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I moved to new york a year ago and have been renting for the past year but have been debating whether or not I should buy a coop.
Im still going to school and have a few years left but work as a server. My parents said they would pay the down payment for me on a coop if I wanted to buy one. I don't want to ask for more than 50k and I have about 10k saved up and was wondering if 60k would be enough to buy a coop. Im looking for a 2 br under 400k. Which seems like I can only find them in harlem, but would prefer somewhere in brooklyn. My cousin would live with me and she would pay for half the mortgage. Does it make sense to buy a coop? or just keep renting.
Ive read about all the costs and such of owning a coop but I feel like I'm just kind of throwing money away and if I buy a coop, my mortgage would be similar to my rent but I would atleast come out with property vs not having any property when I plan to move away from nyc. Whenever that'll be.
I moved to new york a year ago and have been renting for the past year but have been debating whether or not I should buy a coop.
Im still going to school and have a few years left but work as a server. My parents said they would pay the down payment for me on a coop if I wanted to buy one. I don't want to ask for more than 50k and I have about 10k saved up and was wondering if 60k would be enough to buy a coop. Im looking for a 2 br under 400k. Which seems like I can only find them in harlem, but would prefer somewhere in brooklyn. My cousin would live with me and she would pay for half the mortgage. Does it make sense to buy a coop? or just keep renting.
Ive read about all the costs and such of owning a coop but I feel like I'm just kind of throwing money away and if I buy a coop, my mortgage would be similar to my rent but I would atleast come out with property vs not having any property when I plan to move away from nyc. Whenever that'll be.
I would go for a condo if possible. Coops have too many rules. You have to go through an application and vetting process. With a condo, you can rent and sell anytime. Brooklyn, you get more space. Manhatten, you get location. I'd also wait for another recession or another housing bubble to pop. The market is way too high right now. Keep saving. Also look at condo fees and taxes. If you're looking at brooklyn, don't forget about flood zones. Also, don't count on your cousin. She could ********* over.
You'll find there's more to it than just 'buying' one.
Have you considered what the maintenance fees will be? When you rent, you get all your building amenities as part of the package. If you own a coop, you're going to pony up around $600-1000 per month. Probably more for a 2br.
Also consider the application process. If your parents are giving you the downpayment, you'll need a place with a liberal board. Since you're looking in Harlem that's more likely, but not a given. It can take months to get through the 'checking out' process. Boards often look at your credit history, your bank balance, your transaction habits and your investment portfolio. In your price range you're unlikely to run into those hilariously pompous folks who insist you have ten times the purchase price in liquid assets, but you might need to have several months' maintenance up front to convince them you won't turn derelict.
So my advice is: if you think you're going to have a good, steady income and can stomach the responsibilities then go for it. It's a fantastic way to put down roots in a community and really feel like you're part of the city.
But watch out for:
- Buildings with poor financials. Look for derelict shareholders and delayed building upgrades or maintenance
- Buildings with high 'flip taxes', where they take a fat slice from the proceeds of the sale of your coop
- Buildings that don't allow any renters, or that allow too many. The first will put the breaks on your resale value. The second will make it hard to get financing. A 20-40% renter limit is good IMO
- Buildings with fees that are too low: for instance an elevator building with a 24h doorman, onsite engineer and gym will need to charge a lot. (Unless it's a huge building.) But if the fees are $500 then you might be looking at a $50k slug when the city inspects the building and orders all the asbestos removed
- Buildings with sociopathic or incompetent board members. Go into your interviews with BS detector on high alert
- Buildings with terrible external management companies
It's worth scouring the web for any information on the building you can find. Wade through the lists of whining renters on yelp forums or whatever the latest fad is. If they're bitching about broken tiles or rude spokespeople or other *******s then you're pretty safe. If they're complaining that there's an Iowan cornfield of mold in the common elements or that ceilings are sagging with graywater from neglected plumbing then you've a problem.
That's nowhere near a comprehensive list but hopefully it might get you started.
You'll find there's more to it than just 'buying' one.
Have you considered what the maintenance fees will be? When you rent, you get all your building amenities as part of the package. If you own a coop, you're going to pony up around $600-1000 per month. Probably more for a 2br.
Also consider the application process. If your parents are giving you the downpayment, you'll need a place with a liberal board. Since you're looking in Harlem that's more likely, but not a given. It can take months to get through the 'checking out' process. Boards often look at your credit history, your bank balance, your transaction habits and your investment portfolio. In your price range you're unlikely to run into those hilariously pompous folks who insist you have ten times the purchase price in liquid assets, but you might need to have several months' maintenance up front to convince them you won't turn derelict.
So my advice is: if you think you're going to have a good, steady income and can stomach the responsibilities then go for it. It's a fantastic way to put down roots in a community and really feel like you're part of the city.
But watch out for:
- Buildings with poor financials. Look for derelict shareholders and delayed building upgrades or maintenance
- Buildings with high 'flip taxes', where they take a fat slice from the proceeds of the sale of your coop
- Buildings that don't allow any renters, or that allow too many. The first will put the breaks on your resale value. The second will make it hard to get financing. A 20-40% renter limit is good IMO
- Buildings with fees that are too low: for instance an elevator building with a 24h doorman, onsite engineer and gym will need to charge a lot. (Unless it's a huge building.) But if the fees are $500 then you might be looking at a $50k slug when the city inspects the building and orders all the asbestos removed
- Buildings with sociopathic or incompetent board members. Go into your interviews with BS detector on high alert
- Buildings with terrible external management companies
It's worth scouring the web for any information on the building you can find. Wade through the lists of whining renters on yelp forums or whatever the latest fad is. If they're bitching about broken tiles or rude spokespeople or other *******s then you're pretty safe. If they're complaining that there's an Iowan cornfield of mold in the common elements or that ceilings are sagging with graywater from neglected plumbing then you've a problem.
That's nowhere near a comprehensive list but hopefully it might get you started.
Yeah, good advice. Buying a coop takes a lot of research to make sure that you are not falling into a financial death trap. For me, renting does not give me much financial disadvantage vs buying the same place where i live, but it does give me the freedom to move if something bothers me in the building.
if you are afraid that that rents keep going up, the coop maintenance fees do the same.
I'd also wait for another recession or another housing bubble to pop. The market is way too high right now.
You might be waiting a long time for that. The city housing market shows no sign of slowing down anytime soon.
Quote:
Also, don't count on your cousin. She could ********* over.
I agree. Make sure that you can at least afford the Mortgage payments + fees by yourself. The cousin should just be a source of additional income, you should not depend on her to pay the bills.
I would go for a condo if possible. Coops have too many rules. You have to go through an application and vetting process. With a condo, you can rent and sell anytime. Brooklyn, you get more space. Manhatten, you get location. I'd also wait for another recession or another housing bubble to pop. The market is way too high right now. Keep saving. Also look at condo fees and taxes. If you're looking at brooklyn, don't forget about flood zones. Also, don't count on your cousin. She could ********* over.
Or you can look for sponsor (no board approval) coop units, a lot less rules for buying and selling and I am even allowed to sublet. Altough there are not that many out there, they exist. I bought a sponsor unit as my exprense to income ratio would disqualify me from most coop boards.
Condos are nearly 2x as much as coops. If you have the downpayment needed for that then condos are better. But if you had to rent or get a coop, id get a coop as you are still building equity whereas rent is basically paying for someone else's mortgage. Pay attention to coop financials, maintenance and assessment fee histories before you commit.
I'd say probably no. I get the impression that you know nothing about the whole co-op/condo thing, and presumably your parents don't, either, if they're not in NYC. Most co-ops probably wouldn't even want you, as a student with your parents' backing. On top of that, when you mention your cousin helping with the mortgage, I get the feeling you don't even understand that there are sizable monthly maintenance bills.
Yeah, sure, I guess you're throwing money away, but that's kind of the way the world works - you rent when you're younger, and may go on to buy when you're older.
One of the biggest factors that you didn't mention is how long you plan on living there before moving away. General advice is that you usually should only bother with purchasing property if you plan on living there at least 5 years, but when you factor in that many co-op boards take a large percentage of your profit when you sale, 10 years may be a better guideline.
One of the biggest factors that you didn't mention is how long you plan on living there before moving away. General advice is that you usually should only bother with purchasing property if you plan on living there at least 5 years, but when you factor in that many co-op boards take a large percentage of your profit when you sale, 10 years may be a better guideline.
Can you elaborate on your statement that the co-op board takes a % of profits from a shareholder's sale? I wasn't aware of this, thanks.
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