Renting a Co-Op Apartment: Is It a Good Idea for You? (Updated for 2025)

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.

Your apartment’s size usually dictates the number of shares you own, and all residents are considered shareholders. This collective ownership fosters a sense of community and shared responsibility among the people in the entire building.

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.

Co-Op Apartments vs. Other Residential Housing Types

What makes co-op apartments different from other types of housing? Here’s what you need to know:

1. Ownership

As mentioned, buying or renting a co-op apartment makes you a shareholder, not an owner. In a condominium, you own the unit, receive a deed and have a shared ownership interest in common areas. On the other hand, townhouses and duplexes are single-family homes and buildings sharing walls and common structure with neighbors, offering individual ownership of the dwelling. 

2. Governance

Co-op apartments usually have more control over who can buy and sell units. Since the corporation is a joint investment and buyers are considered shareholders, the co-op board members will conduct a thorough check on the applicant’s finances and credit check. They may also recommend letters of recommendation and an in-person interview. Condo associations focus more on enforcing and following rules, with less control over which ones could buy a unit.

3. Purchasing Process

Buying a co-op apartment can be more challenging. The co-op board has the absolute authority to approve or disapprove proposed purchasers, as long as their judgment doesn’t violate fair housing laws. It may also entail higher down payments compared to condos, duplexes and townhouses.

Co-Op Apartments vs. Housing Co-Ops

You may be wondering what’s the difference between co-op apartments and housing co-ops. A housing co-op is a situation where residents all own shares in a corporation that owns the establishment. It encompasses various physical structures, including apartment buildings. There are also student housing co-ops and senior housing co-ops designed specifically for their target markets.

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. 

Better Value and Potential Ownership

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. Once your lease ends, you can buy the rights to your apartment unit from its owner. If you’re after a specific living experience, you may want to consider renting a co-op apartment.

Shared Maintenance Costs

You will have a lesser financial burden since you’ll share maintenance fees to cover property taxes, staff salaries and other factors.

Peace of Mind

All tenants went through a rigorous screening process, potentially leading to a harmonious, stress-free living environment.

The Downsides of Renting a Co-Op Apartment

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

Rigorous Application and Approval Process

A standard application process 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.

Strict Rules

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.

Strict Subletting Guidelines

Many co-ops have stringent rules against subletting, which may be less suitable if you’re looking for investment properties. Tenants must be approved by the board, and shareholders may be required to pay a subletting fee. This can be a hurdle, whether you’re looking to buy or rent a co-op apartment.

How to Know If Co-Op Apartments Are Right for You?

Still on the fence about applying or renting a co-op apartment? Consider the following tips.

1. Assess Your Comfort Level

What do you feel about collective decision-making and adhering to potentially stringent rules set by a board of directors? How many of you are living in the apartment? Is there enough space for you and your family?

2. Financial Requirements

Most co-ops in New York City require a down payment of 20% to 25% of the purchase price, which may go up to 50% or more at higher-end establishments. Understand the down payment requirements, payment terms and estimated monthly fees.

3. Long-Term Goals

If your goal is building equity through standard real estate ownership or generating rental income, this may not be the right decision for you. However, if your goal is a stable, long-term residence with a focus on community and urban life, this may be a good option.

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