Renting a Co-Op Apartment: Is It a Good Idea for You? (2023)

Are you on the hunt for a new place to live? If so, you’ve likely noticed that you have various options. Leasing a studio apartment for yourself or a house with multiple roommates while splitting the bill is common, but have you considered cooperative — co-op — apartments? Learn about the ins and outs of renting a co-op apartment to determine whether it suits you.

What Is a Co-Op Apartment?

A co-op apartment is a unit in a residential property a housing cooperative — a co-op — owns. This corporation sells rights to a unit to qualified parties. A co-op may allow its members to buy and sell shares with or without price restrictions or sublet their units after living in them for a certain period. A co-op may also just be leasing the property and earning zero equity from it at all.

Each co-op apartment building is a community designed for a specific group of residents. The residents collectively govern the place since the landlord-tenant relationship doesn’t exist. The neighbors act as partners who vet aspiring members to determine whether they can benefit the community.

The difference between a “regular” apartment and a co-op apartment revolves around expenses. You contribute to utility bills, maintenance fees and other necessities alongside everyone else. If you rent a co-op apartment from its current owner, you’ll likely become responsible for those payments.

Why Do People Buy Co-Op Apartments?

Price is the primary motivator of co-op shareholders. 

A co-op apartment usually costs less per square foot than a condominium or rental. Owning a co-op share is an affordable way to have a roof above your head in expensive cities — like New York, where housing costs about 82% of the average American salary or $3,000 a month.

The common fees associated with co-ops tend to be higher than what condo associations generally charge for the upkeep of the property. Still, co-op can be the cheapest living arrangement in places with high costs of living.

Additionally, being an owner means having control over every rule and regulation you and your neighbors follow. This power allows shareholders to create their ideal environment. You may feel restricted by such authority as a renter. That said, you’ll at least know that you have a board where you can take concerns.

You’ll find that people generally buy into co-ops to join a community. The residents all contribute to a common goal to create a safe and comfortable place to live. As a result, you can enjoy a more communal experience when you rent a co-op apartment.

The Advantages of Renting a Co-Op Apartment

You’ll enjoy a few perks if you rent a co-op apartment. 

These benefits include better value, potential ownership and more. It’s often expensive to rent multiple apartments over several years in certain cities. Therefore, you can save money if you plan to stay in one location for an extended period.

Moreover, moving may be unnecessary. Buying rights to your apartment unit from its owner is possible once your lease ends. If you’re after a specific living experience, you may want to consider renting a co-op apartment.

The Downsides of Renting a Co-Op Apartment

There are some disadvantages to renting a co-op apartment. 

You have to endure a rigorous application process, which may include an interview and a background check. The board wants to ensure you’re a proper fit for the community.

You may have to meet demanding net worth and debt-to-income ratio requirements to prove you can shoulder the expenses a member must cover. Co-op partners are generally selective about new members because the rest must take up the slack if you default on your financial obligations.

Age can be a factor, too. Co-ops meant for senior citizens may disqualify young members, which is bad news if you’re far from living your golden years.

Once you’re in, you must adhere to established procedures like all other occupants. However, you have no say in them as a renter.

Specific rules may also apply to you. For example, the board may bar renters from staying for a particular amount of time, so read and understand your prospective co-op apartment’s sublease guidelines.

Should You Rent a Co-Op Apartment?

Renting a co-op apartment can be advantageous when its benefits align with your goals. 

Co-op living is perfect if you long for a sense of belongingness. Co-op properties are tightly knit communities, so you’ll get to connect with your neighbors deeply, and everyone will know your name, not just your face.

Renting a co-op apartment also offers tremendous value. Co-op housing is synonymous with sought-after amenities, beautiful finishes, quality appliances and well-maintained spaces. Regardless of how much you ultimately pay, expect to earn your keep.

The secret is finding a community that welcomes long-term renters to make the most of your higher-than-usual application fee. If you can buy the rights to the apartment unit from its owner, you’ll enjoy housing security and feel like a first-class occupant. 

On the other hand, you may be unfit for a co-op if you’re not a fan of following rigid rules and regulations. Co-op boards may sometimes not comply with the bylaws, and co-op landlords have a reputation for being overly strict, so it’s something to mull over. Not being on equal footing with shareholders also puts you at a disadvantage regarding policymaking.

Subletting doesn’t guarantee long-term housing. Aside from rental length limits, co-op members wanting to sell their rights to others when they move or cash out on their equity can force you to look for a new place to live. The new shareholder can refuse to sublet to you, bringing you back to square one when your lease expires.

Is Co-Op Living for You?

Co-ops are unique and present an enticing living arrangement to many people. However, renting a co-op apartment isn’t for everyone. If you haven’t leased a co-op unit before, you may experience some culture shock for good and bad. Contemplate your needs, decide on the compromises you can accept, and explore all your housing options to determine whether co-op living is for you.

Original Publish Date 11/26/2021 — Updated 11/15/2023