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Old 06-26-2012, 11:24 PM
 
7 posts, read 33,161 times
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I'm considering buying a HDFC coop cheap but not sure what to make of the financials. I'd like a second opinion since most lawyers now in days are looking out for their pockets, not their clients
1. 80 units, no doorman or special ammenities
2. increase of 2-4%/year in maintenance
3. 27k in cash, 100 in escrow (what does that mean?) 250 in property (i'm guessing the building)
4. owes 240 in a mortgage
5. shareholders equity: 150k
6. Revenue of 380k/year, deducting expenses for operation, taxes, fees, etc, leftover is 13k which has been added to the reserve

From what I have researched, coop's usually dont like to have a lot of cash in the reserve (if anything at all) because they are taxed on it but it seems kind of low to me?
What do you think? I'm assuming that after they sell some coops, they will pay off the mortgage/add to the reserve? (since they havent had a coop sale in a few years)
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Old 06-27-2012, 01:17 AM
 
1,494 posts, read 2,598,273 times
Reputation: 928
Quote:
Originally Posted by ak165 View Post
I'm considering buying a HDFC coop cheap but not sure what to make of the financials. I'd like a second opinion since most lawyers now in days are looking out for their pockets, not their clients
1. 80 units, no doorman or special ammenities
2. increase of 2-4%/year in maintenance
3. 27k in cash, 100 in escrow (what does that mean?) 250 in property (i'm guessing the building)
4. owes 240 in a mortgage
5. shareholders equity: 150k
6. Revenue of 380k/year, deducting expenses for operation, taxes, fees, etc, leftover is 13k which has been added to the reserve

From what I have researched, coop's usually dont like to have a lot of cash in the reserve (if anything at all) because they are taxed on it but it seems kind of low to me?
What do you think? I'm assuming that after they sell some coops, they will pay off the mortgage/add to the reserve? (since they havent had a coop sale in a few years)
Escrow means it's money held by their attorney on the coop's behalf.

The amount of the cash reserve varies but generally should be around a third of the yearly operating costs. As long as there's a surplus at the end of the year the coop isn't necessarily in a bad financial position. Are there any assessments? Any tax abatements due to expire? How many unsold units are there? I would also take a look at the financials dating back 3 years to look for anything that sticks out as a warning flag.

What I really think is that you should hire a real estate lawyer to perform some due diligence on the building's financials. Unless you're a real estate broker with a lot of experience in coops, you really need someone who knows what they're doing to vet the financials of a coop.

Good luck!
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Old 06-27-2012, 03:06 AM
 
Location: Manhattan
24,497 posts, read 34,324,097 times
Reputation: 12020
And an HDFC co-op has even more complicated wrinkles than a "regular" co-op, some of them dizzying. It is specialty housing and I think a lawyer with specific experience with HDFC is wise.


It looks like average maintenance fees must be quite low: $380,000 Revenue/80 units/12 months = $396/month.

In general, HDFC ownership seems to be a deal, of course, depending on price. I wish I knew more about it.

Here's an old thread you might want to read:
//www.city-data.com/forum/new-y...buildings.html

Last edited by Kefir King; 06-27-2012 at 03:25 AM..
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