Is A Co-Op A Bad Investment?

Co-op apartments are an option for real estate investors that many individuals have not considered. There is no solid answer to whether this is a good or bad investment as everyone’s financial situation differs. Taking the time to do the research on different types of income properties is a necessity. For one person a co-op could be a great investment but for another, it might not provide the income an individual is looking for.

Picking an apartment in the right area of a city can be a huge positive investment due to the rental income potential monthly. Finding an apartment at a reasonable price in an area that is up and coming can be a life-changer in the financial sense. Co-ops are when an investor becomes an owner of the entire property by purchasing from the company or individual that owns the apartment complex.

What To Know About Co-Op Apartments

Investing in a co-op can be immensely profitable depending on a variety of factors. These factors are listed below:

• There are restrictive natures of co-ops that prohibit certain tenants from living in a complex. These can be for safety reasons but it can reduce the overall rental number in an immense fashion.

• Co-op apartments do not have landlords so it is important to look into the company selling the apartments. A less than a quality company can be late with payments or allow renters with less than stellar backgrounds to rent apartments.

• There are different types of co-ops that impact the ability to sell shares in a specific company. The restrictions being very few can impact selling and the overall price of shares.

• There are going to be certain rules for larger co-ops that need to be researched. The last thing a person wants to do is invest in a property with an immense number of rules that could deter potential renters. Rules can be seen as a positive aspect as the last thing anyone wants is loud parties going on with no restrictions.

• The location of the investment needs to be considered. If it is in an area that is declining in property values then it is important to avoid this like the plague

• The amenities that the complex offers can be a larger cost but can generate more income in rental fees. An apartment complex without a pool can be seen as a huge negative in certain locations. Colder climates be a waste to heat a pool with the monthly fees that the tenants have to pay.

• Take the time to look at the property value trends in the area. You might find that you are in an area without a good school district which can impact property values in a negative way.

Costs Associated With A Co-Op

Purchasing any type of property is likely to come with some sort of a loan. This will not be like a traditional mortgage loan as you are investing in the company that runs the apartment complex. The residents will have to pay fees for the upkeep of the building and other repairs that need to be done. Most of the costs paid by tenants are done monthly in order to allow the co plex to do any repairs that are needed.

There can be a mortgage the company that owns the complex is still paying into. The fees are usually covered by different fees that the tenants incur which should keep coop insurance in mind as well. The mortgage on the complex will not impact your overall costs per month. Costs also include monthly utilities which can be included in the rent or can be paid separately. Taking the time to see if a co-op is right for you might take time but it is a decision that you should not rush!

This article does not necessarily reflect the opinions of the editors or management of EconoTimes