New York Real Estate Property Types
Many clients have asked me questions about different types of real estate property in the United States. Since these are often asked questions, I decided to make a comprehensive summary of the major types of real estate property in the United States, especially in New York.
1. Condo, also known as Condominium. This is the type of real estate property purchased by most international buyers who come from outside of the United States, who have no U.S. green card or American citizenship, and who do not have U.S. local jobs and tax records. When you buy this type of real estate property, you own the property 100%. You get a Deed for your property, and you can rent it out with no limit. Almost all of New York's new developments for purchase are Condo. Many of them are still in the construction phase, and will being closed in the near future. These condos can be used as a primary residence or investment property.
2. C0-op, or Co-operative, is a jointly-owned and democratically-controlled building. The whole building is a company, and you are buying stock shares from the company. After you purchase a unit in the building, you do not get a Deed, but you will receive a Stock Certificate. The nature of co-op is like a private club, and you have to pass an interview to purchase an apartment in the building. If the people in the building do not like you, no matter how wealthy you may be, you may not get in. This type of property usually requires buyers to have 2-3 years of local tax records and employment history. So, it's almost impossible for a newcomer from outside of USA to purchase. Also, after you purchased your unit, you are required to use it as primary residence unless your co-op board allows pied-à-terre, and you must live there for 2-3 years before you can rent it out. There is also restrictions on renting the unit; usually for every 5 years, you can only rent it out for 2 or 3 years. The rest of the time you must live there yourself. That's why co-op is not an ideal property to purchase for internationals. The only advantage about a co-op is that the price of a co-op is more affordable than a condo, about 1/3 or even 1/2 less. But if you are international and want to purchase it as investment, don't think about it. There is only one type of co-op that you may invest in, called "Sponsor Unit" co-op, but this type of apartments are very rare, and you need to pay special attention to some aspects in the process. If you want to learn more, you are welcome to consult with me.
These 2 types of properties, require owners to pay property management fees, also called common charges or maintenance fees. Usually this type of property is easy to take care of, even if you are not living in New York. Your building super and handyman can take care of many things for you, and you don't need to worry about it.
3. Townhouse, a tall, narrow, traditional row house, generally having three or more floors. The picture above shows a townhouse. If you purchase this type of real estate property, you will own it 100%, and you will get a Deed. This type of property is also suitable for rental investment property, you can divide the whole townhouse and rent to several different tenants.
4. House, is what we usually see in the TV shows or movies of United States, most Americans live in this type of property. Most homes on Long Island are houses. In Manhattan, since the island has very limited land, a house is very rare. After you purchase this type of property, you also have your own property Deed. The picture above is a House.
The downside of owning Townhouse or House is that you have to physically maintain your own property, or hire a property management company to do things for you, such as mowing the lawn in the summer and shoveling the snow in the winter.