Condo vs. Co-op: What’s the Difference?

If you’re a first-time renter in a big city looking into condos and co-ops as housing options beyond standard apartments, the condo vs. co-op question is likely at the forefront of your mind. Explore what each type of housing is and the key differences between these choices so you can find the best place to rent for your personal situation and preferences.

What is a condo?

A condo is owned by a single person who then can rent it out if they choose. Renting a condo gives you access to the apartment/condo itself, but you also get access to some of the shared community amenities. These can include a pool, event room, lounge, and on-site gym.

The condo owner must pay dues to a homeowners association, also known as the HOA or condo board. Residents elect members of the HOA. Then, the board enforces community rules and manages the upkeep of shared condo amenities. As a renter, you may have to pay those HOA fees yourself, though in some cases the owner may keep paying them.

What is a co-op?

The term “co-op” is short for housing “cooperative”, which is where owners get shares in a corporation instead of ownership to specific units. Someone who purchases a co-op share gets input into decisions related to the building (like decorating the rooftop or letting a new tenant move in). However, that means they also have to split the cost of most expenses — they’re a part-owner, after all. Co-ops also have boards that are either fully self-managed or managed by members elected among the residents.

The unique structure of co-ops has implications for potential renters. Because shareholders own the building and no one unit belongs to any individual, many co-ops don’t actually allow renters. While it’s possible to find a co-op building that allows renters in some cases, you might have to pay a big application fee and agree to set limits on lease lengths if you do rent. Technically, you’re subletting instead of renting outright as you’re renting a unit from the shareholder who has a lease on a particular space. You will have to follow the building’s rules as a renter, as well.

Condo vs. Co-op: What’s the difference?

Co-ops and condos have a few key differences. The big distinctions for renters lie in approvals, required payments, and rules.

1. Approval process

Co-ops get tricky fast when it comes to the approval process. (This is a big difference between renting an apartment or a condo, as well.) The co-op board needs to approve anyone purchasing shares, which often becomes a lengthy process as shareholders take on some financial responsibility for the entire building. That translates to a rigid approval process for potential renters.

Owners might still need board approval to move into a condo, but the process is, generally speaking, easier for condos than co-ops. The owner is responsible only for their own unit in a condo, so the board isn’t usually as concerned about every detail of someone’s financial situation. As a renter, that typically means you’ll deal only with the individual owner when renting a condo, which can lead to more willingness to compromise to finalize a rental agreement than you’d get from a co-op or even a standard apartment lease.

2. Required payments

The owner of a co-op must pay a maintenance fee, which is a monthly co-op fee. This comes on top of the cost of the shares. This fee usually covers:

• Underlying mortgage payments (the bulk of maintenance fees typically go here)
• Property taxes, divided among residents according to the number of shares each resident has
• Operating costs, which usually translates to utilities, amenities, and other maintenance fees

Co-op owners may also have to pay for a part of everything from building repairs to decor to special assessments, and that can include fixing something in a neighbor’s unit. Every shareholder has an interest in the whole building’s upkeep — and, by extension, paying for that upkeep.

Further, co-ops can issue additional maintenance fees to shareholders subletting their unit. So, for renters, these fees are usually reflected in the monthly rent. If fees change over the course of your lease, the shareholder you’re subletting from could try to pass those fees along to you by asking for higher rent if you’re looking to renew.

Condo owners also pay monthly fees, though condo fees break down differently than maintenance fees for co-ops. Condo owners usually pay for their individual:

• Property taxes
• Unit repairs
• Utilities

Then come condo monthly fees, called HOA fees or common charges. Those usually cover:

• Amenity upkeep
• Building operating costs
• Building repairs

That charge can also go up depending on a condo board’s decisions. In addition, special assessment charges can come into play for condo owners. For condo renters, this often means extra condo fees in addition to regular rent. You’ll want to verify before signing a lease whether or not the owner will pay their HOA fees or if that responsibility will fall to you.

3. Rules and regulations

Both co-ops and condos require everyone to follow rules that hold all residents accountable to fellow residents. However, you’ll find a few differences when it comes to who actually makes those rules.

A co-op owner essentially becomes part of the building’s management. If you’re living in a co-op, you’re subject to your unit’s underlying proprietary lease along with the cooperative building’s rules and regulations. That goes for unspoken rules, too, so try to get a sense of the culture of the building before signing, even as a renter.

As a part-owner of shared amenities, condo owners also get input into community matters, but the elected condo board gets a primary say in most decisions. Big decisions (say, installing a pool) usually require approval from all owners. The HOA will also create rules that govern life at the condo, such as groundskeeping rules. Again, for renters, that means making sure you’re aware of rules you’ll need to follow in the overall community if you decide to rent a condo.

The pros and cons of renting a condo or co-op

Renting a condo or co-op both offer unique advantages and disadvantages. It’s essential to understand these factors when deciding which option is better suited to your needs and preferences:

The pros of renting a condo:

1. Ownership experience: Renting a condo can provide a sense of homeownership without the long-term commitment. You can enjoy the amenities and lifestyle typically associated with condo living without the financial burden of purchasing.
2. Amenities: Condo complexes often offer a range of amenities, such as fitness centers, swimming pools, and communal spaces. These can enhance your quality of life and provide added convenience.
3. Maintenance and repairs: Condo landlords or property management companies typically handle exterior maintenance and common area repairs. This means you won’t have to worry about landscaping, roofing, or other common elements.
4. Privacy: Condos are often more private than apartments in larger buildings, as there are fewer neighbors and shared walls. You might experience less noise and disturbance.

The cons of renting a condo:

1. Monthly fees: Condo rentals may come with monthly maintenance fees. These fees cover common area upkeep but can increase your overall rental cost.
2. Less control: You’ll have less control over decisions affecting the property compared to owning a condo. You may not be able to make changes to the unit, and you’ll have to adhere to condo association rules.

The pros of renting a co-op:

1. Community and stability: Co-op buildings tend to have a strong sense of community and stability. Residents often stay for longer periods, providing a more stable living environment.
2. Lower costs: Monthly co-op fees can be lower than condo fees, as they often include utilities and property taxes. This can make co-op living more cost-effective.
3. Ownership benefits: Renting a co-op unit may offer some benefits associated with ownership, such as a say in the co-op’s management and maintenance. You can participate in decisions about the building and common areas.

The cons of renting a co-op:

1. Strict approval process: Co-op boards often have a stringent approval process for new residents. You may need to meet certain financial and personal criteria to rent a unit.
2. Limited resale value: Co-op units may have limited resale value, and you may not receive the same financial benefits as a condo when moving out.
3. Limited flexibility: Co-op living can be less flexible because of board approval requirements. You might encounter difficulties subletting or making changes to your unit.
4. Shared responsibility: Co-op tenants often share more significant responsibility for the building’s maintenance, which can translate to potential special assessments or higher participation in common area upkeep.

Is renting a co-op or condo right for you?

Deciding whether to rent a co-op or condo depends on various factors, and you should carefully assess your personal preferences, financial situation, and housing needs. Here’s a step-by-step guide to help you make an informed decision:

1. Budget and financial considerations:

• Review your budget: Determine how much you can comfortably afford to spend on rent, including any monthly maintenance or association fees. Co-ops and condos may have different fee structures.
• Compare costs: Compare the total cost of renting a co-op and a condo, taking into account rent, fees, and any additional expenses such as utilities, insurance, and property taxes.
• Assess your financial stability: Some co-op buildings may have stricter financial requirements for renters, so ensure you meet the criteria.

2. Housing needs and lifestyle:

• Consider your lifestyle: Think about your lifestyle, space requirements, and the amenities you desire. Each co-op or condo community may offer different features and lifestyle options.
• Evaluate the location: Assess the location of the co-op or condo, including its proximity to work, schools, public transportation, and essential services.
• Understand the community: Research the culture and sense of community in the co-op or condo. Some people prefer the stability and sense of belonging in co-ops, while others prefer the autonomy of condos.

3. Ownership vs. rental benefits:

• Determine your level of control: Consider how much control you want over the property. Condos often offer more control over your living space, while co-ops may involve more shared decision-making with the co-op board.
• Review the rental restrictions: Some condos and co-ops have restrictions on renting out units. Be sure to understand these restrictions, as they can affect your ability to lease your unit.

4. Resale value and long-term goals:

• Think about the future: If you plan to stay in the rental for the long term, consider the potential resale value of the co-op or condo unit. Condos often have better resale value compared to co-ops.
• Assess your mobility: If you anticipate relocating in the near future, a condo might be a more flexible option due to potentially lower resale restrictions.

5. Board approval and application process:

• Understand the approval process: Research the co-op or condo’s application process and board approval requirements for renters. Co-op boards can be particularly selective, and the application process may be more involved.

6. Maintenance and responsibility:

• Consider your willingness to participate in maintenance: In a co-op, renters may have to participate in common area maintenance and financial responsibilities. Determine if you’re comfortable with this level of involvement.

Ultimately, the right choice between renting a co-op or condo depends on your individual circumstances and preferences. Careful research and a clear understanding of the specific co-op or condo you’re considering are essential to making an informed decision.

Final thoughts

Understanding the differences between condos and co-ops will help you make the right decision for your future home. If you’re interested in renting a condo or co-op, check out thousands of available places for rent on Zumper.