building financials

At $2M being carried by 12 units, maintenance is already up. That's about $1K per month per unit just for interest. My worry would be that the co-op will have to pay through the nose when that mortgage needs to be refinanced.

But then it depends on the building. 820 Fifth, e.g., has a $5.5M mortgage for 12 units, but that's nothing considering the value of the building. Whole different story if you're talking a little rowhouse co-op with 10 half-floor one-bedrooms.

Anyway, you'll want to check out the co-op's financial history in detail. Most co-ops are at least 20 years old, so it'll be interesting to see whether the $2M is the original mortgage. If it is, the original purchase prices must've been nominal. If it isn't the original mortgage, what did they spend all that money on?

For small buildings in general, there's an excellent recent discussion at http://www.streeteasy.com/nyc/talk/discussion/14767-buying-in-extremely-small-coop. That big mortgage would compound the concerns laid out there.

It would e easy to simply say this is a problem building. but then I can thin of plenty of buildings where it isn't, because they are ultr-prime building with apartments in the 10 million price range. So I'll ask a question banks did in teh early-mid 1990's "What is the pro-rata ratio?". In other words, take the number of shares for the unit, divided by the total shares, multiply times the mortgage to get the pro rata mortgage amount for this unit. What is the ratio of that number to the value of the unit?

In other words.... what NWT said.