Village Real Estate SpecialistPatrick McNameeEvergreen Realty,
- Posted in Commonly Asked Questions About Laguna Woods/General Information
We have both types of homes in Laguna Woods Village, but very interestingly, they are many times the same floor plan! So you can buy a “Casa Linda” home as either a “Condo” or a “Co-op” but what are the differences in ownership? Good Question!
In Laguna Woods Village, a Co-op is not any easier or harder to sell than a Condo, it appreciates at the same rate as a Condo. You get the same benefits tax wise from ownership of either a Condo or a Co-op (i.e. – you can write off your mortgage interest and property taxes). You can even rent out a co-op year around, just like a condo. Now they are trying to encourage “home ownership” of the coops in Laguna Woods, so they do have a grace period before you can rent out your home full time, but rest assured, if you “break your hip” and have to go into assisted living, you can rent your home out year-around! So there really is no difference! Obviously, if you are an investor, you would want to purchase a condo since you can rent these properties out “year around” right from the get go! By the way, you can “will” a condo or a coop to your children after you pass away, you do not need to be 55+ in order to own a home in Laguna Woods Village, you just need to be 55+ TO LIVE in Laguna Woods Village. So that is not an issue either.
What exactly is a Co-op? The full term is ”Stock Cooperative” and they are a lot more popular back east where they have the brown stone buildings, in New York as an example. See the Diagram Below:
The problem came up in the early to mid 19th century, how can we sell the units in a building? Also, who owns the land underneath the building? So what they did, was come up with an idea where a Corporation buys the building and then each apartment in the building gets stock in the Corporation based on his/ her ownership share.
To make it simple, see the diagram above, if you have 4 apartments in the building, each apartment/ home would get 25% stock in the Corporation (4 x 25% = 100%) What you actually get when you purchase a Co-op is a Stock Certificate instead of a Deed of Trust. Rest assured, it is just as valuable as a Deed of Trust and you can even get a loan on them! Just like a Deed of Trust – getting financing is no problem! Now the interest rate on your coop loan will be 1/4% higher verses a condo loan, but for a $30 difference per month, does that really matter? In general, coops in Laguna Woods tend to be cheaper than condos, so this difference may make this interest rate issue a “wash.”
One final point, the HOA dues on a coop are only $566 per month and HOA dues on condos are $627 per month, so you do save $61 per month in HOA dues with a coop! Also, the association maintains the appliances with a coop which they do not do with a condo.
Feel free to contact me for further information about this! I will clue you in…