New York City Co-op Airbnb?

9 Replies

Hey guys, so I don't know much about New York or New York City but I'm wanting to buy an Airbnb property in NYC. Most of the listings I'm seeing say that they're co-ops and that renting isn't allowed. Is this a concern or should I just ignore it and proceed?

Any advice from locals or people with experience would be appreciated. Thanks!

@Ryan Burch hey Ryan, my advice being someone who has dealt with Co-op boards that allow and do not allow rentals, I personally would not move forward if they have a restriction on subletting the apartment. Reason being, the co-op board members that live in those buildings will quickly realize that you are going against the rules of the board and can make your life hell. There are buildings where subletting is allowed after a year or two of residence, but rules are different for each management and property. That being said, if you come across a condo, you can do with it as you please.

It’s illegal to Airbnb (short term stay) in a multiple dwelling in NYC

AirBnB aside, even renting out co-ops to longer term renters can be a challenge in many cases. Many co-op board require you to have lived there first and then only allow you to sublet 2 out of every 5 years (this varies from co-op to co-op, so there are some with more lenient policies). Not to mention the fact that 95% of lenders do not lend on investment co-ops (the maximum I have found is 70% on a purchase). The way I see it, co-ops will be an uphill battle if you are purchasing one strictly for investment purposes. 

@Morris Cohen, have you been able to get financing on investment coops?

Bad idea. Most co-op boards will sniff you out as an investor and so you won't be approved in the first place. Even if they do allow renting the minimum lease term is usually 1 year. It's illegal to have a lease of less than 30 days unless you occupy a portion of the property yourself and so this strategy isn't even going to work with a condo.

Andy P. I'm assuming you mean a co-op that allows investors as opposed to buying a co-op to try to rent out. If so, you can get financing on investment co-ops but as mentioned above with much lower ltv and the rates will be higher. In NYC properties don't cash flow great because of the really high prices but you can typically look forward to good appreciation. With an investment co-op the appreciation might not be there because the buyer pool is significantly reduced since the co-op is most likely non-warrantable.

@Andy P. I have done a few of them. The lenders that will consider it will only do 5/1 and 7/1 ARMs (no 30 year fixed) as they are holding it on their portfolio. I’ve gotten 70% on a purchase and 60% on a rate/term and cash out refi. The cash out refi rates are awful though. 

@Jason Lee There are countless condos on Airbnb in NYC. How can you say that it isn't going to work?

Building staff, the super, or your neighbors will rat you out eventually and then the condo will impose fines and take legal action. Then there are the city fines to worry about. Not only can you get fined for actually "renting" out the apartment, you can get fined for simply advertising the apartment for less than 30 days, or violating building/fire codes. If you want to base your "investing" around something that violates a condominium's bylaws and city and state law , good luck to you.

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