Real Estate Attorney and Investor · Brooklyn, NY · Member since 2016 · 9 posts · 3 votes
Hello,
I have the opportunity to purchase a one bedroom coop in Dyker Heights, Brooklyn. The purchase price is 250k. I would like to purchase for cash, rent it out and refinance (cash out) in a couple of months. The problem is my mortgage broker told me there are no investor loans for coops. Does anyone know of any financing for this particular type of situation? Thank you.
Financing a co-op is much more difficult to do from an owner occupied perspective than buying a condo or single family home. This is simply because there are not that many banks that will give mortgages for co-ops. When they do, the interest rate is typically a little higher than your typical mortgage. The reason here is risk towards the bank. Co-ops are highly leveraged. The residents will have mortgages for their shares of the co-op while the co-op itself will have a mortgage on the actual building.
I have never heard of investor lending for a co-op. If you are ultimately able to find slender, be sure to check with the co-op rules on renting before you go down the road of trying to buy. Every co-op that I have looked at (and owned) had rules against, where you needed to have permission to rent and it couldn't be more than one or two years total in the time that you own. Secondly, any tenants needed to get board approval. These were in the Bronx... so I imagine that it isn't that much different than Brooklyn.
Good luck!
Cash out refinance for an investor co-op is REALLY tough. The only bank I know of that supposedly does this is United Nations Federal Credit Union.
You'd also need to check with the co-op board to make sure they will actually allow you to cash out refinance. In all the co-ops I've owned in the board has to approve any mortgage or refinance that you want to do & most likely will want to pour over every little detail of your income and assets & give you a hard time.
My friend got a regular investor co-op loan from
Patrick Lavell at Liberty Home Funding with putting 30% down a couple years ago for a co-op that he bought to rent out in an investor friendly co-op. So you might give him a call too. As of a couple years ago he didn't offer any 'cash out' refinance options on investor co-ops but that could have changed.