If your plans aren’t as definite and you don’t know where you’ll be living in several years, perhaps because you see yourself moving for a new job, then it certainly makes much more sense to buy a condo instead of a coop.
Condos are real property, and as a result you actually own your apartment (plus a pro rata portion of the common space in the building) unlike in a coop. As a result, you are entitled to rent out your apartment without restrictions as long as you aren’t breaking any laws.
In contrast, co-op buildings favor primary occupancy and generally discourage subletting. Many coop buildings will prohibit subletting altogether, and those that do permit it will generally have strict rules and limitations around subletting. For example, many coop buildings will only allow shareholders to sublet their apartments for two years out of every five years. Others may only allow a maximum of two or three years of subletting over the entire time that the shareholder is a member of the building.
Furthermore, coop apartments are much harder to sell than condo apartments because of the unattractiveness of not owning real property, restrictions around subletting and the coop board approval process. As a result, a wide swath of buyers such as foreign buyers and professional investors will not even look at coops.
Coop buildings also have their own set of coop financial requirements which are usually stricter than the financial requirements of banks. For example, the minimum percent down that a coop building might allow is 20%, and you’ll often see buildings requiring 25%, 30% or more in down payment. Coop buildings will also often have their own Debt-to-Income Ratio (DTI Ratio) requirements, typically 25% vs the more flexible 43% that most banks will allow.
Lastly, it’s important to understand that co-ops have more closing costs than condos when it comes time to sell. This is primarily because many co-ops have a flip tax that is traditionally paid by the seller. The flip tax is a tool to raise additional revenue for the co-op corporation, and is also a disincentive for speculators to try to buy co-op apartments solely to flip them for more money. Flip taxes are typically 1-2% of the sale price for regular co-ops, but can be much higher for HDFC income restricted co-ops.