Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Depends on the percentage of shares that are still rent stabilized tenants. We moved into our coop of approx 100 units, of which I think maybe between 2 and 5 units still were sponsor-owned and had the original tenants. After about 10 years all those tenants are gone. One lady died and another couple got evicted for nonpayment of rent. Not sure about the other units.
But if it's a really small coop of 10 units and 5 units have renters then it's a different circumstance
It was a very big building. The fact I might not be able to rent out the unit easily if I left the area (due to co-op board restrictions) was part of the reason, I decided against. Also I had a friend who had tough time selling in that particular area her co-op studio apartment when she needed to move some years prior.
what’s called sponsor rights is very important to have when dealing with stabilized coops .
that means you do not need board approval to sell , and can set your own down payment terms and financing terms despite what the building requires .
you must have these rights assigned to you down the blood line , nor can you ever live in the apartment and retain sponsor rights .
basically you are exempt from the obstacles of having a board .
without us being able to pass down sponsor rights , the investor groups will not buy.
so we asked for and retained sponsor rights when we bought .
sponsor rights start with the original sponsor.. if he sells to an investor the investor can ask for his sponsor rights … if the investor sells he can pass those rights down .sponsorr rights are passed on an actual document.
but once someone with sponsor rights moves in themselves sponsor rights end , so it is strictly an investor thing.
it is extremely important to have those rights in deals like these.
also it is critical that these apartments are in buildings that are highly desirable and liquid once the apartments are vacant .
that is not your local , typical building . many times selling can be very very hard .
as an example we sold two of the units in 2008 .they went for just 10% below the all time high .
they sold very quickly in 2008 , although closing took months as mortgage commitments from banks were not honored because the banks had no money to loan when closing came.
few dabblers will have any knowledge about sponsor rights which is why this isn’t for the typical small landlord
Last edited by mathjak107; 04-23-2024 at 08:56 AM..
You buy it for the low then you offer cash to the tenant for them to move.
one could take an apartment for themselves or immediate family and get the tenant out but in most coops it would not work well .
most coops have existing tenants from older conversions which would likely make them over 62 unless succession was involved .
An owner cannot evict a tenant from a rent stabilized apartment in NYC if the tenant or the spouse of the tenant is 62 years of age or older, or has been a tenant in a dwelling unit in the building for 15 years or more, or is a-disabled person unless the owner provides an equivalent or superior apartment at the same or lower rent in a nearby area.
the other pitfall is that the investment must be held in personal name and not an LLC OR CORPORATION
apparently a LLC OR CORPORATION can’t have family .
few investors will buy a package of apartments and not use an LLC or corporation so that tactic is off the table generally.
usually the only way is a buyout or profitable sale to the tenant at a low price but usually that will involve you having sponsor rights since boards may reject the deal given the chance .
we found a 100k lease buyout very effective with 7 out of 9 taking it . but we are talking 7 figure apartments.
but that money is taxable to the tenant and there is no official ruling on whether it qualifies for capital gain rates or regular income .
it has been a case by case based on PRL decisions by individual irs decision.
a prl is a private letter decision by the IRS where they don’t want to rule across the board so it’s a case by case , sometimes they rule in favor of capital gain rates and sometimes not.
lease buyouts are not popular anymore so they don’t want to make a ruling on it i guess
Last edited by mathjak107; 04-26-2024 at 04:00 AM..
I remember the housing crash of the 1990's. Occupied apartments were typically selling selling for $5,000 or less (rent didn't cover the monthly maintenance.)
Anyone who bought a bulk of them and was prepared to wait a while, losing money every month, couldn't lose.
that’s why i like these deals . the appreciation is already baked in .
additional appreciation gets added as you wait .
but sometimes the tenant can out last you .
that is why it’s usually investor groups or corporations who buy these packages as they don’t have a lifespan.
on the website that shows our sales , i can click on the name of who we sold it to and it shows what they sold it for .
i mean we made good money on them but when i see how much added appreciation there was over the years , it can be hundreds of thousands of dollars more they sold for
I remember the housing crash of the 1990's. Occupied apartments were typically selling selling for $5,000 or less (rent didn't cover the monthly maintenance.)
Anyone who bought a bulk of them and was prepared to wait a while, losing money every month, couldn't lose.
we bought a non stabilized coop and rented it out to a tenant in 1987 who was at market rent .
we got 850 a month rent and it cost us 1200 a month with an 8-1/4% mortgage …
it was breakeven with depreciation . without depreciation it took years for the rent to be positive cash flow.
that apartment came in handy as now my ex wife lives in it. it’s in kew gardens by the queens court house
I am in a Mitchell-Lama co-op in the finest part of Manhattan that again confronted the issue of going private. I was for privatization and some quick money but the majority of old-timers thought otherwise.
In an elevator conversation, where most talk is conducted, natch, a woman spouting off for keeping things as they were said she couldn't afford to go private. I said it's a win-win for us: stay and maintenance will likely stay the same because of the rather high flip tax, leave and take a bundle of cash with you.
She said "But I can't AFFORD to buy my apartment and seemed dumfounded when I said 'You already OWN it, you can sell it for at least a half million dollars.'" She kept saying "I can't AFFORD a half million dollars." I finally realized I was talking to a fool or a cinderblock wall. Her ilk carried the NO vote.
That conversation gave me insight into what little common sense to expect of my fellow earthlings.
which is why with 51% of insiders needed today for a. conversion, those days are likely over .
But...
Former SIL is in a rent stabilized apt on CPW. It overlooks the park. His mom is the lease holder. She is 98 and has had that apt since SIL was a child. He's retired and paying +/- 3500 a month. The lease stays she can sign it over to him. And he can sign it over to his son.
The owner keeps thinking the old lady will die. He needs to read the paperwork. They can pass it on like they own it.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.