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Need info on buying a coop
Old 05-14-2007, 10:59 AM   #1
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Need info on buying a coop

So, I am thinking about purchasing a coop somewhere in Queens, NYC. Does anyone knows a site that contains advice on this area? Any red flags that I should be aware of (such as budget deficits)? The down payment will be around 50% of the total price and I plan on having a fixed mortgage. Any advice someone could give on coops would be great.
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Re: Need info on buying a coop
Old 05-14-2007, 11:08 AM   #2
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Re: Need info on buying a coop

i own in queens

did you have a neighborhood in mind? getting a mortgage is no big deal. part of the process is the underwriter checks the building financials.

one thing to watch out for is ask for past maintenance increases and how much they were. a good building will have current maintenace of around 20% to 30% over 2001 levels. a poorly managed building will be close to twice 2001 levels.

my wife likes to go to open houses just to look and in some poorly managed building the mortgage + maintenace is close to what it costs to buy an attached SFH in the area.

i live in rego park in a 1br i bought in 2003. back then my maintence was $495 with gas/electric and one AC included. Now it's $564. In 2001 it was around $400 and you have to account for the insurance increases and higher utility costs

i also suggest keeping the downpayment to 20% and using the rest of the money for renovations since a lot of places will still be in 1960's to 1970's condition.

for values, i think they are a little frothy but i don't expect huge declines in values like in the early 1990's because the same conditions aren't there

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Re: Need info on buying a coop
Old 05-14-2007, 11:13 AM   #3
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Re: Need info on buying a coop

Thanks Al. I am looking at Astoria (very few co-ops there), Sunyside, WoodSide, Jackson Heights and Rego park. I want a place that is near the subway. I found a decent looking co-op in Jackson Heights, but they are running a deficit on a budget. I've been told that this is normal in Queens. Is this true?
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Re: Need info on buying a coop
Old 05-14-2007, 11:29 AM   #4
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Re: Need info on buying a coop

Chicken or pigeon?
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Re: Need info on buying a coop
Old 05-14-2007, 11:36 AM   #5
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Re: Need info on buying a coop

Quote:
Originally Posted by camberiu
Thanks Al. I am looking at Astoria (very few co-ops there), Sunyside, WoodSide, Jackson Heights and Rego park. I want a place that is near the subway. I found a decent looking co-op in Jackson Heights, but they are running a deficit on a budget. I've been told that this is normal in Queens. Is this true?
I would also be wary of any co-op that has a ground lease, any place that has serial special assessments, and inadequate reserves for major repairs and rennovations.

Have you looked at condos as well?
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Re: Need info on buying a coop
Old 05-14-2007, 11:42 AM   #6
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Re: Need info on buying a coop

I have looked at Condos, but they seem to be brutally expensive. Here is some financial information:

2005 Coop revenues - $1,006,657
2005 Coop expense - $1,161,640

Total deficit for 2005 - $154,983

They do have about 400K in notes as reserves, but they have more debt (mostly long term) than assets. Again, not sure if this is typical or not.

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Re: Need info on buying a coop
Old 05-14-2007, 12:32 PM   #7
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Re: Need info on buying a coop

How many units?
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Re: Need info on buying a coop
Old 05-14-2007, 12:34 PM   #8
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Re: Need info on buying a coop

Quote:
Originally Posted by brewer12345
How many units?
96 units.
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Re: Need info on buying a coop
Old 05-14-2007, 12:41 PM   #9
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Re: Need info on buying a coop

OK, so you have an unknown amount of debt (might want to quantify that). Deficit is running $1614 a year per unit. Reserves are about $4200 a unit, but they are eating into them every year at the 2006 run rate. I would expect a significant bump in mainteance expenses in the near future. Reserves are probably too low, which is probably why they have debt.

How much is this place again? The attraction of a codo is that it is realtively clean cut. The risk with a co-op is that you are biying a pile of debt that has to be serviced.
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Re: Need info on buying a coop
Old 05-14-2007, 12:42 PM   #10
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Re: Need info on buying a coop

look at a few years of the financials since a lot of buildings are doing local law 11 work where they have to fix the structure of the building.

i live in rego park a block from the 63rd road station. it's a total of 12 buildings and 850 units between them in the development. we are paying for local law 11 out of the reserves and there was a reserve of something like $2 million in cash.

other than that my building has always been cash flow positive since i've been there. unless it's a special case the building should never run a deficit. i had some family that was a board president and i saw first hand how a building can be poorly run. maintenance went up by a lot but they did do a lot of elevator work and had to replace the boiler. the worst money pit is a 24 hour doorman. in the usual 6 or 7 story red brick building of forest hills/rego park a 24 hour doorman will run you around $200 per month per apartment on average. other money pits is a lot of maintenance people that sit around all day long. i've seen buildings where one super can clean and fix everything in the building and in others it takes 3 or 4 people sitting around all day long to clean the building

astoria is too close to the subway

jackson heights is only good for a few blocks

forest hills is going to lose it's charm once the new mall in rego park is built and most of the stores on austin street will go belly up

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Re: Need info on buying a coop
Old 05-14-2007, 12:44 PM   #11
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Re: Need info on buying a coop

Quote:
Originally Posted by camberiu
I have looked at Condos, but they seem to be brutally expensive. Here is some financial information:

2005 Coop revenues - $1,006,657
2005 Coop expense - $1,161,640

Total deficit for 2005 - $154,983

They do have about 400K in notes as reserves, but they have more debt (mostly long term) than assets. Again, not sure if this is typical or not.

long term debt is probably a bank mortgage that most co-ops have. in my case it's around $37 million for 12 buildings

when they say 50% deductible maintenance, it's a combo of taxes and this building mortgage debt
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Re: Need info on buying a coop
Old 05-14-2007, 12:46 PM   #12
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Re: Need info on buying a coop

Quote:
Originally Posted by brewer12345
OK, so you have an unknown amount of debt (might want to quantify that). Deficit is running $1614 a year per unit. Reserves are about $4200 a unit, but they are eating into them every year at the 2006 run rate. I would expect a significant bump in mainteance expenses in the near future. Reserves are probably too low, which is probably why they have debt.

How much is this place again? The attraction of a codo is that it is realtively clean cut. The risk with a co-op is that you are biying a pile of debt that has to be serviced.
a lot of the new NYC condos have HOA fees of close to $300 a month. i always wondered where all this money goes
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Re: Need info on buying a coop
Old 05-14-2007, 12:50 PM   #13
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Re: Need info on buying a coop

Quote:
Originally Posted by brewer12345

How much is this place again? The attraction of a codo is that it is realtively clean cut. The risk with a co-op is that you are biying a pile of debt that has to be serviced.
Place is $232K for 900 square feet, fully remodeled and ready to move in. They have about $3.5 million in assets and about $3.6 million in debt (mostly long term mortgage).
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Re: Need info on buying a coop
Old 05-14-2007, 01:02 PM   #14
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Re: Need info on buying a coop

the big thing with a co-op is if it can't pay it's debts, the bank takes over, you lose your shares and you end up a renter and having a mortgage

in rego park Anita Terrace almost went belly up, they were in chapter 11 and in court with the sponsor for years and only a nice judge saved them from being liquidated

where is this? most of the red bricks are around 85 units so if this was in rego park or forest hills i'd probably know a 96 unit building
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Re: Need info on buying a coop
Old 05-14-2007, 01:11 PM   #15
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Re: Need info on buying a coop

Quote:
Originally Posted by camberiu
Place is $232K for 900 square feet, fully remodeled and ready to move in. They have about $3.5 million in assets and about $3.6 million in debt (mostly long term mortgage).
OK, so you are looking at a place with $37.5k debt per unit and a tad over $4k in cash, so net-net you would be assuming roughly $33k in debt along with your purchase. Sounds "OK", if everything else checks out. But look for a ground lease (seriously).
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Re: Need info on buying a coop
Old 05-14-2007, 01:14 PM   #16
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Re: Need info on buying a coop

Quote:
Originally Posted by al_bundy
where is this? most of the red bricks are around 85 units so if this was in rego park or forest hills i'd probably know a 96 unit building
This is in Jackson Heights (87st). How often do co-ops go belly up? I'd would imagine that it must be a very rare event, since I'd assume that most of the owners would rather increase the manintenance fee than to loose everything.

One thing that got me confused was that Bank Of America has approved this co-op. Now, why would this major bank be willing to lend me money (at 6% fixed) if this co-op is at any resk of default. I mean, the bank would loose their loan too.
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Re: Need info on buying a coop
Old 05-14-2007, 01:28 PM   #17
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Re: Need info on buying a coop

until they underwrite it, a pre-approval doesn't mean anything. countrywide made me give them 2 or 3 years worth of financial statements from the coop so they could do their math to see if it was safe

is this on 34th or 37th ave? is there an 86st stop on the 7 train? forget if it goes straight from 74th to junction. i drive by a lot in this area

$232,000 for that area, need to tell my wife. she lived around there when she first came to the US back in the 1970's.

also check ACRIS for comps

http://a836-acris.nyc.gov/Scripts/Coverpage.dll/index

if you need help post here or PM me and i'll tell you how to use it

if you like empanadas there are a few good places on northern blvd
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Re: Need info on buying a coop
Old 05-14-2007, 01:42 PM   #18
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Re: Need info on buying a coop

Quote:
Originally Posted by al_bundy
is this on 34th or 37th ave? is there an 86st stop on the 7 train? forget if it goes straight from 74th to junction. i drive by a lot in this area
37th avenue.

Quote:
Originally Posted by al_bundy
$232,000 for that area, need to tell my wife. she lived around there when she first came to the US back in the 1970's.
Tell me about it.

date=1179167294]
is this on 34th or 37th ave? is there an 86st stop on the 7 train? forget if it goes straight from 74th to junction. i drive by a lot in this area
[/quote]
37th avenue.

Quote:
Originally Posted by al_bundy
if you need help post here or PM me and i'll tell you how to use it
Yes please. I'd love to learn how to use this thing.
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Re: Need info on buying a coop
Old 05-15-2007, 09:25 AM   #19
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Re: Need info on buying a coop

this is the way i always do it if you want to find sales in that building

first make sure you have the latest java installed

click on find addresses and parcels
input your address
look at the block and lot number it comes back with

go back to the original link and go to search property records
click the second link parcel identifier
input the info from the first search and leave it for to current date for the date range
search

the co-op pricing info goes back to 2003 or 2004. if your apartment was bought before then it won't have the info and you will have to go by the current comps

you can also search by document type. look at the document from the previous search that gives pricing. then search for that document type for all of queens say for the last 90 days which is when the spring selling season starts. and click on all block numbers that are close to the building you are interested in. chances are they will be in the same area to give you comps.

you can also check out propertyshark.com. free registration. you can search by area for co-op prices

i was in the area yesterday and drove by. I don't know the comps, but i would personally prefer the area in the mid 70's for Jackson Heights
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Re: Need info on buying a coop
Old 05-15-2007, 12:33 PM   #20
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Re: Need info on buying a coop

Thanks for the info Al. After researching the site you provided plus some soul searching drove me to the conclusion that I should pass on this co-op. I would not want to live in a place where the older shareholders do not have the same principles of frugality and LBYM that I have. They run their co-op with a deficit, which is a major no-no for me, so I think it would be good for me and for them that we not share the same roof, since I very much doubt we would get along well.
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