Calling NYC dwellers
- Thread starter Harriet
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thanks! it''s a crazy, crazy world. not that long island is any better (or westchester.... my hubby is a dentist. his practice is in a tiny building/house in a nice town in nassau county. nice, not super upscale...his taxes on his tiny building are almost $30k. last year he got a notice from the school district saying that he owed another $1000 because they got the math wrong on the school budget..........
you just cannot make this stuff up!
you just cannot make this stuff up!
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The reason I didn't chime in the first time this came around was because you had gotten pretty good advice by the time I saw the thread, but here are some things that come to mind now that I've skimmed it:
I'm not 100% clear that your building is going condo v. co-op based on your comments about that taxes being included in the maintenance. In a condo building you own the space that is contained within the four walls of you unit, as well as an indivisible interest in the common elements. You pay taxes and assessments and get a mortgage based on that "space." A cooperative is organized as a coorporation and rather than purchasing your unit you actually purchase shares in the coporation that are represented by a perpetual lease on the space otherwise known as your unit. The building is taxed as a whole and the unit's portion of the taxes are charged as part of the monthly maintenance (rather than as a seprate obligation from the monthly maintenance). Typically you pay a slightly higher rate for a co-op "mortgage" (I don't think mortgage is the precise term since it is not a loan colateralized by real estate, but I can't think of what else it might be called at the moment) therefore there is greater risk to the lender as they is no piece of property to foreclose upon in the event of default.
The reason that the existing tenants are offered first dibs on their units is that in many states that is legally required. I do not know what the law is in NY so I don't pretend to speak to that point, but in addition to satisfying a potential legal requirement this also serves to get interest up and get a bunch of units under contract right off the bat. Lenders will not give financing to a project unless a certain % of the units are "sold" already, so developers often give the existing tenants "a deal" (i.e., X% off of market price) to get to that % sold quickly for financing reasons. You'll probably also see the last units in the building being sold at a discount becuase at that point the developer is ready to move on and just wants to close out and get the project off the books. Starreyeyed and others have raised the good point about what "market price" is. I believe you mentioned that there are no comparables to look at; that is an interesting problem and a good real estate agent (completely independent of the developer's project) may be able to offer some guidance.
Do you plan to take the unit as-is or are you opting for an upgrade package (assuming one is offered)? If you go for an upgrade package, where will you reside during the construction in your unit? Also, are you prepared to live with construction around for during that period that other units are being worked on (again, if that is an option). Many buildings have rules that work can only be done in units between certain hours and on certain days (e.g., 9-5 Monday-Friday and 10-4 on Staurday, nothing on Sunday), but developers are notorious for disregarding those rules--especially since they are the ones that would be MAKING the rules at first. It is a (literally) rude awakening to have some sort of power tool going off early on a weekend morning.
As for whether this is a good investment. LOL, if I had a crystal ball I would be wearing the hope diamond as a RHR!!! Seriously, in general I think that real estate IS a good investment, especially if you have a 2+ year time horizon, but every market--and even specific buildings--are different and events outside of our control obviously have a big impact. 9-11 is a good (yet the worst) possible example. Real estate markets took quite a turn immediately after that, and some stayed down for a very long time. Tied to that, just to illustrate the point, is the John Hancock building. To this day the prices in that building have never recovered because there is a perceived stigma associated with living there during to the potential of another event. Obviously that is an extreme scenario, but as you can see even one piece of real estate in a market can have its own unique marketability circumstances.
This is really just stream of consciousness typing on my part, so please forgive the rambling, but these are things that I take from the thread to this point. Do you know which direction you and the DF are leaning toward? And how long do you have to decide?
I'm not 100% clear that your building is going condo v. co-op based on your comments about that taxes being included in the maintenance. In a condo building you own the space that is contained within the four walls of you unit, as well as an indivisible interest in the common elements. You pay taxes and assessments and get a mortgage based on that "space." A cooperative is organized as a coorporation and rather than purchasing your unit you actually purchase shares in the coporation that are represented by a perpetual lease on the space otherwise known as your unit. The building is taxed as a whole and the unit's portion of the taxes are charged as part of the monthly maintenance (rather than as a seprate obligation from the monthly maintenance). Typically you pay a slightly higher rate for a co-op "mortgage" (I don't think mortgage is the precise term since it is not a loan colateralized by real estate, but I can't think of what else it might be called at the moment) therefore there is greater risk to the lender as they is no piece of property to foreclose upon in the event of default.
The reason that the existing tenants are offered first dibs on their units is that in many states that is legally required. I do not know what the law is in NY so I don't pretend to speak to that point, but in addition to satisfying a potential legal requirement this also serves to get interest up and get a bunch of units under contract right off the bat. Lenders will not give financing to a project unless a certain % of the units are "sold" already, so developers often give the existing tenants "a deal" (i.e., X% off of market price) to get to that % sold quickly for financing reasons. You'll probably also see the last units in the building being sold at a discount becuase at that point the developer is ready to move on and just wants to close out and get the project off the books. Starreyeyed and others have raised the good point about what "market price" is. I believe you mentioned that there are no comparables to look at; that is an interesting problem and a good real estate agent (completely independent of the developer's project) may be able to offer some guidance.
Do you plan to take the unit as-is or are you opting for an upgrade package (assuming one is offered)? If you go for an upgrade package, where will you reside during the construction in your unit? Also, are you prepared to live with construction around for during that period that other units are being worked on (again, if that is an option). Many buildings have rules that work can only be done in units between certain hours and on certain days (e.g., 9-5 Monday-Friday and 10-4 on Staurday, nothing on Sunday), but developers are notorious for disregarding those rules--especially since they are the ones that would be MAKING the rules at first. It is a (literally) rude awakening to have some sort of power tool going off early on a weekend morning.
As for whether this is a good investment. LOL, if I had a crystal ball I would be wearing the hope diamond as a RHR!!! Seriously, in general I think that real estate IS a good investment, especially if you have a 2+ year time horizon, but every market--and even specific buildings--are different and events outside of our control obviously have a big impact. 9-11 is a good (yet the worst) possible example. Real estate markets took quite a turn immediately after that, and some stayed down for a very long time. Tied to that, just to illustrate the point, is the John Hancock building. To this day the prices in that building have never recovered because there is a perceived stigma associated with living there during to the potential of another event. Obviously that is an extreme scenario, but as you can see even one piece of real estate in a market can have its own unique marketability circumstances.
This is really just stream of consciousness typing on my part, so please forgive the rambling, but these are things that I take from the thread to this point. Do you know which direction you and the DF are leaning toward? And how long do you have to decide?
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Hi Dee Jay,
Our building is going condo. I was incorrect in conflating the maintenance and taxes. Btw, have you read the NY Times article on how condos are behaving more and more like co-ops?
In NY, 15% of the tenants must bite for a conversion to go through. The insider discount used to be more generous, but ours is a measly 10%, probably due to the strong market.
We have pretty strict rules re construction and such. However, no upgrade package is being offered, which makes the price look steep.
Do I sense that you''re not in the "you can never go wrong with Manhattan real estate" camp? No offence meant to those who are. I myself am undecided.
The Attorney-General hasn''t weighed in. On the one hand, we''re considering waiting to see if the red herring price drops (does it usually). On the other, given the extremely tight rental market, we''re considering another rental.
Thanks!
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Harriet,
Thanks for clarifying the condo/co-op thing; I wasn''t entirely sure. I haven''t seen that article but I''ll look for it.
I''m surprised the discount is not greater given no option for an upgrade package, but I guess the good news is you don''t have to live through construction.
As for "you can''t go wrong with Manhattan real estate"... I do think real estate in general is a good investment, and some markets (like yours) are usually subject to greater appreciation than others, but I guess I''ve been around the block once too many times to consider anything a sure thing, LOL.
Let me know how this pans out, I''m really interested to see which direction you and DF end up going.
Dee
Thanks for clarifying the condo/co-op thing; I wasn''t entirely sure. I haven''t seen that article but I''ll look for it.
I''m surprised the discount is not greater given no option for an upgrade package, but I guess the good news is you don''t have to live through construction.
As for "you can''t go wrong with Manhattan real estate"... I do think real estate in general is a good investment, and some markets (like yours) are usually subject to greater appreciation than others, but I guess I''ve been around the block once too many times to consider anything a sure thing, LOL.
Let me know how this pans out, I''m really interested to see which direction you and DF end up going.
Dee
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Harriet,
Hmmm... I read the article and I find it quite interesting. One of the long held criticisms of co-ops is that they can reject an applicant for any reason and not disclose the rationale, so discrimination of various kind is often assumed to be behind rejection. There was another recent article (I belive also in the NYT) that brought up the possiblity of requiring co-op boards to give the reason for rejecting a potential homeowner. Not that some trumed up rational couldn't be produced, but if you have an applicant that has the financial wherewithal to make the purchase along with a presumably "good" character it will make for interesting legal action going forward when a home buyer that the board considers "unacceptable" in some other way is rejected.
The right of first refusal is another provacative point. Unless condo buildings are preared to raise the $ and actually exercise the right of first refual when a unit has a buyer put forth that will become a further issue in the the rejection of potential homeowners.
In Chicago we have a large number of co-ops in the Hyde Park area, which is near the University of Chicago, and one of my current buyers in HP specifically told me she did not want to see any co-ops because even though she is financially able to meet the more stringent down payment and reserve requirements, and there is no doubt in my mind she is of good character and could find people to attest to it, she has no interest in adding that layer to the buying process. It's a shame because the loveliest and most well kept of the buildings in that area are co-ops, but my client's reaction is becoming pretty standard, and co-ops units languish on the market for a LONG time, as well as receiving a MUCH lower price relative to their condo counterparts on the market when they finally do sell.
Obviously in NY things are different, as a lot of real estate has been organized as a co-op going back decades, but I will be curious to see how the co-op/condo debate pans out in years to come as more buildings are built and converted, and as the trend toward conversion from co-op to condo progresses.
Dee -
ETA: Please forgive my long and rambling responses; I get to typing out the things I want to convey and the next thing you know I've posted The War and Peace of Real Estate, LOL!
Hmmm... I read the article and I find it quite interesting. One of the long held criticisms of co-ops is that they can reject an applicant for any reason and not disclose the rationale, so discrimination of various kind is often assumed to be behind rejection. There was another recent article (I belive also in the NYT) that brought up the possiblity of requiring co-op boards to give the reason for rejecting a potential homeowner. Not that some trumed up rational couldn't be produced, but if you have an applicant that has the financial wherewithal to make the purchase along with a presumably "good" character it will make for interesting legal action going forward when a home buyer that the board considers "unacceptable" in some other way is rejected.
The right of first refusal is another provacative point. Unless condo buildings are preared to raise the $ and actually exercise the right of first refual when a unit has a buyer put forth that will become a further issue in the the rejection of potential homeowners.
In Chicago we have a large number of co-ops in the Hyde Park area, which is near the University of Chicago, and one of my current buyers in HP specifically told me she did not want to see any co-ops because even though she is financially able to meet the more stringent down payment and reserve requirements, and there is no doubt in my mind she is of good character and could find people to attest to it, she has no interest in adding that layer to the buying process. It's a shame because the loveliest and most well kept of the buildings in that area are co-ops, but my client's reaction is becoming pretty standard, and co-ops units languish on the market for a LONG time, as well as receiving a MUCH lower price relative to their condo counterparts on the market when they finally do sell.
Obviously in NY things are different, as a lot of real estate has been organized as a co-op going back decades, but I will be curious to see how the co-op/condo debate pans out in years to come as more buildings are built and converted, and as the trend toward conversion from co-op to condo progresses.
Dee -
ETA: Please forgive my long and rambling responses; I get to typing out the things I want to convey and the next thing you know I've posted The War and Peace of Real Estate, LOL!
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For something of that ilk in the Gold Coast, which is the equivalent to the neighborhood that I imagine you're in, a place like that with nice hardwood floors, central heat/air, laundry in the unit, granite and stainless in the kitchen, marble bathrooms, and all the other happy stuff *might* be had for about $750K, but more realistically you're going toward $1M, especially if you picky about how much water you actually see and are not just interested in a sliver of the lake between buildings. If you want parking add about $50K per spot--assuming there is any available in the building. There are some lovely Mies Van Der Rohes on Lake Shore Drive that would fit the bill nicely, and they are even CO-OPs so you'd feel right at home!
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The nicest thing about ours is that it has actual closet doors. All the rentals we've seen have those on tracks, do you know what I mean?
Incidentally, here's our alternative. It's the F line at One River Place:
http://www.solowresidential.com/
Incidentally, here's our alternative. It's the F line at One River Place:
http://www.solowresidential.com/
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diamondfan
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I am surprised that co ops still are allowed to deal with applicants in their antiquated way. It seems terrible to me that you can be rejected for no good reason and not even get the courtesy of a reason why. Seems so dark ages to me.
New York real estate is hot, and while I tend to think real estate is a good investment, you just never know so it is best not to assume anything. Buy what you can afford, where you need and want to be. There is nothing worse than buying something far away and having a miserable commute. Buy something that you can afford to make any needed improvements on, even if they are just aesthetic, so you can be happy in the surroundings, even if you need to prioritize projects and tackle them one at a time. Sometimes it is worth it over the long haul to be house poor, sometimes it just makes for struggles that tax everyone.
New York real estate is hot, and while I tend to think real estate is a good investment, you just never know so it is best not to assume anything. Buy what you can afford, where you need and want to be. There is nothing worse than buying something far away and having a miserable commute. Buy something that you can afford to make any needed improvements on, even if they are just aesthetic, so you can be happy in the surroundings, even if you need to prioritize projects and tackle them one at a time. Sometimes it is worth it over the long haul to be house poor, sometimes it just makes for struggles that tax everyone.
diamondfan
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I just hate to see people buy something so far from work and then end up hating the long haul every day. I totally get that sometimes that is all they can afford that is nice and in a good place, but still, it ends up being something tough because they are never home to enjoy it! Likewise reaching so far beyond what one can really comfortably spend, and feeling really strapped and house poor, not being able to live the way you did prior to buying and really missing it, and also not being able to do the things around the house that you need to. Of course it can be fun to have different projects over time and to be on the hunt for special things for your home, that usually is not an overnight thing...when I was getting my house ready for my son''s bar mitzvah it took a good two years to get it furnished and get a lot of the details in place, literally up til the week of the event, but I am really talking about things that impact your daily life like plumbing. Some folks can move in, are happy to just get in and take things as they come, and they can even live in the home during work phases, others find it too tough and disruptive. It really is so personal. You just have to know yourself and your lifestyle.
ammayernyc
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ammayernyc
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Don''t worry... we love where we live. We''re just looking around.
In fact, you should see the apartment we''re in. It''s absolutely amazing. I''m not sure what the current rent would be since we''ve been here for three years, but it''s definitely less than 9k.
We live in a Glenwood building. Unfortunately, the floorplan isn''t on the website, but our view is amazing... we can see the GW Bridge, Yankee Stadium, Triboro, etc. I can tell you what the traffic is like on the FDR at all times
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In fact, you should see the apartment we''re in. It''s absolutely amazing. I''m not sure what the current rent would be since we''ve been here for three years, but it''s definitely less than 9k.
We live in a Glenwood building. Unfortunately, the floorplan isn''t on the website, but our view is amazing... we can see the GW Bridge, Yankee Stadium, Triboro, etc. I can tell you what the traffic is like on the FDR at all times
.ammayernyc
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