Pros and Cons of Purchasing a Stock Cooperative

There are several advantages and disadvantage to purchasing a stock housing coop in California. Some of the advantages and disadvantages follow:

Pros to Acquiring a Stock Coop (Apartment Style)

  • Compared to a similar condominium, a co-op is substantially less costly per square foot to buy.
  • The owner occupancy rates are generally higher, making for a more stable community.
  • The rules for buying or renting a cooperative housing units are generally far more restrictive than for condominiums which tends to reduce the number of tenants in the community. Most boards have the right to interview prospective buyers and tenants and approve their qualifications, provided they don't engage in unlawful discrimination.

Cons to Acquiring a Stock Coop (Apartment Style)

  • The down payment requirements are generally 10% to 25% as opposed to condominiums where the down payment can be as low as 3.5% with FHA financing or 10% with conventional financing.
  • Obtaining financing is more difficult as there are a very limited number of lenders that make cooperative housing loans.
  • It is more difficult to rent your coop if that becomes necessary or desirable for the reasons stated above.
  • You may be required to sit through an interview by the board of directors and be approved.
  • Many coops have the right of first refusal to buy an owner's cooperative share before they can sell it to another person. This often makes the selling process more difficult.

San Diego HOA Management