Caught in the maze of buying an apartment in New York.City? The rules are different in New York City than in other parts of the country! For the inexperienced some of the differences may be perplexing, however, we can guarantee that if you do your homework and keep this guide handy, the process will flow much more smoothly. Our job at Douglas Elliman is to help you determine which type of apartment is suitable for you, to assist in neighborhood selection, to educate you regarding real estate prices, and to pair you with the agent that best matches your style and preferences.
New York is a city comprised mainly of cooperative and condominium apartments with a smaller selection of private homes, which we call townhouses or brownstones. Most important is understanding the differences between the types of apartments you will find in Manhattan.

Co-operative Buildings


Cooperatives are not a new concept, although they seem to be a type of ownership that is more common in New York City than elsewhere in the United States. In New York City, approximately 80% of our apartments available for purchase are in cooperative buildings, while 20% are in condominiums. This means two very simple things to potential buyers in New York City:

1. There is more inventory to choose from if the buyer includes co-ops into the mix of properties, and
2. Prices are, in general, more attractive for cooperatives - simple supply and demand.

Cooperatives are owned by an apartment corporation. Individual tenants do not actually "own" their apartments as they would in the case of "real" property. Owners, (shareholders) of co-op apartments, actually own "shares" in the corporation which entitles them to a long-term "proprietary lease." The corporation pays the total amount of the building's mortgage (importantly, a cooperative may have an underlying mortgage on the entire building, whereas a condominium building must be owned outright), real estate taxes, employee salaries, and other expenses for the upkeep of the building. The tenant-owner, in turn, pays a portion of these expenses as determined by the number of shares the tenant owns in the corporation. Share amounts are dictated by apartment size and floor level.

The considerations when buying a cooperative are:

1. The Board of Directors has the right to "approve" or "reject" any potential owner. The board, elected by all of the tenant-owners of the co-op, interviews all prospective owners. It has the responsibility of protecting the interests of all tenant-owners by selecting well-qualified candidates.
2. The quality of services and the security of the building are kept at high standards.
3. Portions of the monthly maintenance are tax deductible. Each building has its own tax structure, but all co-ops offer a tax advantage. Shareholders can deduct their portion of the building's real estate taxes, as well as their proportionate share of the interest on the building's mortgage.
4. The amount of money that may be financed is determined by each cooperative. Some buildings require substantial down payments. Generally speaking, in Manhattan prospective purchasers should be prepared to "put down" at least 20 to50% of the purchase price (depending on the building) when purchasing a cooperative apartment.
5. Subleasing a co-op must be approved by the Board of Directors of the cooperative. Each corporation has its own rules, and they should be examined if a potential owner intends to sublet.

With this in mind, it is important to remember that co-ops are the norm here in Manhattan, not the exception. However, before beginning a search for a cooperative apartment, think about the financing limitations and theapplication and interview process.

Condominium Buildings


While condominiums are quite common throughout the country, they are a rather new concept for New York City. A condominium apartment in Manhattan is real property. The buyer gets a deed just as if he were buying a house. Since this is real property, there is a separate tax lot for each apartment. Hence, this meansthe buyer pays his own real estate taxes for the property. An owner will also pay common charges on a monthly basis. Common charges are similar to maintenance in a cooperative. However, they will not include real estate taxes since these are paid separately, nor will they include the building's mortgage and interest given that a condominium, by law, cannot have an underlying mortgage. Condominiums are attractive for a variety of reasons:

1. Financing the purchase of a condominium apartment is governed by the financial markets not a board of directors and thereby much more flexible than in a cooperative. Generally, a buyer can finance up to 90% of the purchase price.
2. An approval process is usually required, and most condo boards are requiring application packages with financial disclosure.Generally, however, the requirements are not as rigorous as the co-op boards. A board meeting may or may not be required. The length of time for approval varies from building to building, but it is usually not as long as a co-op approval process.
3. There is greater flexibility in sub-leasing your apartment. This makes condominiums the better choice for investment property.
4. They are the ideal choice for non-U.S. citizens or for those with their assets held outside of the United States given that co-ops are unlikely to approve a buyer whose funds are not in the U.S.

Given that there are fewer condominiums than cooperatives and that they are "easier" to purchase, they are generally more expensive than co-ops. Additionally, monthly combined common charges and real estate taxes in a condo are typically less than a co-op's monthly maintenance charges, again resulting in higher purchase prices.

Steps to Purchasing an Apartment

The steps to purchasing a co-op or a condominium in Manhattan are very similar. Let us assume that you have found the property on which you wish to place an offer and that you have spoken to a bank or mortgage broker (if financing) to determine a comfortable financing price level.

1. Offers are made orally in New York City. When you have found the right property, a bid or offer will be placed through your agent. They will convey your offer to either the seller's agent or to the seller directly.
2. The seller may "counter" your offer. This will begin a negotiation process that will eventually lead to a "meeting of the minds," at which point price, terms, and closing date have been agreed upon.
3. A real estate attorney is required in all property transactions in New York City. Contact an attorney familiar with real estate in Manhattan to represent you. The seller's attorney will begin preparation of a contract of sale, and during that time your attorney will begin to examine the financial condition of the building in which you wish to purchase. Your real estate agent can assist you in finding experienced attorneys.
4. After your lawyer concludes that the financial condition is satisfactory, that the by-laws of the building are acceptable to you, and that the contract of sale is also acceptable, your attorney will allow you to sign the contract. At that time you will usually be required to present a deposit of 10% of the purchase price. The contract plus the deposit will then be forwarded to the seller for signature . This money will be held in the seller's attorney's escrow account until closing. It is important to note that until all parties have signed the contract, and it has been delivered, the seller can still entertain and accept other offers.
5. If financing, you should move forward with your loan application. Your real estate agent can assist you in finding a mortgage broker . It is advised that you pre-qualify for a mortgage with a brokerage firm prior to beginning your housing search.
6. You will, by now, have received from your real estate agent the board requirements and application materials. The application materials can be similar for a cooperative and condominium. However, the actual process is quite different. You will need to complete all of the required materials which typically include: an application, a financial statement signed by a CPA, all requisite support for your financial statement, three years of tax returns, bank statements, letters of personal and financial reference, letters of professional reference, the contract of sale, bank documents (if financing) indicating that your loan is in place, etc.
7. When your "package" is finished, it will be reviewed by a Douglas Elliman Manager, and then, assuming it is complete, it will be forwarded to the managing agent for review. Upon determination that it is in order and that credit checks were acceptable, it will be forwarded to the Board of Directors. No applications will be accepted by a Managing Agent unless they are complete.
8. In the case of a cooperative, if your application meets initial approval, you will be invited to be interviewed by the Board or by an interviewing committee. This is a serious matter and not to be taken lightly. It should be treated as a business meeting.
9. After approval by the Board, you are ready to begin planning for a closing!

In the case of a condominium, there is generally no formal interview. Your application will be reviewed, and if all required materials are included and in order, an approval is typically granted.
The entire process can move quickly in a condominium, and assuming a loan can be secured in a timely fashion, one can move from contract to closing in about 60 days. However, the cooperative process is more involved, and 60 to 90 plus days is not unusual.

This guide provides you with a step-by-step, easy to follow outline of the entire process of renting an apartment in New York City. The rules are different here. The items which we categorize as "necessary" in this guide are in fact crucial. We can guarantee that if you do your homework, the process will flow smoothly for you.

Assume that there are no exceptions to the items on these lists.

Step-by-Step Process to Renting an Apartment in New York City

1. Speak to your Prudential Douglas Elliman rental agent. If you are relocating, call Prudential Douglas Elliman's Relocation Division at (888) 891-6683 (toll free) for counseling and to determine when to come to New York to begin your search. At that time, schedule your appointment. Your needs will be discussed, questions will be answered about the process, and you will be assigned to an agent best matched to your needs and budget.



2. Organize and prepare the necessary information to bring with you, including:
• Letter of employment and salary verification (include start date if not yet employed)
• Bank account numbers (checking and savings), credit card numbers
• Names, addresses and phone numbers of previous landlords
• Names, addresses and phone numbers of accountant and attorney, if applicable
• Names, addresses and phone numbers of personal and business references
• Tax returns
• Pay stubs
• Expected bonus (verification from employer)
• Additional sources of income with verification
• Personal identification with photograph - driver's license or passport



3. If relocating, prepare the necessary funds before coming to New York. Landlords will not accept personal or out-of-state checks. They require certified funds. Anyone renting or relocating must:
   • Try to establish a New York bank account before you begin your search. If this is not possible, bring the necessary funds with you.
   • Bring enough traveler's checks to cover the cost of two (2) month's rent (which must be converted into CERTIFIED CHECKS). This comprises the first month's rent and one (1) month's security deposit.
   • Bring funds to cover the broker's fees if your company is not paying covering that expense. Brokerage fees are paid by you, the tenant, in New York City. These fees are due upon signing of the lease unless your employer is paying the real estate commission for which they will be billed directly.
   • Bring funds to cover a Credit Check: $25 to $50, which can be paid by personal check.
   • Bring funds to cover possible move-in/move-out fees (See Co-op/Condo Funds Needed).
   
   
   
4. The day of your appointment you will meet with the agent who will be working with you. Then you will be taken to each apartment that the agent has scheduled for you to see.



5. When you have made your apartment selection, you will be asked to fill out a rental application and one or more miscellaneous documents. Your agent will negotiate price and lease terms for you. Upon acceptance, a credit report will be done, and your references will be checked.



6. Leases will be signed and checks presented.



7. Your Prudential Douglas Elliman agent will assist you with settling in comfortably once the lease is signed and the move in date established.

Conditions for Renting an Apartment in New York City

Affordability

As a guideline, you can expect to pay 25% of your gross annual salary for rent.

Financial Eligibility

To qualify for tenancy, most landlords require that you annually earn 40 to 50 times the amount of the monthly rent. Remember to take into consideration outstanding loans and liquid assets. Landlords are rigid in New York City, and cooperative buildings can be even more demanding.

Lease Guarantors

If your salary level and total financial picture does not meet the landlord's requirements, you will need a co-signor, or guarantor, to guarantee the lease. Landlords prefer a family member who lives and owns property in New York, New Jersey or Connecticut. The guarantor must earn ample income. Extensive financial documentation may be required and paperwork cumbersome. Prepare your potential guarantor for this possibility in advance. Employers will seldom guarantee on behalf of employees.

Internationals

If you pay taxes outside of the United States, or if you have a housing allowance from your employer, your eligibility is evaluated differently. Discuss these areas with your company's relocation department and with your agent.

Types of Rental Buildings In New York City

In addition to buildings that cater solely to the rental community, there are opportunities for you to rent co-operative and condominium apartments in the city. The conditions attached to the leasing of these types of units are totally determined by the building and vary considerably. Your Prudential Douglas Elliman agent can guide you through that process and you can get further insights into these types of buildings by reading the buyer section of this guide.

Unfurnished Apartments	Starting Price		Furnished Apartments	Starting Price
Studio	from $1,300		Summer sublets, month to month, 3+ months	from $2,000
1 Bedroom/Junior	from $1,700
2 Bedroom	from $2,400
3 Bedroom	from $3,100
4 Bedroom	from $4,900

This closing cost guide is designed to give you the general costs associated with the purchase or sale of a cooperative, condominium or townhouse property. Please note that these are estimates and that potential buyers and sellers should consult their real estate attorney or financial advisor for specifics. Please take note we do not represent that these are the entirety of potential costs, but are only to be used as a guide. Mortgage closing cost estimates have been furnished by our affiliate, Preferred Empire Mortgage Company.

Condominiums

For the Seller Broker: Typically 6% Own Attorney: Consult your attorney Processing Fee: $450+ NYC Transfer Tax: 1% of price up to $500,000 or 1.425% of price if $500,000 and over. NY State Transfer Tax: $4 per $1,000 of price Miscellaneous Title Fees: $200-$500 Payoff Fee to Title Closer: $100-$300 Miscellaneous Condominium Charges: Vary by building Note: For condominiums in new developments, the Purchaser will pay costs normally paid by the Seller. These include Seller attorney fees as well as NY and NYC Transfer Taxes.

For the Purchaser Buyer's Attorney: Consult your attorney Bank Fees: $750 Application Fee: $500 Appraisal Fee: $300-$1,500 (depending on sales price) Credit Report Fee: $9.80 single/$14.60 joint Bank Attorney: $750-$850 Tax Escrows: 2 to 6 months Recording Fees: $250-$750 Mortgage Tax: 1.80% of amount of mortgage on loans under $500,000 or 1.925% of amount of mortgage on loans of $500,000 and over Fee Title Insurance: Approx. $450 per $100,000 of sales price under 1m - +15% on 1M or more Mortgage Title Insurance: Approx. $130 per $100,000 of mortgage amount Municipal Search: $350-$500 Mansion Tax: 1% of entire purchase where price is $1,000,000 or more. ADDITIONAL REAL ESTATE EXPENSES Common Charge Adjustment: Pro-rated for the month of closing Real Estate Tax Adjustment: Pro-rated depending on when the tax is collected Miscellaneous Condominium Charges: Vary by building Short Term Interest: Equal to interest for balance of month in which you close

Co-ops

For the Seller Broker: Typically 6% Own Attorney: Consult your attorney Co-op Attorney: $450+ Flip Tax: Typically 1% to 3% of price (if applicable) Stock Transfer Tax: $0.05 per share Move-out Deposit: Varies by building NYC Transfer Tax: 1% of price up to $500,000; or 1.425% of price if $500,000 and over. NY State Transfer Tax: $4 per $1,000 of price Pick-up / Payoff Fee: $250-$500 UCC-3 Filing Fee: $100 Miscellaneous Coop Charges: Vary by building

For the Purchaser MORTGAGE CLOSING COSTS Buyer's Attorney: Consult your attorney Bank Fees: $350-$750 Application Fee: $350 Processing Fee: $280 Appraisal Fee: $300-$1,500 (depending on sales price) Credit Report Fee: $9.80 single/$14.60 joint Bank Attorney: $750-$850 Lien Search: $250-$350 UCC-1 Filing: $100 Mansion Tax: 1% of entire purchase price where price is $1,000,000 or more. ADDITIONAL REAL ESTATE EXPENSES Miscellaneous Co-op Charges: Vary by building Recognition Agreement Fee: $200+ Maintenance Adjustment: Pro-rated for the month of closing Short Term Interest: Equal to interest for balance of month in which you close