With vacancy rates so low, real estate agents find themselves showing more condo and co-op apartments, despite their notoriety for being much more difficult apartments to rent than rental buildings.
Renting an apartment in a co-op or condo has its pros and cons. You can usually find much better value for your money in a co-op or condo building because most people aren't willing to put up with the hassle and additional lead time needed to put together a board package and wait for it to be approved by a condo or co-op board. If you fall in love with a condo or co-op apartment, be prepared in advance that you WILL have to jump through extra hoops. That is why you are getting the apartment at a below market price.
In addition to the paperwork required for a normal rental building (often consists of an application, credit check, one month bank statements, letter of employment, landlord reference letter, and one year tax returns), board packages usually require reference letters for each prospective tenant, agreement about the "house rules," and forms, such as a Carbon Monoxide Agreement, will need to be notarized. Agents then have to type up the package, add dividers, xerox a number of copies and deliver to the building's management company. Some boards take 2 days to review a package but some boards may take 15 - 30 days to approve applicants.
Co-ops and condos charge "board fees" in addition to the rent, such as a "processing fee," "application fee," "move-in fee," "move-out fee," and more. Some of the fees are refundable, some are non-refundable. These fees can add up to $1,500 and even more, depending on the building. Some owners will absorb these costs into the rent for the apartment. Many owners will split the costs with the prospective tenants. Some owners will refuse to cover any of them. Carefully review the condo package requirements to make sure there aren't any extra fees that the owner "forgot" to mention.
It is important when negotiating the rental of a condo or co-op building that applicants review the lease and any attachments to the lease (called a "rider") put together by the owner. There is a clause in the standard condo lease that says that if the common charges or real estate taxes in the building increase, that these charges can be passed along to the tenant. Make sure the owner is willing to strike this clause from the lease. Last year, many co-ops and condos saw a 5 - 8% increase in costs due to increased fuel costs. If the owners common charges and real estate taxes are $1,000 a month, your rent could suddenly increase by $80 a month.
Many condo and co-op leases also do not have a renewal clause. Make sure that your lease comes with an option to renew if you plan on living there for more than one year. Some co-op buildings only allow sublets for 1, 2, or 3 years out of every 5. If you don't want to move out in a year, make sure the lease or rider grants you an option to stay longer.
Most importantly, make sure you have a good feeling about the owner of the apartment. Remember that the owner is probably an individual, not an investment group or management group, etc. They are likely not members of the Better Business Bureau. You could get lucky and have a great landlord who will respond to problems immediately, such as appliances that stop working due to normal wear and tear. Or, you might have an owner that never returns phone calls when there is a problem. Or, beter yet, you might have an owner who insists on inspecting the apartment at any time with little notice.
The moral of the story is: proceed with caution. You could get lucky. Or it could be a complete disaster. Go with your gut.
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