No, that’s not a typo.
A one bedroom unit in the Colonial Village Co-Op community has hit the market for under $28,000.
And for 19 glorious hours, this property was available on the open market for any buyer looking to buy into the Colonial Village community at a 90% discount of what the Colonial Village condos across the street usually sell for.
As expected, this property did not last long and was put Under Contract less than a day after it was put on the market.
But it begs the question; why so cheap? And what’s the catch?
The first thing to know is that your co-op fees are going to much higher than condo fees. The monthly fees on this property are $1,070(!). The fee includes (but is not limited to) your property taxes, the underlying mortgage, and all utilities except for electric and cable.
The second thing to know is that you cannot rent out the property. Co-ops are notoriously strict when it comes to renting out units. The unit will have to be the primary residence of the purchaser.
Third is that lending will be difficult. An all-cash purchase is most likely the only option. I am not sure I know of lenders that would approve a loan for around $30,000. And the co-op board has final say on approving or rejecting any offer. Expect the purchaser to bring all cash to finance the deal.
Re-sale value is tough to determine. You’re not buying a $28,000 co-op because of the re-sale value. The comparable properties are few and far between. When units do come up for sale in the co-op community, a buyer is often found through word-of-mouth before the co-op hits the market.
According to Bright MLS, the last unit in the community to sell was in 2015 when 1762 N Troy St #651 sold for $25,249.
Still, the question remains: Why are the Colonial Village co-ops so cheap compared to the Colonial Village condos?
Shouldn’t the co-ops be priced higher like at the River Place co-op community where 1 bedrooms sell for around $200,000?
Think of it in terms of monthly payment.
If you were to buy a Colonial Village condo, like this one under contract at $269,000, here’s how the figures would (roughly) break down:
Sales price: $269,000
Downpayment: $54,000 (~20%)
Condo fees: $269/month
Annual property taxes: $2,643
Monthly approximate living costs: ~$1,650.
You can play with the numbers and adjust for your homeowner’s insurance, but you’re going to be around $1,650.
Here’s how things break down for the co-op:
Sales price: $27,540
Downpayment: $27,540 (assuming all cash)
Co-op fees: $1,070/month
Annual property taxes: $0
Monthly approximate living costs: ~$1,250
Initially, the biggest difference will be the downpayment, and then you are looking at a monthly difference of $400 give or take.
The condos at Colonial Village is also VA approved so instead of putting down $54,000 (yes there are other conventional programs where you can put less down), you can use your VA loan and buy a Colonial Village condo with zero percent down.
So in this (very broad) example, is it worth it to buy into a co-op with a cost difference of $400 per month?
There is no renting allowed, no financing (or very strict financing), the unit will not appreciate, and you don’t actually ‘own’ your unit since you are renting the unit as a shareholder from the co-op.
Makes you wonder if the unit was overpriced at $27,540 (it’s not, but you know, it makes you wonder).
Photos via Bright MLS
Property listed by Keller Williams Realty