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Old Today, 11:51 AM
 
11 posts, read 3,018 times
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Iím looking for rental properties and I saw a studio in between Central Park and Times Square going for $100k. Whatís the catch? That seems very low to me. Iím looking to branch out outside of my current market. So any tips that would help educate me on this whole situation are appreciated. I probably sound like an idiot but you gotta start somewhere. I live in kind of a bumpkin area and the studios by the local university are starting at $225k. Thatís why Iím concerned. Love to buy this one though if there isnít some sort of catch Iím overlooking.
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Old Today, 11:54 AM
 
11,289 posts, read 21,744,561 times
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Quote:
Originally Posted by Pizzaburger View Post
I’m looking for rental properties and I saw a studio in between Central Park and Times Square going for $100k. What’s the catch? That seems very low to me. I’m looking to branch out outside of my current market. So any tips that would help educate me on this whole situation are appreciated. I probably sound like an idiot but you gotta start somewhere. I live in kind of a bumpkin area and the studios by the local university are starting at $225k. That’s why I’m concerned. Love to buy this one though if there isn’t some sort of catch I’m overlooking.
Of course there's a catch. An apartment in that area should go for upwards of $600K, if not over a million.

Did you read the description? One likely scenario is that it's occupied by a rent controlled tenant who is paying a very tiny rent and will never leave.
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Old Today, 12:18 PM
 
742 posts, read 369,654 times
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Or it could be HDFC.
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Old Today, 12:20 PM
 
134 posts, read 30,241 times
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Probably an illegal conversion of some kind expecting a cash sale. Or what Henna said.
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Old Today, 12:26 PM
 
11,289 posts, read 21,744,561 times
Reputation: 8900
I figured it out.

The listing is in the Carnegie House.

Google Carnegie House and you find this: https://therealdeal.com/2015/08/27/c...-looming-fees/

Also:
Examples of Ground Lease Co-ops in Trouble
The land underneath the Carnegie House co-op, located at 100 West 57th Street, just sold to a group of investors for $285MM, and the land underneath the Trump Plaza co-op on East 61st Street is currently on the market. This situation is terrifying for co-op unit owners, as the only reason why investors would purchase a co-op ground lease is to make money on it – that is, escalating the ground rent as high as possible based on the then-existing market price of the land. According to an analysis by The Real Deal, at current market prices, the Carnegie House co-op’s annual rent owed pursuant to the ground lease could increase from $4.4MM/year to $27MM/year! Imagine what that would do to your maintenance payments!

So, if you’re ever searching Streeteasy and become enamored with a 2br/2ba co-op with a beautiful terrace that is priced comparably to a studio, but has unusually high maintenance costs, turn away fast and continue your search. It is probably encumbered by a ground lease. Do not try to convince yourself that it’s worth it because of the low price tag. You do not want to mess with a ground lease co-op!
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Old Today, 01:06 PM
 
519 posts, read 409,130 times
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I remember this happening on 57th street, units were going for much less than market value but they had insane maintenance charges. like $4,000 per month for a 1 bedroom. My question is, what eventually happens to these units? What is the long term solution? Will anyone that wants to live there really fork over $4-5k in monthly maintenance? That's a lot even if you bought the apt in cash.
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Old Today, 01:09 PM
 
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Ok case solved. Thatís what it is. $1113 HOA fee + ~ $200 ground lease
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Old Today, 01:17 PM
 
519 posts, read 409,130 times
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Quote:
Originally Posted by Pizzaburger View Post
Ok case solved. Thatís what it is. $1113 HOA fee + ~ $200 ground lease
that's not all that unreasonable... the issues is, will it go up to $3,000 per month or so if its a ground lease?
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Old Today, 01:44 PM
 
11,289 posts, read 21,744,561 times
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Quote:
Originally Posted by eddiep83 View Post
that's not all that unreasonable... the issues is, will it go up to $3,000 per month or so if its a ground lease?
Yes, that's what I was thinking. Many coops, especially in Manhattan, have maintenance fees of $1000 to $1500 and it doesn't stop people from buying them at market rates.

So obviously if people are going crazy dumping these for $100K then there is something terrible about to happen with the financials.
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Old Today, 02:09 PM
 
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This is nothing new, nor earth shattering.

Plenty of co-ops and condos (and even some private homes) have leaseholds. That is the structure sits on land owned by someone else.

General idea is that for land owner they continue to derive income (rents) from the land brings in a steady source of funds. Co-ops, condos, private homes and other buildings can often have a chance to "buy" at lower rates because they aren't paying for the land. However usually they are paying higher monthly costs because of rent payments to LL.

Leaseholds go back ages in New York and can be directly traced to GB/England.



England/Great Britain where a large majority of land is owned by a few persons (royalty, nobility, very wealthy, etc...) . Instead of outright purchasing a home as in say much of USA, you are purchasing a leasehold that gives one rights to live on said bit of land. You own the structure and perhaps improvements, but the land and anything beneath (such as mineral rights) belong to whoever owns.

Co-ops can and have purchased the land building sits upon.

https://realestateqa.blogs.nytimes.c...sehold-co-ops/

https://www.nytimes.com/2015/06/14/r...-new-york.html

Thing is when many of these land-lease co-ops or whatever went up (1980's or before) NYC in particular Manhattan land prices were comparatively cheap, even below 96th street. Fast forward to modern times and land values have exploded. This can mean buildings are in for a shock when their lease is up for renewal and it is time to renegotiate rent payments.
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