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I am about to put down my downpayment on a rather new condo in Downtown Brooklyn. I decided to have my lawyer request the financials from the Sponsor's lawyer. The balance sheet is showing negative surplus of around $100K (the total assets are valued around 900K).
I then went on to the income statements and the net income for 2008 is almost break-even at -35K. While the number may seem high on an absolute basis, percentage wise, it is only deficient by about 2%.
But I am still worried. I know this is a rather new building, but are negative surpluses common for condo's? I know it is very possible for Coops to have negative equity, or surplus.
Any input would be immensely appreciated.
don't worry if there is a surplus the board will find a way to spend it. if there is a deficit they'll just increase the cc.
Balance sheets for Coops and Condos have to be read rather carefully. While the income statements can be taken more literally, balance sheets have items like accumulated depreciation which make them not really reflective of the building's real financial position. Look more at the "cash" position and ignore the depreciation at similar stuff: what cash do they have on hand, what are their current receivables and accounts payable. Also, the value of non-cash assets is usually pretty useless.
Thanks so much. Out of about 900K in total assets, only 11K is cash! 200K is from receivables (assessments) with accounts payable of also around 210K.
Definitely not stellar, in my opinion.
200 AR plus 11 cash - 210 payables = around zero. Not so good, especially since AP is almost always 100% and AP sometimes isn't.