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Should I care if I don't need a mortgage? what kind of discount is reasonable on an apartment for which mortgages are hard to come by?
you should care about the quality of life issues.
I'm not sure i understand. Do you mean living in a building with many rentors?
If sponsor owns many apartments, maintenance, decor, etc. items may not be done to keep monthly charges low ( as rents of R/S tenants still in place may be less than maintenance .
Also, think of problem with future resale of your unit, if prospective purchaser cannot pay all cash.
I own in a prewar condo same, and governance is a little bit of an issue because the board has to round up all the far-flung investors to get their proxies in. That said, I love my building.
DG Neary Realty
Personally I would probably steer clear of low-owner-occupancy condo conversions. Apt23 is correct to bring up the quality of life concern. I hate to say it, but it is often the case that renters are simply not as caring about a building as those who own (think empty beer cans left in the elevators, food wrappers dropped in the hallways and half-empty pizza boxes strewn haphazardly in the stairwells).
Plus, do you really want to repeatedly encounter the crazy cat hoarder who wanders around the halls in her rarely-washed shmata complaining about the roaches in her apartment? Because she's not going anywhere anytime soon.
An additional concern is that you're unlikely to get accurate information about owner occupancy in a condo. Of course, you can assume the sponsor units are rentals. If the building were a coop, you could assume the rest are predominantly owner-occupied. In a condo, you won't know until you move in, especially if you're paying cash and don't have a lender harassing the Managing Agent for verifiable data.
As for the cat-hoarding spinster down the hall, she haunts some conversions, but not all. In any case, she may not be your biggest worry. People who have lived in the building for thirty, forty or fifty years, and who are likely to stay there the rest of their mortal lives, have a pretty strong stake in keeping the place clean, safe, and hospitable. They may not have much money, and their physical and mental health may limit their maintenance and housekeeping, but they probably care deeply about their homes. The problem neighbors are just as likely to be the transient market rate tenants living in sold units, whose stake in the building basically ends with their security deposits. Even owner-occupants can be boorish neighbors; and it's not unheard-of for them to get old or sick or financially stressed and neglect basic upkeep.
gaongaon: Returning to your original question about the appropriate discount, it really depends on how big a bloc the sponsor still holds, how unfavorably lenders view the condo and how likely the building is to "normalize" within a few years. If you're willing to share the address, or a bit more information, maybe we can offer some insight.
>They may not have much money, and their physical and mental health may limit their maintenance and housekeeping,
Are you saying that poor people have a greater propensity for mental health problems? Putting aside columbiacounty as too easy a punch line here, are you otherwise serious?
Huntersburg: Poor people may have a greater propensity for certain mental health problems, and I suppose people with certain mental health problems tend to be poor. That's all completely beside the point.
The old tenants are (wait for it)... OLDER. That's all. Rent-controlled tenants are mostly aged. Rent-stabilized tenants are more mixed, but still must skew older, on average, than the median condo buyer.
So let's call the thing what it is: the lurking menace behind these discussions is senile dementia, which we can probably agree is an affliction of the elderly. There's also the matter of debilitating depression, which likewise afflicts the elderly in sad disproportion to their numbers. The proverbial cat lady is both senile and depressed. She doesn't need to be poor to terrify her unit-owning neighbors. She doesn't even need to exist. The mere specter of Friskies cans piling up in her kitchen amid gamboling roaches - whether real or imagined - is enough to scare off potential buyers.
I don't mean to make light of her plight, or that of her neighbors. But in the broader scheme of Things That Should Scare a Buyer in a Recent Conversion, she's a relatively minor problem.
Did the cat lady go out and get her cats in her 80s and 90s whereas in her 70s and earlier she was just a goldfish and labrador lady?
How would you explain aboutready's debilitating depression when she gave birth to her daughter - you recall, the depression that required her institutionalization and medication for some period of time, according to her? She might have been older than the average mother, as she's stated, but she was by no means elderly.
This is not a recent conversion.
gg: That will tend to trim the discount, unless there's a huge sponsor concentration. Even then, if an apartment is really nice, cash buyers in buildings like 500WEA seem to be holding their noses and bidding high anyway.
I recently looked into a condo unit in a building that had low-owner-occupancy. The owners of the unit were desperate to sell and were looking to make a fast all-cash deal, presumably because no lender would approve a mortgage on such a building. While the place was not a total disaster, there were small signs of neglect that put me off: a washer in the common laundry room that was broken and hadn't been repaired in at least two years and a dodgy heating system (half-radiator and half-floor heater). But here's the part that bugged me: on my first visit I asked the agent to show me the roof and he obliged, taking me to a ladder on the top floor. I climbed the ladder and found the roof hatch partially open. I simply shoved it aside to have a look around, and when I came back down, I asked him if I should close the hatch. He said no, it was better not to in case the super (whom I never saw) was on the roof. I hadn't seen anyone, but I thought, OK, surely there was a reason it was open. I came back a week later to have a second look at the place and there was the roof hatch, still partially open, just as I had left it. We'd had a couple of major thunderstorms in the meantime and the carpet was soaking wet. I pointed this out and the agent remarked that he would inform the super. But would I really want to invest a serious chunk of money into a unit that a) I was sure to have difficulty re-selling and b) where nobody cared enough about either the security or the condition of the building to do something as basic as keep the roof hatch closed? In the end, I decided I didn't.
Just to clarify--I don't mean to sound nasty with regards to the renters, and certainly don't want to pick unduly on cat ladies. And West makes a very good point--in our current rental the worst neighbors were the just-out-of-college roomies who thought it was appropriate to blast Haddaway DJ mixes at all hours and get into drunken arguments with their girlfriends on an otherwise peaceful Sunday evening. Thankfully they're gone.
But yes, the cat-hoarder-who-complains-about-her-roaches also exists, in some form or another, in many multiple dwellings here in NYC. (In my last apartment, a co-op, it was a brings-pigeons-home-from-the-park lady who single-handedly launched a major mouse situation on our hall thanks to the scattered birdseed all over her apartment).
This is just all worth keeping in mind if you plan to purchase in a building in which owners/shareholder-tenants are the minority. :-)
If you want to know the owner-occupancy percentage in a building, you can ask the managing agent. Even if you are not using a lender, you can get the agent to send you a filled-out "generic lender's questionnaire." There may be a nominal charge of $150 or so for processing, but it's definitely information you can get.
Some of the info on the questionnaire may be useful (such as the age of the building and the type of construction) to your homeowner's insurance company anyway.
I live in a such a building and I have not had any issues. The place is clean, the washers work, hallways vacuumed once a week, elevators cleaned and freshened every morning, everybody seems stable and normal. The doormen, porter and super all keep things very ship shape. Last week I noticed the hanger part on the laundry cart was broken. This week, we have a brand new laundry cart.
I think neglect can be in any type of building, regardless of ownership levels. Just watch out for it before buying.
The real question is; do you want crazy cat lady on your coop board? That would worry me more.
Agree with needsadvice: i live in a recent condo conversion that is less than 50% owner occupied, and in the past year we've had a rent controlled tenant set fire to the apt/building, and another who was evicted start hanging around the lobby.
That being said, a good friend was terrorized in her fancy west village co-op by an elderly upstairs neighbor who kept leaving the faucet/bath/shower running for hours, causing serious water damage to her apartment MULTIPLE TIMES in one year.
Point is, like your family, you don't get to choose your neighbors. And condo conversion or established co-op, you stand to live near some undesirable neighbors.
I guess the only solution is to buy in new construction with a bunch of bankers! :)
>a rent controlled tenant set fire to the apt/building,
Your belief was this was done purposely?
>and another who was evicted start hanging around the lobby.
The evicted tenant likely lived in the building since or before 1970. Maybe this older person wanted to see old friends and neighbors?