Mitchell Lama Co-op (rental, buying, inspection)

[livingsinglenyc]

KK, did you end up getting into some sort of affordable housing "deal'?

[sanford909]

This is my first post on this forum... It is not a reply, it's a question, but I didn't know where else on this site I could post it. Please forgive me if I've posted this the wrong place!

Question: The apartment needs some upgrading... kitchen & bathroom. If I get Board approval for the work, what happens in the future, if I should sell the apartment. Will my upgrades increase the value/resale price? If so, how is that determined?

[Kefir King]

Originally Posted by sanford909

This is my first post on this forum... It is not a reply, it's a question, but I didn't know where else on this site I could post it. Please forgive me if I've posted this the wrong place!

Question: The apartment needs some upgrading... kitchen & bathroom. If I get Board approval for the work, what happens in the future, if I should sell the apartment. Will my upgrades increase the value/resale price? If so, how is that determined?

Sanford,
The usual rule of thumb (except for some dishonest HGTV shows) is that you almost never get back what you put in...kitchens and bathrooms get closest to break-even. So make sure that any upgrading will increase YOUR quality of life while you are living there.

I think though that if you can do most of the work yourself, and thus ignore the cost of your time and effort, you can make some money with upgrades. It's the LABOR cost of these jobs, especially in NYC, that makes upgrading so expensive. Easy and cheap to buy some tile, a tub, a sink, a medicine cabinet, and a toilet (and even a bidet) but it costs a fortune to have a tiler, plumber, and electrician to turn it into a showplace bathroom.

[sanford909]

Thanks for the very good advice K. King. I'm not looking to create a showplace or to reap large returns on my upgrade. As you say, I'm just wanting to improve my quality of life. I'm pretty good at some projects, but not others, so I would like to save $$$ by doing some projects myself. Being brand new to both co-op life & Mitchell-Lama, I assumed that that the co-op would require me to hire an insured, licensed plumber for anything involving plumbing. In fact, if apartment owners are allowed to do such plumbing projects themselves, I would worry!. In the past, I've found that working with water, valves, pipe fittings, etc. can be tricky in terms of unanticipated pressure, leak problems, etc., best left to a responsible professional — not for amateurs like myself!... But that's just me.

I haven't seen by-laws yet, and will look for this info. when I do.

[bill83]

People buy ML coops at super low price. What about selling? What is the price 5 years in the future, the same or slightly higher?

[sanford909]

Here is a quote from another online source:
"When a Mitchell-Lama shareholder leaves the co-op and “sells” his/her shares, they are only entitled to the amount they paid, plus any capital assessments, plus (depending on the policy of the particular cooperative) any mortgage amortization. The concept of “fair market value” and “appraisals” simply do not apply to such apartments".
I hope this helps.

[Coney]

Most Mitchell Lama places are strict about making changes. You should check with management first.

[Kefir King]

As long as the co-op stays withing ML then the apartment must be sold back to the co-op. Practically speaking this has meant something like a doubling in price every 10-15 years,
BUT if the co-op takes itself private, something several have done by paying back all government loans, then large apartments in desirable complexes can be sold on the open market for immense profits...hundreds of thousands of dollars, even a million.


Licenced insured plumbers are usually required for any major repairs. If you do it yourself, you risk immense liability if you screw up. Often the co-op will provide for plumbning repairs for smaller jobs involving normal breakdown (toilet or faucet replacement, leaky drains, washers, etc.) Probably what the co-op will do is determined by what the co-operators through its board WANT it to do.

I'd replace a washer or a leaky trap myself, but that's about it.

[sanford909]

Regarding the resale of ML co-op, one source says: "When a Mitchell-Lama shareholder “sells” his/her shares, they are only entitled to the amount they paid, plus any capital assessments, plus any mortgage amortization".

But Keffir King says: "...the apartment must be sold back to the co-op. Practically speaking this has meant something like a doubling in price every 10-15 years..."

So which is it? Does the seller get double his price in 10 - 15 years? Or does he only get back what he paid plus some add-ons?

[Kefir King]

sanford,

They equate to the same thing. That complicated addition of several items, "add-ons," has resulted in an approximate tripling of principal over the last 20 years. That means a buyer at $4K in 1992 can sell back at about $12K in 2012 and that's what a newbie will pay. That is observable fact.
Remember that tiny increments over many years get substantial.

You cannot lose with these apartments.