Coop rental- Sell or Refi?

6 Replies

Hello All- I am learning the ins and out here on BP. 

I currently own a coop here in NY which is now rented out. It pretty much just pays for itself, not much cash flow. Purchased for $90k, owe $67k. Currently no PMI. I had a thought to refinance to pull money out for down-payment on a larger rental property. However because of all the trouble getting it rented (paperwork, red tape & approvals). I am more inclined to sell it and use any profits for investing. It wasn't the wisest purchase.

Trying to put together $40-50k for a down-payment for my first deal on another rental property. Thoughts?   

Hi Jared,

I'm an agent in NYC. You might already be aware, but if you refi the co-op will most likely have to give approval and if your LTV goes above a certain level they probably wouldn't approve. You don't mention what the apartment is worth now so it's hard to say without knowing how much equity you have. There are some lenders that will do HELOCs on co-ops but again, your co-op will probably have to give approval.

If it's not cash flowing great then it might not be a bad idea to sell and get into something with a better return. Is it in Yonkers? The market there seems to be pretty strong so if it shows well and is priced right it should sell pretty quickly.  Just keep in mind the seller closings costs (state transfer tax, realtor commission, co-op's closing fees). Good luck!

Originally posted by @Jason Lee :

Hi Jared,

I'm an agent in NYC. You might already be aware, but if you refi the co-op will most likely have to give approval and if your LTV goes above a certain level they probably wouldn't approve. You don't mention what the apartment is worth now so it's hard to say without knowing how much equity you have. There are some lenders that will do HELOCs on co-ops but again, your co-op will probably have to give approval.

If it's not cash flowing great then it might not be a bad idea to sell and get into something with a better return. Is it in Yonkers? The market there seems to be pretty strong so if it shows well and is priced right it should sell pretty quickly.  Just keep in mind the seller closings costs (state transfer tax, realtor commission, co-op's closing fees). Good luck!

Yes, you are right. It is in Yonkers. The value is a toss up. So many coops in area and I will admit it's just an okay neighborhood. I am ready to sell. 

Yes the Yonkers market is doing well. So I'm anxious to start. Thanks for commenting. 

On the refinance side, it may be difficult to get the refinance through. Most banks won't lend to investment co-ops at all let a lone a cash out refinance. I have a couple banks that will (I am in the midst of doing one right now for a client), but they will likely cap the LTV at 60% on any cash out investment co-op refinance and the rate won't be great. Your best bet is probably to sell it in order to ensure you get enough cash.

This was informative because I too own a 2 bedroom co-op in Yonkers free and clear. I was wondering if I should do a cash out refi and rehab, and rent it or just sell as is. I think the value is about $100K 

The thing is all utilities are included and the maintenance fee is $940 so I considered the rent route because the cash flow could be decent if I rent it out for $1600

Thank you guys for your responses. 

@Ron Joseph Yes, we are in similar situation. Looks like my gut was right and I'll just sell it. I got your PM. I sent response.  

Right absolutely. I will check now

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