The Facts on Co-ops


Co-ops have been around since the mid-1400s in Europe. They were established to maintain the quality of the tenant and ‘like’ owners that wanted a selective group of people to live with. They have thrived throughout history with over 29,000 co-ops available in the U.S., with the most concentration in New York City, where housing is expensive and selective.

Chicago is more known for its condominiums than co-ops (a fairly new concept that began thriving in the 1960s ) with the conversion of apartment buildings. There was a condominium frenzy that occurred and has continued as new projects were launched by Chicago developers.

Co-ops actually existed before condominiums. There are a number of co-ops in the city that were built in the 1920s and early 1950s before the condo boom hit our town. Most of these co-ops were well-built as they were the only alternative to single family homes during this time. There are co-ops available at all price levels, from a couple hundred thousand dollars to over eight-million.

Co-ops are all different. Some require only 25 percent down (75 percent financing allowed), like at 1335 North Astor Street, and while others only allow 25-50 percent financing. There are a number of banks, Bank of New Lenox is one of them, which will finance a co-op.

The major difference between a co-op and a condo is an owner of a unit in a co-op owns shares in the corporation. They pay a percentage of the assessment and overhead of the building based on how many shares they have. Yet, the price of a unit is driven by the market and is sold like a co-op while real estate tax deductions on a co-op unit are allowed.

Co-ops also require a Thomas Report to determine if the buyer can afford the unit. This is because often the building can take back a unit if someone defaults on their assessments. Most also require both personal and business references and a Board interview. It sounds a bit daunting, but really if you can afford your unit, you should have no issues getting into most places, at least here in Chicago. Chicago co-ops are much less restrictive than New York.

The assessments at co-ops are similar to condominiums with a full time door staff and on-site engineer. But, again it depends on what floor you are on. Typically, the higher floors will cost more in assessments since most of these co-op buildings were built as high-rises, which by today’s standards are shadowed by the new high-rises that are much taller than in the past and blocking views. Look for the value in the lower floor apartments which will have lower assessments.

Lastly, most co-ops must be owner-occupied. Rentals are typically not allowed, so if you are looking for a straight investment property a co-op is not a good choice. But if you are seeking a community to live in with a stable population and quality lifestyle, consider a co-op.


About Terri Lee Ryan

Terri Lee Ryan is a former Chicago commercial real estate broker, marketing consultant and hotel developer. An avid writer, she is the author of Life Is One Big To-Do List. In “People, Places and Property” she dishes on leaders in real estate, new places in your neighborhood and deals being done in Chicago.