A board of directors, elected by the tenant owners of the co-op (hyperlink to co-op definition in “Terms to Know”) will interview prospective owners and will “approve” or “reject” a candidate based on their specific interests and guidelines.
The amount of money that may be financed varies from one cooperative to the next.
Some cooperatives will require substantial down payments of around 20 to 50% of the purchase price of the apartment.
The Board of Directors must approve subleasing a co-op. Each corporation has its own rules and they should be reviewed if the potential owner wants to sublet.
One of the advantages of a co-op are the tax deductions for things such as monthly maintenance, real estate taxes, and portions shares of interest on the building’s mortgage.
An approval process is usually required and will include an application package with financial disclosure, but the overall requirements are not as rigorous as co-op boards. That said, a board meeting may be required to be approved. The approval process length in time can vary, but it is usually not as long as co-op approval processes.
The market, not a board of directors, governs financing a condominium purchase, so it is usually more flexible. Generally, a buy can finance up to 90% of the purchase price.
Sub-leasing is more flexible in a condominium, so they are often the better choice for an investment property.
Condos are usually the ideal choice for non-U.S. citizen or for those with assets held outside of the U.S. Most co-ops will not approve a candidate whose funds are not in the U.S.