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I am looking at a condo in Tribeca. While the purchase price seems in line with the market, the combination of CC and Taxes equals approx. $2.08 / sq. ft.
My question is: since monthly charges are supposed to be around $1.30 to 1.50 per foot what "discount" should be reflected in the purchase price to reflect the high monthly.
There is no discount. Money has no value. Just be thankful the listing price isn't $2000psf.....
If yu can't handle the monthlies then you need to earn more. What r u a wall street protestor?
with 20% down, you should be paying the same. now work backwards in determining the price.
are you considering other factors as well? does this building provide additional services that others don't to justify additional CC costs?
are you comparing this non-tax abated building to others that have a tax abatement? if that is the case, then you need to do an adjustment for a shorter period of time. also need to review what the unabated taxes will be.
We had a massive bubble. We had 3 QE. Buy when your money is cheap. Work backwards. Flmaozzzz.
Re Borker talk. 'you will buy a home and I will get my 6%.... Now let us justify the ask price!'. Work backwards.
are you drunk this early in the morning or just an angry frustrated person spewing off unrelated missives ad non-sequitors?
earn more? wall street protester? broker talk? Flmaozz? WTF are you talking about...??
No one asked you to contribute to every post. You're about as helpful as a screen door in a submarine.
no...he's as helpful as a fart in a spacesuit, dammit!!
sorry if i've offended anyone, but the analogy was too spot-on for me to resist posting.
Wife touched by thousands
In theory it is the yearly extra payments above the market average divided by the financing rate (say the 30-yr mortgage), but in practice, it is not that high.
Another way without an academic underpinning is 7-10 years (the avg holding period) of extra payments.
The reality is somewhere in between and varies by each submarket as the extra level of charges has a different sensitivity level to asset value based on how much it drives monthly payments outside the market range and changes the behavior of that submarket's participants.
>>since monthly charges are supposed to be around $1.30 to 1.50 per foot <<
That 'rule of thumb' is really no longer applicable. Many cc charges are now closer to the $2 per range.
I still think $2 per ft is high. I think $1.60 per sq ft is a truer average.
Now if you've been looking at like kind properties (amenties,etc) and those units have a specific average, that's where your strongest argument is....like kind.
Let's argue $1.50, your CC of $2.08 has a finite dollar figure based on the size of the space.
Let's argue 1000 sq ft.
So $1500 a month vs $2080 is a difference of $580 per month.
WHat would that $580 pay off in a 30 year mortgage? Probably $120K at 4%.
If you go this tact with negotiating against a seller, it's fine but you cant just pull #s out of your azz. Have comps that show the lower maintenance with like kind units or it will fall (and rightfully so) on deaf ears.
It will be trickier too with tribeca condos as well as they'll likely be in various stages of their tax abatements.
what r u comparing to? another bldg/unit? Do you like a unit in this bldg and trying to value the high Ccs based on other stuff u saw? Rather, If there is sales data for the bldg, I would stick to analyzing the bldg trends and how the open market has been valuing in-bldg units w/ high CCs over the years (checking that it isnt a recent phenomenon), rather than try to make an adjustment based on how the rest of the market usually values units with CCs in the normal range.
Good points urbandigs. I have always done comparisons in-building, and this issue never came up. In this case I am trying to compare units in two buildings. I'm looking at price per sq ft, amenities, tax abatement etc etc. But there is always other X factors : location, condition of the unit. I just recently saw a building where there were two identical apartments in a B-line,.,,,3rd floor and PH. The 3rd floor was worth more that the PH since the PH was a wreck!
I guess my question is....all else being equal what's the impact on price of higher maintenance/CC. I like the idea of the 20% down theoretical and working backwards.
w67.....you sound like a renter...for the next 10K years.
putting aside all the variables and adjustments that arise from comparing 2 diff buildings, which ultimately degrade any analysis, I would think there are 2 trains of thought on the question:
1) what crescent22 said, and take add up the annualized 'additional cost per month' over a 7-10 yr period
2) take 50% or so of the added expense in terms of current financing options. For example, if all else is the same and unit a costs $2k to carry and unit b costs 3k to carry, it todays lending environment $1,000 per month equals about $225,000...take half of that..or $110,000 or so.
In this example, the #s for both methods come out to about the same. Around 110k-120k if you take a 10yr holding period on unit with 1k per month higher CC
M sqaured.. you seem to wanna be a "homeowner" who can't afford the extra common charges, the extra taxes and negative equity carry as interest rates go higher! ZEIT HEIL.... BURN ALL RENTERS... BURN THEM TO HELL. TAX BREAkS, BITCHES AND BEER for the LANDED GENtRY..
SHOW ME YOUR MORTGAGE! OR GET THE FK OUT OF THIS BAR... YOU DISGUSTING RENTER... I SHOULD STAPLE A COPY OF YOUR RENTAL LEASE ON YOUR BACK!
Simple formula. Annual extra payment divided by 30 y treasury rate. Not dividing by higher amount as the maintenance tends to increase by the same percentage regardless of the current level. Some people may divided by 30 y mortgage rate. 12000 extra per year will mean a discount of 400k. This assumes that you are already maxed out on your mortgage tax deduction.
300_mercer, you made it look simple as stated! Thanks!
300m -- i dont think the market would produce that much of a discount
Unit A: 1200sft, 2br/2bth, f/s, monthlies at $2,000 trades for $1.2m
Unit B: 1200sft, 2br/2bth, f/s, monthlies at $3,000 trades for $800k?
*monthlies are prob $1500 higher than norm for a 967sft apt, this traded at 660k.
Looks like reality is somewhere in the middle
all else equal, always buy the higher priced, lower monthly apt.
monthlies always go up, prices can go up or down.
always consider that you may end up needing to sell sooner than you anticipate, or in less-than-ideal market conditions (where there is plenty of "clean" supply).
High-monthly/low-priced properties can be tough to sell even under the best circumstances.
many can buy RE for cash and do so, and have an aversion to monthly obligations, whether via debt(thus their cash purchase) or monthly charges (incl taxes). High monthly/low-priced properties are not attractive to such buyers.
high monthlies are often a sign of trouble, like an inappropriately large underlying mortgage, expensive lawsuit, poor bldg maintenance, etc. Banks, already reticent to lend, will shy away from lending for purchases of props with high monthlies.
>Looks like reality is somewhere in the middle
which falls into the formula I used;
my $580 a month difference claiming a $120K discount puts your $1000 a month difference at a 200K discount, dead smack in the middle at $1m for unit B.
My formula represents a true cost of that extra payment. Doesnt matter if your staying there 3 years 7 years or 20, that $1000 a month buys you $200K more of mortgage.
If high charges are a sign of irresponsibility, there is no arithmetic that you can use. Who wants the risk for your building that your neighbor bought cheap and has less at stake but a bigger burden they could be more likely to fail to meet?
$1.50-$2.00 per sq/ft is more the norm now from what I see in doorman buildings.
bramstar: "Many cc charges are now closer to the $2 per range"
kylewest: "$1.50-$2.00 per sq/ft is more the norm now from what I see in doorman buildings."
As someone who bought within the past two years, but was looking for several years, all downtown pre-war doorman co-ops in well-maintained buildings, both these comments very accurately describe the 100+ apartments I saw over that timeframe, with closer to $1.50 four years ago, and much closer to $2.00 (and higher) more recently.
condos (page 3 left column)
"monthly carrying costs, including common charges and real estate taxes were $1.57 up 8.3% from $1.45......."
coops (page 2 third column)
" the monthly maintenance charge for all sales increased 9% to $1.70 a square foot per month from $1.56......"
Like I said, average $1.60
$.40 difference. Times 400. Carry the 0. Round up. Times 12. Mmmmm. Mmmmm. Take salary. Pay taxes. Mmmmmm
Ever hear of a bubble. Sorta like happened in 2001-2012. Not deflated yet.
Well you'd have to agree W67, NYC prices have a better chance of seeing $500 per sq ft than monthlies seeing .80 cents a foot.
And please, need another stock tip. :)
(And certainly, as soon as I have daughter)
:) But is she pretty?
You are alright by me... sometimes I offend myself with my rants... but it comes from a little hurt boy from a foreign land just trying to achieve the American dream and seeing idiots like Ali with a Harvard degree selling shoes and coping an attitude.... But I digress.
Truth10, I do very little in the way of trading... but when I DO, I DO IT BIG. A shout out to INONADA who kicked me in the AZZ to get back in the game with his CONED call... I just put $35K in that. I owe you a few weeks on my sailboat in Tahiti. but then again, if I would have made 100% return in CONED and been not as aggressive on SPRINT. OH another shout out to my "business" partner who played loose with my capital in 2007-2009... and I did that for 15% return.... and FINALLY a shout out to all the RE HUMPERS on SE. YOU KNOW who you are and in no particular order:
W/O you guys showing me that plenty of ppl who think they are "smart" buy into the RE FOREVER mantra even after the HUGE BUBBLE POPPING made my SPRINT CALL look like a FDIC guaranteed return. IF YOU GUYS THINK NYC RE HAS ANY CHANCE OF DOUBLING FROM THIS LEVEL VERSUS SPRINT DOUBLING FROM $5.56.. YOU ARE ON. I AM ALL IN. 401K, KIDS TRUST FUND, MY $2MM ETRADE ACCT, MY NIECE NEPHEW COLLEGE FUNDS, MY FERRARI FUND, MY 67FT SWAN FUND.
8 MORE QUARTERS... let it ride.
So TRUTH10... I HAVEN'T WAVERED ONCE ON SPRINT TO $10 call. I DON'T SEE in my UNIVERSE of liquid investments a better trade than SPRINT. APPLE GONNA hit $1,400/share? SP 500 gonna double? NYSE? CONED?
Easiest trade in my life... sprint is still trading like it's headed to BK.
Udigs, maintenance for such a place on high floor will be closer to $2 as normal. Also. I am just using simple financial logic. Why take 50 percent of annual cost divided by mortgage rate or treasury rate? It is simple an extra payment in perpetuity. Just because you sell it does not go away for new buyer. You may have a point in that market not discount high maintenance places enough.
Last year, an appraiser adjusted comps $25 for each $1 difference in maintenance.
That's is basically the same math as mine using 4 percent discount rate which is apps 30 year mortgage rate.
"sorry if i've offended anyone, but the analogy was too spot-on for me to resist posting."
You offended everyone at "hello."
"monthlies always go up, prices can go up or down."
Untrue of course. MMC, definitely in your interest to find out what's driving the higher ccs. It's amazing how often that can be due to poor choice of management company or a complete lack of negotiation with vendors. If it's a smaller building, that may be addressable if you have the inclination (not exactly a common trait though). But I'd stay away from either high prices or high monthlies. Not sure why anyone would tell you one is somehow better than the other. Both suck.
my personal troll produces more garbage in her desperation to refute me.
the reality is that monthlies always go up over time--in extremely rare case some buldings lower maintenance after raising to correct a problem that they chose not to assess for, or after correcting an expense that is too high--whatever the case a lowering of monthlies is very rare, and over time, they all go up--clearly prices do not always go up
and to buy in a building with the plan to fix a high monthly is so absurd i wont address--if the maintenance is uniquely high, move on to a better purchase, dont waste time
and dont stay away from high prices if you can afford--look for good value at whatever price range is yours--for those with money high prices (good values) are necessary to pay for what is desired--do make sure that the realtionship between price/size/and monthlies is sensible
ansd sensible is like i said: all else equal pay more in price. less in monthlies
and listen NOT to my personal troll--she will seemingly say anything, regardless of stupidity, to contradict me
re my troll, the attention is quite flattering--despite her idiotic comments!
Bj my sprint just blew by yr high? No shout out? Wtf. Classless shits living in Brooklyn got no sense of courtesy. Oh well I guess that's why they can't afford manhattan.... They self select the outer boroughs. Poor FKs. Hahahjajaja.
Well you still dont want me buying Sprint, I am the kiss of death with stocks. I keep my allocated funds for the market with Bernstein Global in conservative bond funds.
And the most conservative one still kicks a Nyc RE investment in the azz.
I occasionally do favorite stock o fthe year plunge, I have had my eye on First Solar since @ 18$ a share because everyone hates it. It's still a billion dollar company that lost like 80% of it's value. Aside from the obvious reasons to stay away, I think Fukushima puts solar back in play since the Japanese and French appear to be skittish on nuclear energy and I think it will have staying power.
Still my kiss of death is strong, picked one or two winners since Lehman and that's it. GE at $14 and Citi at $1.10. Of course anything picked just post crash barring insolvency worked.
On the subject of trolls, recently saw Trollhunter, a norwegian indy style movie that was like a cross between BLair Witch Project and Where the Wild Things Are. What a surprisingly excellent movie for the low budget it obviously had.
w67th, firstly, I don't pay attention to daily movements in my equities portfolio. That sh!t drives people crazy. Secondly, I have thanked you plenty! And don't want to over-inflate your ego - you need to stay hungry to make more good calls.
"in extremely rare case some buldings lower maintenance after raising to correct a problem that they chose not to assess for, or after correcting an expense that is too high--whatever the case a lowering of monthlies is very rare, and over time, they all go up--clearly prices do not always go up"
bottoms, this is some quality drivel. You speak with an air of authority that is sadly misplaced - care to quantify how often any of this happens? Or how much monthlies "always" go up? Of course, if you look at monthly costs over a long enough period of time, they will almost certainly always be higher. Problem is, the average homeowner holds on to a property for what, 7 years? That's not long enough for your point to have much application here. High monthlies matter - just as much as price. The only difference is, one can be lowered after you buy; the other, not so much.
And RE: all your "troll" comments, here's some fun reading for you (it might cause you to go into anaphylactic shock, so tread carefully):
When someone of little or no intelligence on the internet gets into a discussion, debate, or argument that they cannot keep up with because of their inability to think and process information outside of their closed little mind, and respond by calling the other person more intelligent than them (A TROLL)! This act is therefore TROLLING because it's a cop out to an intelligent conversation by which the one more intelligent is falsely accused of being a troll as a trolling diversion tactic of the Reverse Trolling which is always done by stupid trolls.
Some general obersvations and questions for the group about this topic.
It does seem that properties with high monthlies simply don't trade at enough of a discount and should be avoided (backed up by comments above suggesting actual sale prices assign a smaller discount than the math suggests). I've been looking at apartments in Battery Park City, where monthlies are extremely high (due in large part to the land lease which brings up additional considerations), but from what I'm seeing it really seems like people aren't properly pricing this into the equation. I feel like at some point people may wake up and realize this, which would cause a real pricing hit for these apartments.
Suggestions on the thread make sense in terms of assigning a price differential based on discounted PV of the extra $ you will pay out over time, but doesn't this ignore the additional effect the higher monthlies will have on the resale value when you sell? Even if the growth rate of monthlies is the same, the gap in $ will be larger when you go to sell, and this will negatively impact the price. The resale value issue is exacerbated in a land lease situation like BPC, but perhaps this also gets back to the question of whether in the future people will "wake up" and start assigning a proper discount.
Regarding BPC, it seems to ignite some passionate opinions on this board (in both directions) - but for my purposes I love living in the neighborhood, am interested in buying a place to settle down longer term, but the pricing just doesn't seem to add up (though it's hard to properly comp the higher monthlies since there's no exact comparison).
ok troll--cool--you disagree
1) you disagree with my statement that monthlies always go up. you think that, more than rarely, monthlies go down
2) you disagree with my comment that, where all else is equal, one should seek to buy the apt with the higher price/lower monthly, rather than the reverse--and you offer the brilliant observation that both high prices and high monthlies "suck"--
that you are my troll is best illustrated by your demonstrated obsession with me here on se--as well as your continual mechanical attempts to refute all i say, based usually on completely laughable logic--ex: items 1) and 2) above
like i said, im flattered that you spend so much time on me
But my ego is small and broken and stuck together with tape. It needs mending every day.
Truthx10. Wouldn't touch solar. It's a subsidy game. A good energy banker friend (from the old Lehman) recently told me an interesting fact. A barrel of oil can lift a ton 10miles into the sky. (i may be off on the specifics). No other energy is anywhere near that cheap/efficent even at $100bbl.
But sprint is just getting started. Wait till their next earnings. :) I am.
w67th, my bad. Consider your ego stroked and mended (felt gross to write it, but there you go).
1) I don't actually know if it's more than rarely; it's just that you make these claims and can't quantify them. My monthlies haven't gone up since I moved in 4 years ago. I highly doubt my building is a needle in a haystack, but some data would be helpful, no?
2) Yep. Why settle for a high price with low monthlies when you can find a low price with low monthlies? Seems pretty elementary to me. Not a brilliant observation by any means, but you seem to have trouble with it.
3) You're conveniently forgetting that the obsession was initiated by one Wbottom many months ago, when you inexplicably went on a long-winded slurp-fest all about me, claiming I engaged in "right-wing trolling" and "pack-trolling" (see definition in my previous post to explain your rationale there). It was and still is really weird - now that it's clear you just enjoy your awful personality, I do get a kick out of watching you writhe and squirm every now and then. You cast so much bait, it's hard to refrain I guess.
you claim your monthlies have remained the same for 4 years (since you bought at peak)--and you think this is not exceptional? dumb
anyone else have monthlies which have had zero increase over the last 4 years?
read carefully my point: "where all else is equal, one should seek to buy the apt with the higher price/lower monthly"
now read carefully your take on my point: "Why settle for a high price with low monthlies when you can find a low price with low monthlies?"
shit like this makes it clear how dumb you are
the rest of the blather is...well...blather
"read carefully my point: "where all else is equal"
Yeah, except "all else" is NEVER equal, so this over-simplified take is completely useless to anyone actually making a real decision. Thanks for trying.
"anyone else have monthlies which have had zero increase over the last 4 years?"
Is this how you collect data? Fascinating! You make claims and go apoplectic when someone holds your feet to the fire. If all you do is throw out statements but have nothing to back them up, why should anyone listen? Yet you have a burning need to be heard, otherwise you would have stayed in the grey zone (though you claimed to love it there) as bottoms. Tough to explain that one, huh?
apoplectic is definitely in my list of top 100 words.
mlh--your comments are spot-on--further, the typical causes of high monthlies don't go away, they get worse--in land-leases, best solution is often to renegotiate, or for owners to buy the land--this leads to assessments (preferable but often unaffordable to many owners) and/or increases to already-high monthlies
if youre in love with bpc, you know the math...price accordingly...consider the reverse-compounding effect of the perpetual neg cash flow that monthlies are, and the much worse projection for a monthly that starts high, or will be high once an abatement expires
if you can be happy away from bpc, in a normal price/monthly $$ situation, run there
"aint yet heard from too many who've seen their's increase by zero over the last 4 years--hey...patience..we may yet hear from such a person"
Wait, you think a significant amount of people actually pay attention to your drivel? Ha! It is to laugh.
I shoulda bought First Solar....it's $31.05
about 11 weeks ago
>I occasionally do favorite stock o fthe year plunge, I have had my eye on First Solar since @ 18$ a share because everyone hates it. It's still a billion dollar company that lost like 80% of it's value. Aside from the obvious reasons to stay away, I think Fukushima puts solar back in play since the Japanese and French appear to be skittish on nuclear energy and I think it will have staying power
That's the way it goes, truthskr.
Try not to beat yourself up about it.