Hong Kong, Hog Kong · Member since 2015 · 2 posts · 0 votes
Hi, I recently signed up to this site and find it very insightful. I am not a U.S. citizen but have live in NYC for a year and am some what familiar with the different boroughs. As a first time investor in property, I narrowed my choice to Manhattan for buy and hold. Essentially I like to leverage up and not get some cash flow or at least to cover the mortgage. I would like to get an opinion about investing in a condo-op (a coop that allows rental). It is actually a coop in midtown very close to the subway with a very easy going board, with mostly 1 bedroom and studio. The apartment is currently owned by my friend who's looking to offload it due to a commitment in another apartment purchased. There is a tenant already. My question is, is coop a good investment in New York for cash flow? Or better to pay up on a condo? some coop are restrictive and the policy can change anytime. Buying from friend will also mean discount, as there's no agent fee involved.
Investor · new york, NJ · Member since 2014 · 137 posts · 13 votes
11y
please consult a tax lawyer and or attorney - even if the coop has loose rules now it could change - additionally there are tax advantages to a condo - and your liability is different. in both cases you should check the financial status of the association to avoid being blindsided. I guess NY RE looks inexpensive compared to Happy Valley, but there are also a lot of tenant protection laws so be advised. possibly a property manager could answer your questions or maybe even me once I get my license:)
Real Estate Broker · NYC Metro Area · Member since 2015 · 58 posts · 28 votes
11y
Hi Dennis and welcome to BP!
Personally I would be hesitant to purchase a Coop if your goal is to rent it out from Day 1.. Many Coops have strict rules on renting and often write into the contract that the unit cannot be rented out for the first 12-24 months.. Even when you are allowed to rent out, your tenants will be subject to board approval which means there's extra hoops to jump through.. Additionally many Coops have rules on the Owner:Tenant ratio in the building and if they have already reached their quota, then you will just have to wait in line to rent yours out!
Also be sure to check out with your friend what kind of financial standing the building is in (when was their last increase on the coop fees etc and is there any capital expenditure planned in the near future) as these monthly fees don't go away and can definitely inhibit your ability to produce cash flow from Coops..
Investor · new york, NJ · Member since 2014 · 137 posts · 13 votes
11y
please consult a tax lawyer and or attorney - even if the coop has loose rules now it could change - additionally there are tax advantages to a condo - and your liability is different. in both cases you should check the financial status of the association to avoid being blindsided. I guess NY RE looks inexpensive compared to Happy Valley, but there are also a lot of tenant protection laws so be advised. possibly a property manager could answer your questions or maybe even me once I get my license:)
Real Estate Agent · Bronx, NY · Member since 2015 · 211 posts · 88 votes
11y
Hi Dennis,
I agree with Brian and Kara. I would not recommend a coop for your purposes. Even if the board currently allows renting they could change that with a vote at any time. Also, as stated above, renting out a coop apartment can be a nightmare for you and a potential renter. In addition to looking in Manhattan, I suggest you also look in the Bronx as it is still less expensive but hot and increasing in interest.
Real Estate Agent · New York, NY · Member since 2014 · 160 posts · 45 votes
11y
Agreed with all, @Dennis Y. if your purpose of purchase is strictly for investment, stick to condos and be sure your agent and attorney do their due diligence on the building. Even some condos have sublet policies in place.
Hong Kong, Hog Kong · Member since 2015 · 2 posts · 0 votes
11y
Thank you all for your feedbacks! The only reason I even thought about coop is because of further discount from my friend, no further need to additional die diligencr, friend has also lived there for a few years, the location and size is great, and also there is a tenant already. But the risk is the board can change even though only three people are on the board. I think from piece of mind Perspectice, I will likely stick to condo then.