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I see some cheaper co-ops in Manhattan, but the description says it comes with a rent stabilized tenant. Why would anyone want to buy it then. I assume it's hard to evict and you can't raise rent too much. The rent the tenant pay doesn't even cover the HOA fees
You buy it for the low then you offer cash to the tenant for them to move.
If I were a tenant , the cash offered probably wouldn't be enough to buy anywhere so would not make sense to take ...I would have to give up my low rent and move somewhere market rate which would end up costing more in the long run
Sometimes, the tenant is elderly and alone. So buyers are just waiting for the grim reaper so they can then own the place with no strings attached. But it can be a gamble. If the old person has live-in family that doesn’t work because he/she can continue to live there if they’ve been living with grandma for, IIRC, at least two years. But maybe the laws have changed.
Because when they leave, the value of the apartment becomes vastly higher.
We have someone on the board here that did this kind of investing, and very successfully. There are substantial real estate investment groups who do this as a specialty.
Quote:
Originally Posted by Berniess
I see some cheaper co-ops in Manhattan, but the description says it comes with a rent stabilized tenant. Why would anyone want to buy it then. I assume it's hard to evict and you can't raise rent too much. The rent the tenant pay doesn't even cover the HOA fees
Think of it like an investment by someone who has tens or hundreds of these. The *maturity* date for each apartment is different and the investor is OK with that. They might be willing to wait a decade or more. Life is unpredictable and more often than not, people will leave an apartment in one way or another.
i owned a package of 9 apartments in the 200 central park south building , the second hottest coop in manhattan.
these can be gold mines depending on where they are located.
since to be stabilized they had to be original tenants from when the building converted so they were boomers .
they were also still tenants because they couldn’t afford to buy .
that told me they likely would not be able to afford to live by central park when they retired .
so we bought a package of 9 apartments for cents on the dollar with break even cash flow and offered 100k to any tenant who moved out .
over ten years 7 out of 9 tenants took the offer and each apartment went for 7 figures or multiple 7 figures .
we dumped the two remaining on an investor group .
location is extremely important as well as the tenants economic situation and age and anyone else with succession rights .
i can tell you this , the good stuff is not advertised…. the stabilized market place is the play ground of pros who know how to play the game and have direct ties to the brokers who deal in this stuff .
it is never advertised if worth while
when we wanted to dump the two remaining , our broker has their golden list of players .
they made a few calls and in 1 day we had a potential buyer , an investment group .
so be careful , it could be a money pit if it’s an advertised property as the good stuff is not usually privy to the public.
what kind of deals do these go for at break even rents ? the two apartments we dumped each were valued at 1.1 million …both were sold for 360k in total . as far as i can tell the investor group is still sitting on them .
i found a few websites like realty hop that tracked 7 out of 9 of our sales unbeknownst to me and shows who we sold to.
you can then click and see who the next party sold to and for how much , very interesting and a surprise to see our LLC name tracked automatically by a few websites
so that gives you an idea of the levels these trade at . they go for cents on the dollar . today 25-33 cents on the dollar can be a sell price and even that is high
we even made money at that price compared to what we paid when we dumped them . so these deals are gold mines but it is generally a private playing field .
if you are seeing it advertised i would be very very leary , as i said , if there is anything worthwhile you wont even see it as it’s a good ole boys club in the decent stuff
you also never want to buy just one.
if i had to guess , what you are seeing is not a very good deal at all , especially if cash flow is negative.
no one knows how long the wait will be so negative cash flow is out .
that is why you only buy these in a package so if one goes negative others can get you to break even ,
in a good area future appreciation while you wait makes up for the break even rents .
i am amazed at what these apartments we sold were resold at years later by who we sold to
Last edited by mathjak107; 04-23-2024 at 02:24 AM..
Years ago I was considering buy a studio co-op apt in a building that still had rent stabilized tenants. I decided against doing so not only due to my own personal situation but also I felt that owning a co-op share in such a case involved more risk that I wanted to take.
Years ago I was considering buy a studio co-op apt in a building that still had rent stabilized tenants. I decided against doing so not only due to my own personal situation but also I felt that owning a co-op share in such a case involved more risk that I wanted to take.
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
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