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Say, I bought a HDFC co-op today for $200,000. In 2020, the property value doubled, will I have to sell it with an income restriction requirement, to a buyer with annual income under $65,000?
since the income requirement is defined as a precentage of the AMI (area mean income) the number will change accordinly. If the current 65K represents 110% of AMI, the restrictions mght be 110% of AMI in 2020. I am not sure however that the HDFC will continues more than 15 years so restrictions might be time limited.
Each building under HDFC sets their own limits. Some set the income restriction at 50% of NY area median income, others 120%. If the NY area median income for 1 person is currently $53,800 and the building uses the 120%- that is how they come to the current limit of $64,560 for 2009. Obviously this will change every year based on what the NY area median income is.
In recent years many properties that are HDFC have been priced far above what income limits would suggest the typical buyer could afford (for a variety of reasons)- so keep that in mind before bidding.
Read the Offering Plan. There are many different versions of HDFC Coop rules. And some Coops ignore them.
Thank you for all you comments. So it's not the New York City sets the limits and approve the sales/tansaction, really up to the co-op board...?
Also, have your lawyer carefully identify all the factors in the particular coop you're looking at that will allow the entrenched board to rob you blind.
And run away at the first sign of impropriety, like the current audited financials are not yet available.
Yes, you will. Each HDFC building is set up differently (in rules on how much they can price apts, income limits, flip taxes, et cetera) however in order to remain an HDFC they have to abide by the original HDFC rules which use income limits. It is remotely possible an HDFC would decide to un-HDFC itself, but I have been informed by reliable sources that this pretty much never happens.
I've seen the same HDFC listings for well over a year, not all but many remain on the market a long time b/c of the income restrictions.
as semerun points out, many have been listed at prices far higher than what people of their income limits could reasonably afford, and that's why they remain on the market so long.
Many listed HDFC's also advertise "parents buying for children" which is absurd in my opinion.
The flip taxes can be massive so just be aware of what you're getting into. We could have gone for an HDFC but we felt like it would be too hard to resell.
Actually if priced appropriately, an HDFC can be very easy to sell. The problem is that so many of these apartments are not priced in line with the income restrictions (assuming the board abides by the restrictions- some don't). I have been helping my friend look for an HDFC for about a year and a half now (she is patient). I identified the right building for her, but apartments don't trade frequently in the building. When they do become available- they tend to go into contract within days. She fell in love with one unit that was on the market a few months back- and immediately put a bid on it. Her bid matched the highest closing price ever in the building (for an equivalent apartment that closed before the real estate market went into free fall last year). The owners wanted more- despite the market drop. I advised my friend to stand firm- I didn't want her to stretch her budget or to overpay. 2 weeks later the unit went into contract with another buyer. She is disappointed- but realizes that the NYC real estate market might not have stabliity right now- so there is no rush. If I am right that the unit sold at a price too high- then she can take advantage of a lower price later on. If I am wrong, well this gives her more time to save.
"It is remotely possible an HDFC would decide to un-HDFC itself, but I have been informed by reliable sources that this pretty much never happens."
I have to disagree with this statement. Take a look at Harlem HDFC's. Plenty going for huge $, and a lot of listings not even mentioning they are HDFC because the Coops aren't following the regs even before they are legally allowed to do so. There's a TREMENDOUS pressure not to collect those flip taxes and to ignore the income requirements: people want to sell who have been waiting for their windfall for years and their choice is selling for $250,000 and giving 70% of it away or selling for $700,000 and keeping it all? That kind of money makes people justify lots of behaviour.
After you buy from HDFC co-op, the tile of the unit is in your name. When you sell the unit, would it still be selling it from HDFC, or it's a simple resale from you?
I do think it depends on each HDFC. There are few very reasonable HDFCs, though. The ones with extremely low flip tax (and that is exempt for people who buy resale apts), very high income restriction (which has been going up every year though 2010 might be flat), and truly affordable. There are some HDFC apts that are going on resale for ridiculous amount of money. That's true. But if you do your homework, you can find ones with flexibility. Some HDFCs won't let you sell for a # of years (though I assume that applies for the original buyers). But not all do.
If some HDFCs ignore city regulations, I seriously doubt the health of that coop is good not to mention the legal risk they would face. City will clamp down on illegal activities sooner or later. Proceeds from the sale's profit is supposed to go towards paying down the coop's loans to the city. If people avoid that and the coop board is complicit, what does that tell you about the future of that coop? Not good. How is that coop going to build reserves for capital expenditures to keep up the value of the coop? When will that coop ever finish financial obligations to the city and become non-HDFC and go market rate? Avoid coops like that like the plague. You will face a hefty assessment down the road.
You want to go into a HDFC that has an established board with good financial and legal history, predictable transactions, flexibility, low flip tax, high income restriction, and again, experienced board that knows what they're doing. It sounds like many HDFCs have boards that have lawsuits on their way.
Oh, I want to add one more thought. There are HDFCs that seem permanent (at least for a very long time). Newer HDFCs, though, with higher income restriction are on schedule to be market rate when their financial obligations are met. The closer to that D-day, higher the value of the coop will be. Of the modern HDFCs, the older ones have the best rules from the city since the city was trying to attract pioneers pre-gentrification, rewarding risk takers. When the modern HDFC concept proved successful, and Harlem and other nabes became less risky to families looking for more space, the city made HDFC rules more strict.
I was all set to purchase a 2 bedroom HDFC coop on 97th and Park for 215k like 3 years ago until my union lawyer got all the paperwork and told me not to buy. She went as far as to say "If you continue to go with the purchase I want you to sign something showing that I told you not to". After that I stopped looking at HDFC coops. Basically said there was to much risk and not enough money in the reserves.
I would also look at ACRIS and see if there is any deed restriction between the land and the city and see what is allowed with respect to resale and income restrictions. Even if a HDFC does not follow regulations, it does not mean you can too.
I would be incredibly leery of buying into an HDFC that was not charging the flip tax. Someday the city is going to come and demand its money. We're not talking about a few thousand dollars here that you accidentally left off your tax return. This is hundreds of thousands of dollars that the co-op and the sellers are just blatantly not paying.
It should be noted that HDFC restrictions are rules- not laws, therefore the city can not clamp down on this under the classification of illegal activities. These are issues that UHAB (the group that provides support for the HDFC program) has been struggling with in recent years.
The HDFC building that my friend has interest in (she has been outbid on a couple of apartments) has a very high flip tax, 120% Area Median Income (AMI), no significant projects needed anytime soon, no underlying mortgage and a large reserve fund. The residents love the building- and units sell very quickly when they come to market. The key in this building is that residents understand they are buying into a value proposition and the board actively reinforces this concept to owners. My friend doesn't care about the high flip tax- her plan is that this is her home for at least 20 years, if not for the rest of her life. I can understand kevin5's hesitations, and I imagine what he faced was a fairly common scenario- but there are HDFC's that are well run and well financed.
semerun - I'm more familiar with the HDC/HPD buildings which may not work the same as the HDFC. In these buildings there is a debt held by each apartment that must be paid to HDC and HPD over a certain period of time. The "flip tax" goes to pay that.
The city makes the rules, so I would imagine that in a time of economic trouble, like now, they'll come looking for money that they are owed one way or another. Ultimately of course, it depends on what kind of contract the HDFC has with the city.
That's my take on the HDFC structure too; typically there is some subsidy and/or tax exemption behind this, which is why the city can create regulation. However, my understanding of the flip tax is different; it's use is to ensure that owner stays in the unit for a longer period. There is no point for the city to subsidize a unit only for the owner to resell a year later.
This is true jake, but I also believe that there is a specific debt attached to the coops and each subsidized apartment has a share of that debt. Most of my info comes from the offering plan from Beacon Towers in Harlem.
Each subsidized apartment at Beacon had an HPD debt and a HDC debt. The HDC debt would always be paid off first, and I think that lien came from an additional mortgage on the land that the coop must pay off. The "flip tax" would only be present if the seller made a profit and would be a different % depending on how long you lived there. It would go towards paying off the debts, but the debts would also reduce by 1/25th each year. So the debt would either be paid off by flip taxes or disappear completely within 25 years.
But like I said I have no idea if the structure for an hdfc is the same. Someone should read over the contract for one of those and tell us what it says.
In our HDFC we voted out the income restriction. Not sure if this happens/can happen in every building but in ours, once a newer board was assembled we decided it was too severely reducing the pool of buyers. In fact, the initiative was driven by the older owners who wanted to sell out. Once we passed it, it was sent to the coop lawyer who amended the offering plan and we were set.
My understanding is that HDFCs were buildings that went bankrupt (or had other problems) and needed assistance from the city. So my guess would be that there is an agreement on an income cap or a flip tax that expires at some point, and that the board can vote to keep it if they want after the expiration. Sometimes it is kept to keep the character of the building as lower income.
The city must have gotten something out of the deal, and that must have been written as a legal document somewhere. I'm really curious to read one of those.
I sincerely don't believe a HDFC or HDC coop can get rid of rules that the city imposed. Unless their financial obligations are met. They can propose to the city to make changes, but unless there was a flaw in the original contract from the city ( some kind of error) and the coop could prove legally that they are entitled to such changes, they can't simply walk away from city's original rules.
The rules provided by the city that's in the coop's offering plan are a part of the contract. If you break the contract, you are in violation. Any HDFC or HDC that violated the contract from the city to give the city its due is at a great legal risk.
I would run from such a coop like hell. Are you kidding me?
But I'm not opposed to all HDFC/HDC coops. I don't know why Kevin5 didn't buy 2bed coop on 97th and Park for under $300k. Unless Kevin5 tried to buy in order to flip for profit, it's cheap in a great location for the space. Great to live in. But I guess the lawyer did not want liability. However, it's strange to run from all HDFC or HDC units when there are plenty of coops that make a lot of sense.
youngfamily, you're right.
eliz181144, your lawyer cannot just chance the offering plan — it's the building's contract with the city. You can try to opt out of the HDFC program but that's different.
If you try to get out of HDFC and it gets OK, your maintenance charges will quadruple. Usually HDFC buildings get artificially lowered maintenance because the building's taxes are low.
tomotion, the flip tax can be up to 25% of the profit. So if you manage to sell your HDFC apt. for double the price, count out a tremendous amount of money for the flip tax.
An HDFC can be a very tough animal to understand. Buying any real estate involves a large amount of due diligence but HDFC's add another layer of complexity to the equation. After reading a tremendous amount, it's very clear to me just how little I know (or for that matter most others as well).
What I do know is that very often the boards, lawyers, and owners don't all fully understand what's involved in these transactions. I have read stories where an owner bought under the understanding that the initial restrictions had ended, and stayed in the apartment for more than 10 years. When it came time to sell, the board then rejected potential buyers for not meeting the income restrictions despite being told that they didn't apply anymore when she first bought. The lawyer never saw all the documentation, the (old) board didn't enforce the restrictions, and she should have never qualified to buy since her income was far above the limits. What a mess.
Eliz181144, when you are ready to sell (or just want to clarify), I would check with an HDFC expert to confirm whether the actions taken by your board/lawyer were allowable. You don't want to get caught up in some legal battle later on because of this. You can Google Jordi Reyes-Montblanc, he runs the HDFC council, and often will give free advice on HDFC's (since he has worked with hundreds of them). I have read quite a bit of what Jordi has written online- but in the end, his message is clear- once an HDFC, always an HDFC. He is also clear that the intent of the program is to keep units affordable via the income restrictions.
"the flip tax can be up to 25% of the profit"
the flip tax can be up to 70% of gross sales price: 30% to the building and 40% to HDFC (I might have that backwards).
"I sincerely don't believe a HDFC or HDC coop can get rid of rules that the city imposed."
The vast majority of HDFC Coops have built in expiration dates for the rules, many coinciding with the payoff date for the mortgage.
"If you try to get out of HDFC and it gets OK, your maintenance charges will quadruple"
For this to be true, RE Taxes would have to make up over 75% of the building's total expenses. I'm not sure that's the case in any of these buildings.
"I sincerely don't believe a HDFC or HDC coop can get rid of rules that the city imposed. Unless their financial obligations are met. They can propose to the city to make changes, but unless there was a flaw in the original contract from the city ( some kind of error) and the coop could prove legally that they are entitled to such changes, they can't simply walk away from city's original rules.
The rules provided by the city that's in the coop's offering plan are a part of the contract. If you break the contract, you are in violation. Any HDFC or HDC that violated the contract from the city to give the city its due is at a great legal risk. "
While I don't disagree with this technically, plenty of HDFC Coops have been ignoring the rules, and in deals where my attorneys have dealt directly with HDC, they seem to be very lax about enforcing their rights under the Offering Plans.
Isn't it ultimately down to rule enforcement? Has the HDFC come down on ANY co-op that has broken the rules? And what recourse does the HDFC have against previously unpaid flip taxes?
Seems to me that this is another J-51-type brouhaha in the making.
inquirer. the reason i said: "not sure if this can happen is every building" is because, I am not sure if it CAN happen in every building so didn't want to give the false impression all HDFCs operate the same way. Our lawyer didn't "just change" anything. he filed the paperwork and it was approved by the city. a lot of the posters are correct, the ability to vote changes in and our of the offering plan is due in a large part to the financial stability of the building and what you're willing to part with. for example, our building does pay tax, doesn't participate in reduced oil programs, and so on. when we met with the lawyer he explained that the city set up HDFCs to fight off urban blight and encourage home ownership in minority groups/young people starting out. now, a lot of the "rules'" are chocking off (frankly) gentrification so they're loosening them. it seems, the city allows whatever facilitate progress in an area.
we fell in love with our apartment but were reluctant to buy in an HDFC, too. bt knowing we wanted to stay for years made it irrelevant. as it is turning out, the relevance HDFC just seems to be disappearing with each sale.
30yrs_RE_20_in_REO you seem to have similar experiences with HDFCs i find most of what you sat to be an accurate reflection of what goes on in our building. these "changes" are orchestrated by the "old time" board members who seem to know how to play the city and get max benefit.
A lot of HDFC Coops are what the City used to call "in rem" when owners defaulted on their RE Tax bills and the City took the Property. Then the building was sold to the occupants for nominal amounts pare apartments and a low rate underlying mortgage. There are a LOT of different versions of Offering Plans, with different time lines, etc. about the only thing I can think of which is almost totally consistent between Coop is the amount of the income requirement caps. In some ways, it's similar to the Mitchell-Lama program, with the idea being that it's supposed to be affordable housing, with strong disincentives for people to be "flipping" for profits.
There are also new construction HDFC Coops and Condos, which also have income and resale requirements, but are generally different than these type of "sell to the tenants" old school Coops (which were largely tenements and other walk-up apartment buildings.
Hey Young I actually wanted to buy to live there potentially till retirement which is about 30 or so years away. The place was a railroad apartment and needed a good amount of work. My lawyer warned me that because their reserve fund was so low that if anything happened (new roof or boiler etc)it would come out of the tenants pockets. She also mentioned something about them not having all their expenses audited each year. She admitted she wasnt an expert on hdfc coops but I took her word on it. As much as I liked the area (having lived there my whole life) I was tired of spending an hour or more sometimes looking for parking. Uh and it was on the 5th floor. That probably wouldnt be good when im in my 60's. I think one of the things that scared me is that the building is run by the tenants.
@30_yrs_RE_20_in_REO -- It's been weeks - but feel I need to clarify what I was trying to say -- I was not suggesting that HDFCs don't ignore their own rules (obv. many do), so much as I was suggesting that we were informed that it is not common for an HDFC (while their agreement is in place) to go through the legal process of leaving the HDFC program. Some brokers told us that when we looked at a few, as in "Oh well, a lot of HDFCs just legally change their status to non-HDFC so that's why they are a great value." The people (RE attorneys) we spoke to after hearing that line made it clear that its extremely rare. We also asked some other brokers at HDFC open houses and they said changing HDFC status was a rarity.
RE: "It is remotely possible an HDFC would decide to un-HDFC itself, but I have been informed by reliable sources that this pretty much never happens."
"I have to disagree with this statement. Take a look at Harlem HDFC's. Plenty going for huge $, and a lot of listings not even mentioning they are HDFC because the Coops aren't following the regs even before they are legally allowed to do so. There's a TREMENDOUS pressure not to collect those flip taxes and to ignore the income requirements: people want to sell who have been waiting for their windfall for years and their choice is selling for $250,000 and giving 70% of it away or selling for $700,000 and keeping it all? That kind of money makes people justify lots of behaviour."
"The problem is that so many of these apartments are not priced in line with the income restrictions"
Thank you very much for pointing this out, semerun.
I can't believe how many so-called "middle income" buildings capping household incomes at $75,000 are priced in the $300-400K range. INSANE!
This discussion is very enlightening. Coop boards have a fiduciary responsibility to shareholders. If the Board is blatantly ignoring rules, as in not collecting flip taxes, or ignoring income limitations, it could be held financially liable and individual board members could be individually liable.
I have had many conversations with a friend who is on the board of an established HDFC in Harlem. The divisions are many, but old vs new sums it up. Higher income (for Harlem) mostly white 'pioneer' types (self described) who want greater amenities so the building will appeal to a wider array of pioneers vs older residents who don't want increased maintenance costs. Falsification of applications for apartment sales seems rampant, as married or gay shareholders use the income of one individual to meet income qualifications. Fair warning, it only takes one lawsuit, or an investigation by the Attorney Genenral to collapse this house of cards.
nesbit, that's what I know, too. A friend used to live in an HDFC building in Manhattan Valley, and his experience was not pleasant. When there was a building-imposed renovation (old plumbing fixed, etc.), they were destroying some custom tiles, or good floors, with the cheapest crap, and there was nothing a shareholder could do. And the voting system is set up in the way that makes the entrenched board invincible forever. The board even had the right to "invite" new members in without election process.
Also, the "old" that you mentioned are part of the entrenched board. The board openly violated the house rules, such as installing banned washer/dryer or dishwasher, or breaking walls that shouldn't have been broken; there was always something wrong with either the boiler or the roof or the pipes; the city-ordered repointing took 3 years to finally get right. He suggested the building gets out of the HDFC but was told that the maintenance will be up 320%, although the building had no mortgage.
He finally sold his place, paid the flip tax 15% of the profit, and informed the Attorney General office about the financial irregularities in there.
should be "or good floors, and replacing it with the cheapest crap"
If you already own an HDFC, can you buy another one that would be your primary home?
I feel like there are a lot of misconceptions out there about living in an HDFC building. As with any cooperate purchase you need to do your due diligence before purchasing. However, these apartments can be a great purchase as long as the cooperative is in good financial shape, and there is no fraud taking place. If the cooperative is run legitimately you should be able to get a bank loan on your apartment, if the listing agent is asking for an all cash purchase I'd be weary.
I purchased an HDFC apartment several years ago and have had a good experience. Apartments in my building have sold for a profit since then with a reasonable flip tax collected (this is set by the board).
As with any cooperative you should due some investigating before you move in. Your experience in the building will really depend on who your neighbors and the sanity or lack thereof of the board members.
Whats the rules on renting out your HDFC APT & What are the rules on renovation and changing the layout of an apartment
I dont understand the rules and regulations in HDFC, can someone explain in clear language why it would be bad?
I'm not a pro but from what i understand HDFC are not necessarily bad however make sure the building has solid financial as it operates as a co op. Also, some building have a flip tax. Means if you resell at profit after 2 years, the building taxes you on the profit generated. It can be as high as 30%. You may also wanna ask if they have -Section 8- in the building. An HDFC building is a building that used to belong to the city and the city gave it away to its tenants at the time. Depending on the building the family may be low income family so most of the time, the tenants are minorities and can be noisier.
aarista, I agree with sledgehammer--HDFCs vary wildly. We live in an HDFC and they are constantly bending the rules for buyers/sells. In the 80 the rules tended to be strictly enforced. Now they seem to be entering into the modern era - mostly because the "old timers" want to realize their profits. We had a guy sell his apt for over 600k that he purchased for under 40k in the 80s when the area was a war zone. I am not kidding. 40k. Anyway, the year before he sold we lowered the flip tax. I'm sure this was no coincidence. As far as income restriction, we also bend that rule as long as you can dredge up one W2 that was low. It's really amazing to see the games that go on.
I also agree 100% about knowing the amount of Section 8 in the building. That can be a nightmare if managed improperly.
I have a question: can anyone recommend a lawyer to represent me, a potential buyer in an hdfc coop? I also noticed some coops in the East village have sections of the roof as "private" roof garden space. How does this happen? I'm also interested in how to handle a request to install a skylight in the roof for the top floor apartment. Thanks.
Question: Recently I saw a 2br Hdfc Coop in a very desirable area of Brooklyn. They want a very low price & the unit needs a new kitchen & bathroom & new windows. Basically there are no appliances & cabinets in the kitchen. The broker says it is an all cash sale because a bank would not give a loan because the buildings financials are not in good standing. As well, the broker said the cash sale of that apartment would all go to the debt of the building making it financially stable for the next purchase. They are using the entire profit of sale towards the debt because the shareholders jointly own this unit. Apparently they hired a new management company that turned another building on the block around from the same situation. I've been told there is potential in these situations. I was also told I should find a lawyer who dealt with Hdfc's to go over the budget plan. Is it too big of a risk?
@eliz "I also agree 100% about knowing the amount of Section 8 in the building. That can be a nightmare if managed improperly." how do HDFCs have Section8!? Aren't they supposed to be owner-occupied?
@liteup "Is it too big of a risk?" solved easily by bidding almost nothing. it'll be like squatting if the building situation gets worst (so almost free housing still), sounds like an adventure that might pay off.
I have an HDFC Coop for sale in the area of 92nd Street and three doors west of Central Park West. Although there are some Section 8 in the building, there are out of 51 units about 30% new shareholders. The interior space is approximately 1000sf in my exclusive listing, and it could be renovated to have a second bathroom. The income restrictions have now been raised. By household number, the income limits are: (1) (one person) $96,865; (2) $109,560; (3) $123,255; (4) $136,950; (5) $148,005. The purchase is a niche market, but HDFC Coop purchase for a primary residence in the Upper West Side 3 doors from Central Park West in a pet friendly building with washer/dryer hookup in the apartment is a deal for the right person. Open House 2:30 to 4pm Sunday, Feb 5 and Feb 12. 7 West 92nd Street. Email me directly if you like. Area@halstead.com.
In other words an asking price of roughly $700/ sq foot (I counted 864 sq ft based on the floorplan provided and had to guess on the bath and hallway- but I am probably pretty close on those) for an income restricted apartment on the first floor. This apartment is not where I typically look so I don't know whether or not this is a good deal...but it doesn't sound that way to me.
This is one area where I don't see any outrage - how does one justify qualifying for tax breaks from the city, while at the same time, bending (I say breaking) the rules that were set down to provide moderate-income housing?
People were incensed at the idea of Met Life incorrectly/wrongfully applying for tax rebates but aren't bothered by this?
the section 8 owners in HDFC are mostly the original owners. they are low income, and were renters in city-owned buildings. when city government converted their buildings to HDFCs, they got the units for free (actually $250), plus the city put them in section 8 program to give them free money every month to ensure they pay maintenance
@nyc10023, thank you. It took 48 comments and 2 years for someone to point out the fact that this is a moral outrage. Taxpayers needn't subsidize starter apts for the adult children of rich fathers capable of buying in cash, nor the unmitigated greed of those itching to break the rules and pervert the program to a way to make profit -- as long as there aren't too many "low-income families" of "noisier" "minorities". This is corruption, endemic and pervasive, on a level I never anticipated I'd see in America. Is this the type of city you want to live in? Please. Listen to your conscience. And I do think that these HFDC "rules" have very real consequences for those who don't. We are talking large sums of money signed contracts. That = fraud, so far as I know.
> This is corruption, endemic and pervasive, on a level I never anticipated I'd see in America. Is this the type of city you want to live in? Please. Listen to your conscience. And I do think that these HFDC "rules" have very real consequences for those who don't. We are talking large sums of money signed contracts. That = fraud, so far as I know.
Totally agree with you. Reminds me of all the fraud that homeowners committed to get bigger mtgs than they could qualify for lying about their income. In a way it could be funny to have a display of how many nannies, secretaries and people that didn't even had a stable job were claiming they were earning $150k/year.
Do you remember those NINJA loans that were justified as "I'm self-employed, cannot verify income". Borrowers claiming that were verifying that they were cheating the IRS! Why on earth tax-payers money (of those that don't cheat) needs to be wasted bailing these people out? It's fascinating in a weird way. "Those that play by the rules are morons", the system says over and over again.
> Do you remember those NINJA loans that were justified as "I'm self-employed, cannot verify income". Borrowers claiming that were verifying that they were cheating the IRS! Why on earth tax-payers money (of those that don't cheat) needs to be wasted bailing these people out?
Let's face it. In a normal world those cheaters would be receiving an IRS audit, not program after program trying to bail them out.
On the other hand, let's not throw baby out with bath water. If the vast majority follow the rules are of moderate income, then I am all for it. Profiteering by a small minority,IMO is tolerable.
This HDFC building on W92th st cracks me up! Low income apts at $700 /square foot? Get the fvck outta here! These apt should be sold only to low income & middle class families, it should be illegal for a Millionaire to buy these apt for their trust fund kids so they get a piece of the UWS!
notadmin - if the building owns the apartments they can choose to rent them as Section 8 for income. Visit the UHAB site. For example, my building owns several apartments that we rent to generate income. We have two identical apartments - one rents for $2500 and the other is Section 8 from way back in the 80's and rents for $800. The only upside is the rent comes to the building and by-passes the renter so there is a very stable (though low) stream of income for the building.
I see a lot of recent HDFC threads. I think it's very important to note that you cannot generalize the rules of one HDFC to another HDFC. The by-laws are amended all the time, and it can drastically change the landscape.
eliz.. fine and dandy..
you can amend the laws, but i think where a lot of the disgust (rightful in some aspects) comes from is that once you rent out certain units at market rate, or take advantage of new (much) higher AGI rates, or allow tenants to keep a larger portion of sell profits, include newer tenants paying higher HOA fees vs original section 8, etc, etc, etc...
at the end of the day your building's city tax exempted/reduced rates remain the same, allowing some shareholders to pocket the huge difference..
the kicker is UHAB, or city agencies are too slow, stupid, or careless to actually enforce and do something, despite the most recent publicized indictment (which seems to be the caveat).
if you amend the bylaws which allow you to build your reserve and rent out at market rates, shouldn't one start paying fair market value taxes to alleviate the rest of us who make "too much" and can't participate your shenanigans of which we, and the rest of the city/state fund?
ss400k - I didn't make any claims about whether it's fair or claims that the system is/isn't being gamed to a certain extent. The question was whether you had to sell as income restricted in you purchase in an HDFC. And, as living proof of a "no" answer I shared my experience.
As far ax tax breaks, do I feel my family should get one? No. We're a banker and a doctor. Do I think the 80 yr old woman across the hall who lived here when it was a war zone should. Yes. Do we all live in the same building. Yes. Our fates are mingled. My guess is that in less than 20 years the HDFC concept will be phased out but for now it does serve a cross section of the population who really did pioneer the gentrification of an area.
"As far ax tax breaks, do I feel my family should get one? No. We're a banker and a doctor."
Yet you do get a tax break due to the lower purchase price, and in many cases HOA fees (which include prop taxes) that HDFC co-ops receive...
This is all based on my understanding that you purchased an HDFC unit as a banker/doctor couple, unless I misread your posts above of which I'm too lazy to corroborate.
Yes, we did purchase as a lawyer and banker. Almost every HDFC with income restrictions has a loophole. In our case, my med school debt built our "case." As I said, it's different with every HDFC. And I agree, we should not get tax breaks. If the building loses it's HDFC status I won't feel ripped off. And we didn't buy the apartment because it was an HDFC that received breaks. We purchased it because we had 2 toddlers (now 3) and needed the space.
And to clarify, it was not a lower purchase price. It was market rate. The ORIGINAL owner was the one who got the place for almost nothing and sold at market.
Sorry, doctor/banker. The lawyer found the loophole. Just to clarify. (baby brain....just had #3 two weeks ago)
Heads up to other HDFC co-ops: banks are now requiring that the financials be audited and not just prepared by a CPA. So if your past 2 years have not been audited, good luck getting a mortgage. Cash only. Found this out the hard way trying to re-finance.
does anyone know anything about the board raising the maintenance fees? i've come across coops being around 500-700/month. How much can they raise it? i know someone who has a rent controlled who is raised 2-4%/year. Does the same apply to these coops?
I am in an HDFC in BKLYN, NY. We have a shareholder who refuses to comply with the maintenance fee increase we implemented a few years ago. We are a struggling HDFC, all of our bills are being paid but we do not have the extra monies to take this individual to court for proceedings for none payment. He is currently paying the old maintenance fee not the current.
Can we take away his shares away. Somehow in our HDFC the by laws are implemented when convenient. If not at all ignored.
Did I mention the shareholder is uncooperative and a nuisance. Always filing false complaints within the HDFC and with the Buildings Dept.
Thank you for any advice
I have a friend who is in a building which is about to convert to an hdfc. She qualifies for section 8, but wants to know about section 8 reimbursement if he sells at some future time. Does section 8 want the money tht was paid reimbursed from any sales profit?
What about students wanting to purchase HDFC homes? If you have money saved up, but obviously as a student not meeting the income requirement - are you stil l allowed to buy despite the fact that you may make more than the income requirement in future years?
Hello to everyone, Im about to buy an HDFC in the lower Manhattan...we haven't submit yet the financial for the approval. How much is the lowest income the may accept? or there is NO lowest and only higher? Is the tax return document the most important docs to be presented? any other docs I will have to show them? Thank you all!
I am starting to look for apartments and are coming across a number of HFDC apartments with these extravagant price tags but have maximum income requirements below HHI $80K. When it boils down to maintenance and mortgage combined is more than someone earning that much would be able to afford comfortably. How do they expect a person to afford an apartment that costs that much on that salary. Is there financing that I am missing? Lower down payment? Thank you in advance for an insight you can give me on this.
I have a question ppl tell me different thing I'm so confused can I rent a HDFC we have a 2bedroom In uptown NY we pay 491 but we moving with my father in law house the board of my building told me I was not allow to rent the Apt or sell the apt and if I rent it I only could higher the rent to 510 and if I sell it I have to give them 70% of the money and 30% for me is this true pls help
Best place to refer to each HDFC's requirements (income, flip tax, etc.) is the offering plan, which all coops have. Have your attorney read carefully and caveat emptor -- let the buyer beware. You can get an apt. usually for a lower price and a good deal, but there's a reason. I'm in one myself-- got it for a steal in Brooklyn Heights, paid cash, and am paying $907/month for a 2BR with a doorman, so not all that bad.
I put an offer on an HDFC apartment, before they would accept the offer they required to see proof of funds and my finances. They wanted cash as to not deal with financing, my offer was a cash deal and exactly what they were asking. I asked for their financials and I was told they don't release that until they accept an offer. I fulfilled their requirements and they accepted my offer. I requested their financials. I was told I would get them by the end of the day, three days later I had not received them. I called the agent. I was told the board decided they were too low and increased the price by 10,000. I was asked if I was willing to pay that and I said I would not consider anything more until I saw the financials for the building. I was sent an email telling me they would not release their financials until I made another offer that was the different asking price. The apartment has been on the market for at least six months and under contract once, that I know of. I was told the financing had fallen through for the buyer and that's why they wanted cash. I feel like I'm being played. They saw what cash I had and figured I could pay more. Is there any way I can see the financial health on a building before going through these roadblocks? My first impression is they are hiding something.
Sorry to hear of your troubles. This seems highly inappropriate. To me, that sounds like a building that I wouldn't want to buy into. My experience of buying in an HDFC building is that they drove me crazy by being super slow, but were reasonably correct and professional otherwise. I think HDFC buildings vary very widely, maybe even more so than regular co-ops do.
It's possible your building is hiding things and trying to play you as you say. It's equally possible that the people on its board have no idea how to do business and don't realize how wrong they are. (I know that sounds outrageous, but I have in fact seen this a couple times.) The motivation for the behavior is quite different, but since the end result is the same, it's not good. So, if you do manage to buy into the building, you'll be stuck dealing with these people as your board and your neighbors for a long time. Would you want that?
I hope things work out well for you one way or another.
> I asked for their financials and I was told they don't release that until they accept an offer. I fulfilled their requirements and they accepted my offer. I requested their financials. I was told I would get them by the end of the day, three days later I had not received them
why on earth would you put an offer w/out studying the building's finances with a microscope? HDFCs are known for being managed like hell.
> I was told the financing had fallen through for the buyer and that's why they wanted cash.
LOL typical, to blame the buyer. chances are, that guy smelled a rat and run away as you should do as well. these guys sound like a bunch of crooks.
i'd avoid HDFC at all costs. you'd be at the mercy of very arbitrary rules and compared with long term owners, you'd always be "the newcomer to milk".
"i'd avoid HDFC at all costs" i mean, unless is practically free, say a couple of years of rent or so.
Chances are much better that the would-be first buyer's bank smelled a rat and ran away. And even that ultimately, the building failed to provide audited financials because they don't exist.
Never underestimate the depths of the HDFC disconnect.
> Chances are much better that the would-be first buyer's bank smelled a rat and ran away. And even that ultimately, the building failed to provide audited financials because they don't exist.
GOOD Point! So the rule should be: "Absolutely run away from HDFCs that demand all-cash purchases". It really takes real courage to buy into these schemes.
Lulu88, Run, Run away! This deal smells rotten to the core.
Asking for all cash usually means the building has not been vetted and/or approved by a bank for a mortgage. Could be less than 80% are occupied by rentals or as others have mentioned, poor financials. Something smells real fishy if they're withholding the numbers.
> This is one area where I don't see any outrage - how does one justify qualifying for tax breaks from the city, while at the same time, bending (I say breaking) the rules that were set down to provide moderate-income housing?
you are right. many people are corrupted at the level they can afford to be. sby said the other day here that HDFC are a snake-pit. that's imho 100% accurate, better to stay away.
> the section 8 owners in HDFC are mostly the original owners. they are low income, and were renters in city-owned buildings. when city government converted their buildings to HDFCs, they got the units for free (actually $250), plus the city put them in section 8 program to give them free money every month to ensure they pay maintenance
are you serious? for how long are they supposed to be milking the system? till they die? or till any family member they have dies?
> I see a lot of recent HDFC threads. I think it's very important to note that you cannot generalize the rules of one HDFC to another HDFC. The by-laws are amended all the time, and it can drastically change the landscape.
exactly. that's why they totally SUCK. they have arbitrary rules that change according to what fit the small number of insiders. why on earth would you get into a system like that? only if it's almost for free imho.
> Somehow in our HDFC the by laws are implemented when convenient. If not at all ignored.
typical. i hear the same thing over and over again... stay away if you can, a PITA if it's too late.
oh... no! answering to 10 month posts? ok... back to work! this happens when i procrastinate :-)
I am a real estate broker that has sold many HDFC coops. I've represented both sellers and buyers. There are many good HDFC coops. For qualified buyers they can offer affordable home ownership (shareholder)
Like everything else in NYC there are always bad apples. Cash only is a big red flag. There are many reasons why a lender won't lend in an HDFC coop but there are many good ones with good financials that are on approved lists at banks like any other coop. There are some that need to be approved and if they cooperate with the lender and answer the lender's questionnaire and meet lender's guidelines they will be approved.
Any coop HDFC or otherwise that won't release their finances to a prospective buyer in my opinion certainly has something to hide. While some HDFC boards may not be as sophisticated as regular coop board neither require any special skills or knowledge to sit on a coop board.
HDFC boards are not very different from any coop board. The only difference is maximum income restrictions based on metropolitan median standards. There are a lot of urban myths about HSDFC coops many are perpetuated by brokers with little knowledge of HDFC coops and "affordable housing" but may end up with an HDFC listing.
Caveat Emptor. Let the buyer beware. The due diligence process is the responsibility of the buyer and their attorney when considering a purchase in an HDFC coop like it is when buying any property in NYC.
Please recommend an attorney knowledgeable with HDFC coop's.
Seems this thread has been quiet for a while, but if anyone is paying attention and could tell me how (or where to look to find out how) a buyer's income is calculated for purposes of hdfc eligibility, I would greatly appreciate it. Thanks.
Here is your answer folks:
I've looked at a few HDFC's in Harlem, and at least two of them the realtor later told me were purchased with "all cash". These were 500-600K apartments. I'm trying to understand what's happening. Parents buying for children? Or is there a "gold rush" mentality that believes (perhaps correctly that HDFC will "un-HDFC" at some point?
Also, curious how they determine "family income". If I purchase an HDFC and my income is just under the limit, and then my girlfriend moves in with me, or I get a new job that pays a lot more, what happens?
Yes, there is a bit of a gold rush mentality out there with at least some of the HDFC's, especially the one's in Manhattan. It's only been in the last 5 years where the Harlem HDFC's have been seeing prices out of line with the income restrictions. HDFC's that were originally built as luxury buildings tend to sell at astronomical prices, while the one's that were originally constructed as tenements tend to be closer aligned with the income restrictions- but still very expensive. There are HDFC's in Harlem where the prices are reasonable, but the boards are very strict about the amounts as well as the source of the downpayment (i.e. no parents buying for children).
That said, once an HDFC, always an HDFC- as posted earlier, don't count on the income restrictions going away. It's not a very common situation. That said, not every board is so strict, and they will allow for situations like parents buying for children. As to determining family income- the restriction is only applicable at the time of purchase and resale (your future buyers income). Once you are in the apartment, there is nothing stopping you from getting a new job that pays above the income limits.
"Once you are in the apartment, there is nothing stopping you from getting a new job that pays above the income limits."
Which is what you'd have to do to be able to afford these apartments in the first place.
Or just pull a Charlie Rangel and lie outright.
HDFC is one of the biggest legitimate real estate scams in the city today.
Yes, once you purchase it doesn't matter what you make any time after. Cash purchases either are gifts, inheritance, or a profit from a previous sale. For resale income restrictions will go up but they won't go away. We explored un-HDFCing for our coop and it's near impossible. There are rules in the property deed of what the property can be used for and the property taxes will go up considerably increasing the maintenance considerably. Some buildings have enforcement mortgages that you might have to pay as well.
NYC Matt, yes many people have lied to get an apartment and depending on location original owners can sell for a lot but if the coop wasn't foolish enough to reduce or eliminate the flip tax there is little opportunity for a cash windfall. Most HDFCs are not run well and have terrible financials limiting financing options for potential buyers. HDFC isn't perfect but the city continuing to be the landlord for these buildings would probably be worse.