollin, I have lived in a co-op in Detroit downtown since 1989 with the exception of two years,, If your looking at 1300?? [[ where I am at) I would say that if your getting the unit at a good price, its a pretty good deal, The place is pretty well run,, consistent, extremely safe, the people are nice and they are keeping the building nicely updated.. Most of the other co-ops in the area seem to be equally well run... Overall , its a pretty good experience, hassle free , safe and stable,, [[ which are often big complaints in Detroit)
We do have a special assessment on new elevators presently, which is the first time this has ever happened,, I personally like it big time, a great improvement to a good place. If you own a house [[ I also have one of those) your always blind sided by things so this is no shock . Look at the financial stability, its operation, the residents, its location,, even talk to some,,, Personally, I think its a great alternative if you want little work involvement.. Its allows you much more freedom.

i live in town-square co-op. prices can run the full gamet but even the highest will be lower than a house even in this economy. i bought mine in 2007 for 49k. the owner/realestate rep sets the price so you get to negotiate.
town square co-ops are like town houses so it is like a house. i have a garage, basement, and three bedrooms upstairs. very well keep grounds and safe.
dues are $667 a month which covers exterior maintenance [[snow removal, spring plantings, grass cutting), they even shovel up to my front door. inside, i only pay gas, electric and phone/cable. every other inside maintenance is covered along with appliances. my back yard is my responsibility so i can put in a deck, hot-tub etc.

Many coops require you to buy without a mortgage and own the property free and clear. This would mean coming up with a substantial amount to get into one. Because of this, it can also be hard to rid yourself of it should you be required to move.

The place i'm looking at are townhouses. They don't have a garage but i'm not interested in a garage. They're 1000 square feet plus a basement. Maintenance fee is 370 a month that includes all exterior maintenance, major interior maintenance like furnace, hot water heater, plumbing etc, plus it includes utilities like gas and water for 370 a month.

My concern is was when I owned my house in Harper Woods and the neighborhood nosedived. It took me awhile to get out and a lot of money lost. The price I'm looking to pay is about 20k or less. My loses couldn't be that big I guess.

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Originally Posted by DetroitPlanner

Many coops require you to buy without a mortgage and own the property free and clear. This would mean coming up with a substantial amount to get into one. Because of this, it can also be hard to rid yourself of it should you be required to move.

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This complex does allow financing.

actually alot of co-ops allow financing nowadays. mine does along a few i looked at before buying.
where is this $370 a month co-op?

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Originally Posted by Chinman

actually alot of co-ops allow financing nowadays. mine does along a few i looked at before buying.
where is this $370 a month co-op?

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Warren. It's 370 for a 2 bedroom and 390 I believe for a 3 bedroom.

There are lots of condos for sale in Warren for a price similar to this co-op [[less than some new cars). Only major difference is that you pay taxes separately, rather than through your monthly assessments. Some banks give loans for condos but not for co-ops.

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Originally Posted by 48202

There are lots of condos for sale in Warren for a price similar to this co-op [[less than some new cars). Only major difference is that you pay taxes separately, rather than through your monthly assessments. Some banks give loans for condos but not for co-ops.

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That's not the only major difference:

1. In a co-op you have to be approved for membership by the Board or members of the co-op. This is NOT true in a condo. As long as you can get a mortgage, you can buy the condo.

2. In a co-op some maintenance is taken care of for you, but the amount varies from co-op to co-op, so you might want to check on this. In a condo any maintenance to the unit itself is the responsiblity of the owner, plus you pay a condo fee for maintaining the common areas and grounds.

3. In a co-op, the property taxes are part of your monthly housing charges. In a condo, I believe the property taxes for your individual unit are paid by the owner, but property taxes for the common areas are part of the monthly condo fee.

4. In a co-op, if you have a neighbor who is a trouble maker or does not follow the rules and regulations, the co-op Board can evict them. In a condo, there is nothing the association can do other than fine the owner.

5. In a co-op, you never own the unit or home you are living in. You own a share of the corporation that owns the entire development. In a condo, you own the unit or home.

6. It is true that financing is available, but only if the co-op is what is called "market rate". If the property is still subsidized by the goverment [[as most were when they were built) it will be difficult to find financing. Most co-ops were built in the late 60's or early 70's and therefore have paid off their mortgages and are no longer subsidized by the government...but not all.

There are many well established co-ops around. You might want to check with the Midwest Association of Housing Cooperatives in Taylor, Michigan to get input on a cooperative you might choose.

For full disclosure purposes, I lived in a suburban co-op for 30 years and served on it's Board of Directors for most of that time. Also served on the MAHC Board for 12 years.

Hope this helps...

The co-op is market rate. They were originally built in 1964. Financing is available. I've already been pre-approved for a loan for one. I already know what maintenance is covered. All exterior plus furnace, hot water heater, plumbing is included.

Good research, Shollin. I think you're making a good decision. Best of Luck!

I owned an apartment at the RiverHouse on E. Jefferson for 15 years. I sold it in 2010 and moved to MidTown. I purchased it as is from the co-op at market value . When I sold it I set the price and got twice what I paid plus extra for some of the renovations I had done when I lived there. The person who bought it had to be approved by the Board after a long process which included bank, credit, and criminal check. It's a nice place in a good location next to the Berry sub-division and right on the river. The neighborhood on the other side of Jefferson leaves a lot to be desired except for the three Indian Village streets from the River to Mack. The association fee was $430.00 which included all utilities, taxes, and most maintenance. It's very secure with 24 hour guards and completely gated. You can get an apartment there pretty cheap but you would probably have to do some work. But the monthly fee is based on sq. footage not value.

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Originally Posted by MidTownMs

I owned an apartment at the RiverHouse on E. Jefferson for 15 years. I sold it in 2010 and moved to MidTown. I purchased it as is from the co-op at market value . When I sold it I set the price and got twice what I paid plus extra for some of the renovations I had done when I lived there. The person who bought it had to be approved by the Board after a long process which included bank, credit, and criminal check. It's a nice place in a good location next to the Berry sub-division and right on the river. The neighborhood on the other side of Jefferson leaves a lot to be desired except for the three Indian Village streets from the River to Mack. The association fee was $430.00 which included all utilities, taxes, and most maintenance. It's very secure with 24 hour guards and completely gated. You can get an apartment there pretty cheap but you would probably have to do some work. But the monthly fee is based on sq. footage not value.

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Why did you move to Midtown, after being in an obviously nice, secure place? Just curious.

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Originally Posted by Marsha Music

Why did you move to Midtown, after being in an obviously nice, secure place? Just curious.

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After 15 years I wanted a change and I could see what was happening in Midtown and I wanted to be a part of it. The area was much safer than where the Riverhouse is located and when I had an opprotunity to sell my apartment I took it. I moved to Albuquerque, NM last April when I retired. I just read an article on CNN's website listing the top 25 cities to retire to and Albuquerque was number 1.

After 15 years I wanted a change and I could see what was happening in Midtown and I wanted to be a part of it. The area was much safer than where the Riverhouse is located and when I had an opporutnity to sell my apartment I took it. I moved to Albuquerque, NM last April when I retired. I just read an article on CNN's website listing the top 25 cities to retire to and Albuquerque was number 1.

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Originally Posted by MidTownMs

After 15 years I wanted a change and I could see what was happening in Midtown and I wanted to be a part of it. The area was much safer than where the Riverhouse is located and when I had an opporutnity to sell my apartment I took it. I moved to Albuquerque, NM last April when I retired. I just read an article on CNN's website listing the top 25 cities to retire to and Albuquerque was number 1.

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Not only that, but when the breeze blows across the sage prairie, it smells nice. A lot better then the incinerator.