When most people think about buying a home in Chicago, it’s common to think about single-family bungalows and condos. But there’s another option known as the co-operative apartment, or co-op for short. If you don’t know the difference between a regular condo and a co-op, it’s worth understanding because there are many important differences.
We’re the Ben Lalez Team, and after helping over a thousand families find their perfect Chicago homes over the last decade, we’ve noticed a growing interest in co-ops. They offer some advantages that many buyers overlook, so let’s check out what makes co-ops special and why they might be worth considering when you’re looking for your next home.
What Is A Co-op?
When you buy a regular condo, you own the property. But when you buy a co-op, you’re actually buying shares of the corporation that owns the entire building. Your shares then give you the exclusive right to live there and have voting rights when decisions need to be made about the building.
This ownership structure creates some interesting differences that can work in your favor, especially in certain Chicago neighborhoods.
The Financial Advantages You Might Not Know
If budget is important to you, the biggest advantage is that co-op apartments in Chicago are generally cheaper than condos. We’ve found that similar-sized co-ops can sell for 10-20% less than comparable condos in the same neighborhood. This means a lower entry price for you if you want to get into a specific neighborhood.
Co-ops also have different fee structures than condos. Monthly assessments in co-ops look more expensive on paper, and are usually higher than condo HOA fees, but this isn’t a simple comparison.
This is because o-op fees usually include property taxes and sometimes portions of the building’s mortgage, while condo owners pay these separately. When you calculate the total cost of ownership, the numbers become more comparable.
When it comes to financing rates, co-op boards can often refinance the entire building’s mortgage at once, potentially securing better rates than individual buyers could get on their own.
Co-Op Community
One thing we’ve noticed over the years is that co-op buildings often have stronger community bonds. In order to purchase a co-op, buyers typically have to go through a more rigorous approval process. This means that co-op buildings tend to have lower turnover, leading to longer-term neighbors who get to know each other.
Many co-ops have active social calendars with holiday parties, summer gatherings, and community events that create that old-school Chicago neighborhood feel, even if you’re living in a multi-unit building. If you’re looking for a strong community within a building, a co-op might be perfect for you.
The Screening Process
Co-ops are known for their thorough vetting process. This might seem intimidating, but think of it from another angle. It means all your neighbors have also gone through the same careful screening.
Unlike condo associations, co-op boards have the power to decide whether or not they approve a buyer. This means purchasers will typically require extensive financial information, personal references, and often an in-person interview before being approved.
This process generally results in more financially stable neighbors, fewer rental units, and more engaged owners who care about maintaining the building’s value and maintaining a strong community.
Chicago’s Most Notable Co-op Buildings
Chicago actually has some magnificent co-op buildings with fascinating histories. The famous 1500 N. Lake Shore Drive building, designed in the 1920s, is one of the city’s most prestigious addresses. Many of the historic co-op buildings were designed by renowned architects in styles that are no longer commonly found in modern condo designs.
What’s interesting is how these buildings survived different real estate cycles. During the 2008 housing crisis, many co-op buildings in Chicago maintained their values better than comparable condos. While condo foreclosures jumped during this period (increasing from 12% to 19% of all Chicago-area foreclosures between 2007 and 2008), co-ops saw far fewer distress sales, thanks to their stricter purchase requirements and financially stronger ownership base.
Tax Considerations For Co-op Owners
As a co-op shareholder, you can still deduct your portion of the building’s real estate taxes and mortgage interest on your personal tax return, similar to other homeowners.
What’s different is how property tax assessments work. In Chicago, older co-op buildings often benefit from lower property tax assessments compared to newer condos. Co-ops are assessed as a single property (like an apartment building), and this assessment can be relatively low compared to the building’s true market value.
This tax advantage can turn into meaningful savings over time, especially in a city where property tax increases have become a big concern for homeowners.
The Maintenance Advantage
One important benefit of co-op living is how maintenance is done. Many larger Chicago co-ops have full-time maintenance personnel, often including live-in superintendents or building engineers.
For example, the Gold Coast co-op at 1242 N. Lake Shore Drive has 24-hour door staff, elevator operators, and a live-in superintendent. This offers immediate attention to building maintenance issues and creates a level of service that’s hard to find in most condo buildings.
Co-op boards are usually more proactive when it comes to maintenance, focusing on preservation rather than dealing with problems when they pop up. This can mean fewer emergency repairs and more thoughtful long-term planning for major systems.
Understanding Co-op Governance
Unlike condo associations that operate under Illinois condominium law, co-ops are more like private corporations.
This gives co-op boards more flexibility in some ways, including:
- The ability to set more comprehensive house rules
- Greater control over who buys in the building
- More options for handling problem residents
- Flexibility in how they structure their financing
If you’re a buyer who values stability and careful management, this model can provide peace of mind that the building will maintain its quality and character over time.
Making The Co-op Buying Process Smooth
We want to be clear. Buying a co-op requires a different approach than purchasing a condo or single-family home. The timeline is typically longer, and this is why it’s important to work with realtors who understand the nuances of co-op transactions.
Having helped many clients through successful co-op purchases, we’ve developed relationships with co-op-friendly lenders, attorneys specializing in co-op transactions, and even board members at various buildings. This expertise can make the difference between a stressful experience and a smooth transition to your new home.
If co-op living sounds right for you, we recommend getting pre-qualified with a lender who regularly handles co-op financing before you even start looking at units. This gives you a clear picture of your budget and strengthens your position when applying for board approval.
Is A Co-op Right for You?
We’ve found that the right home type depends entirely on your specific situation and goals. Co-ops aren’t for everyone, but for the right buyer, they can offer exceptional value, character, and community.
If you’re curious about co-op buildings, give the Ben Lalez Team a shout! We know which buildings have the best reputations, reasonable financial requirements, and most desirable locations across the city.
After all, our job isn’t just about helping you buy a property. It’s about finding you the perfect home that fits your lifestyle, in a community you’ll love. And sometimes, that perfect match might be a co-op that most buyers never even consider!
