Co-op Vs Condo ??
Although this could be a tax or legal question, my question is centered around all advantages and disadvantages for using each.
My thought is to use a condominium if I want to sell each unit individually.
I'm not so sure if the sole modivation to setting up something is for property tax purposes while you hold and rent out your apartment building. In Iowa both condos and co-ops are eligible for the roll-backs. Does the assessed value for the building go up when a co-op is in place?
There are local movements to try to stop the ability for apartment building owners from simply converting a building into condos and saving up to approx 50% on the taxes! Co-ops are not popular around here and may provide my answer.[ Edited by myfrogger on Date 12/06/2003 ]
Before even considering a coop, I would make sure there would some kind of funding available for the units, should you choose coop route. Coop funding is very different for lenders than condominium and residential funding, and there is a very limited number of lenders who will do it, and even more limited areas in which they would do it in.
I will have trouble getting financing to buy the commercial apartment building if it is set up as a co-op?
I understand the potential difficulties if I were to sell each unit. This question is for apartment buildings that I want to hold as a long-term rental property.
Anyone else?
the usual route here in Calif. is to go the Condo route. You build out and upon completion you sell the Condos and the pre set financing is available to each buyer who can qualify. Almost like selling little houses.
the Coop route I only used when I have all financing in place and recorded. I then sell out the units and each person who buys the stock is entitled to possession of the unit. They then pay so much a month which pays all mortgages, etc.
I used Coop. Cause it was easier at the time. I was selling out to ex tenants who could not have qualified to own a dog house and then only if the doggy cosigned their loan. It worked
Of course three years latter when I came by to check one of the tenants now owned all the shares as he just bought them one by one as their owners needed small sums of money.
So my experiment of terminating Off Site Ownership failed. But I would try it again.
Cheers Lucius