High Maitenance v Low Purchase Price

Well you have establish what's average first.
Maybe some will disagree but I consider average maintenance and taxes for condos $1.10 per sq ft and $1.60 for coops.
Anything obnoxiously over I will calculate who much that extra monthly carrying charge would affect a mortgage.
For example, a 1000 sq ft condo has a monthly cost of $2200. It should be around $1120. That extra $1000 per month represents how much towards a mortgage?
$1000 times twelve months is 12,000. How much mortgage does 12K pay off on a 30 year mortgage?
With todays rates at @ 5.5%, it's a neighborbood of 220K for interest only.
Myself, I would take 200K off my bid if I were purchasing.

There are many variables to consider but this is a good starting base.

wo growth rate... impossible to determine.... do analysis w/ 3% growth based on $4K maintenance... in 20 yrs when you are paid off any ANY type of mortgage you are still CFlowing the same amount.... where is the "FREE and CLEAR" portion of "home ownership?"

How long are you staying? Long enough that where your monthly nut ends up is important? You pay down your mortage, your maintenance never goes away. Are you more liquid now, or do you anticpiate being more liquid later?

truth... has better non-emotional analysis. BUT WHERE IS THE FREE AND CLEAR?

Compare monthly payments and buy according to that. But keep in mind that high maintenance begets higher maintenance. Its a sign of poor building management / financials.

truth- disagree about maintenance - in full service buildings maintenance now seems to be fairly routinely between $1.50-$2.00/sf.

In a coop, part of the maintenance usually covers the underlying mortgage on the building. Maybe this is a simplistic way of looking at things, but if the price is higher, maintenance lower, just means the buyer has to go for a larger mortgage on his/her own

I have walked away from at least two apartments that I otherwise likely would have bid on because the maintenance was too high. Remember that out-of-proportion maintenance will negatively affect resale. Maintenance only increases over time so buying into a co-op where CCs are already overpriced is, IMO, not a great idea.

ph41

Like I said, I'm sure some will disagree. My figures are based on what I have been looking at. That would be south of 34th st and north of delancy. Obviously 5th avenue has higher monthlies and avenue b has lower. For where I have been looking, it is a spot on average.

w67
It's a judgement call.Some people have less they can mortgage but more they could afford monthly, whether by credit rating, job security. Different things may work for different people.

Make sure you have a decent understanding of what's going into the maintenance. Is there a ton left to pay on the co-op's mortgage? Are there ongoing assessments? These items may be "inflating" maintenance now, but won't be as much of a factor in the future. But otherwise, in general, high maintenance is there forever, while your mortgage payments only go the length of your loan (which is arguably close to the same thing if you get a 30 year, though if you plan on holding property and giving it to your heirs, it's a different story). I tend to look on low maintenance a bit more favorably than lower purchase price, as it's obviously not as negotiable, even if you're the board president, but I'm sure others have a different mindset.

Why does all the analysis revolve around "monthly costs". Assume there is no mortgage - what does a high maintenance mean as to the "viability" of the building? The management of the building - efficiency, fiscal prudence? Perhaps a history of maintenance costs over time may be more valuable. Is the cost rising significantly?

Also remember, if you pay a low price for a high maintenance, you have the misfortune of earning a % return on a lower base.

place i am looking at has high CC for a few reasons -one being they sold all commercial space a while ago because of 80/20 rules - other reason is lots of staff -- its a prewar building with 1200/1250 sft - priced at under 700psf -- CC is 2.2 psf - it does include ALL utilities so its a tad lower in reality -

Rhino- you actually might make the same percentage return on re-sale as on a higher priced unit

I guess what I mean is that for the same monthly payment, you have a smaller denominator over which to realize the same % return.

for a place that size, you'll pay approx $100 for electric except for the summer where $200-$250 would be more accurate. 1200X.2= $240 per month. That sounds high. Is this a doorman/porter/super/concierge building? If not, you're paying through the nose.

I don't live in a "full service" building, but $2 psft per month for maintenance is pretty nutty. That is about the same as my mortgage and pretty close to my annual maintenance. Even though it has been years since I have had a doorman and I often do miss that convenience, for $2 a square foot I could have a couple of full time staff of my own.

"Also remember, if you pay a low price for a high maintenance, you have the misfortune of earning a % return on a lower base."

Sure, because as we know from reading SE, every apartment is supposed to trade for the same $PSF, every apartment appreciates or depreciates the same percentage, etc. Sort of the opposite of Lake Wobegon: Every apartment IS average.

Rent_or_Buy: hopefully someone will give you a reasoned answer with some real facts behind how high mtc actually affects pricing, but I'm yielding the field for now to the folks who are more interested in picking fights than importing actual knowledge. Later.

30yrs
I thought my posts were reasonable, at least as an approach, anyone can input their own figures as to actual base values.
Don't let banter stop you from posting please. I always appreciate your views and input.

As an example of the effects of high maint/taxes, 246 west 17th is a good example.
First 3 or so floors are original and were un tax abated. The sales prices got hammered. But considering where the other floors will be 5 years from now. It may have been better to buy the discounted lower floors with the chop.

Particular attention to units 1a 1b 1c
http://www.streeteasy.com/nyc/building/246-west-17-street-new_york

30yrs, no need to be bitter - you've offered great insight to this board, and while there are a few combative types around these parts, some of us value others' experience and knowledge. Please share if you've got it!

so....30 yrs is marching off in a huff?

Yeah that was confusing to me too.

Hard to generalize but some thoughts. When you buy a coop your price is the purchase price plus your pro rata share of the underlying mortgage-pro rata share being number of shares of target apartment divided by total shares. New York Council of Coops publishes an annual report about building operating costs. If you look at this and compare to target building you may gain insight as to why maint. is high. In some buildings where sponsor retained retail/commercial or where retail/commercial was sold off allocation of total building expenses to that portion of the building may be unfairly low. Finally, in a buyer's market (like now), buyers seem to be more punitive of things like high maint., land leases, etc. than when it's a seller's market (2003-2007).

30yrs_RE_20_in_REO --

I think im doing okay - in the East 70s on third - high floor - under 700 psf and 2.2 psf cc -- not a steal -- but i am just hoping not getting taken for a ride - 1200/1250 sf

You're looking in the same neighborhood as I am- maybe somewhere between East 72nd and East 79th. First of all, it's very residential which has appeal to many buyers. You don't feel like you're in a business area, but more of a neighborhood. High floor is a big plus. I know that many people only want to live between Park and 5th in the UES because of the schools, etc., but it's much more lively on 2nd and 3rd. I prefer 3rd to Lexington which isn't as nice in the evening. As discussed in this thread, high maintenance is always a concern but good chance that the pluses of the neighborhood and the building itself will outweigh that concern.

I share your like of 72 to 79.

"I prefer 3rd to Lexington which isn't as nice in the evening."

Agreed there, too. I think what happens is, Lex used to be the nicer one, 3rd got a little crappy, so it got all the knocks downs and new development. And more new stuff. Lex is aged a bit... but its not like its Madison where it gets all the money for upgrades. Lex is kind of the worst of both worlds.

That's interesting what you write about Lexington. I know that Fifth and Park are the better UES addresses and Carnegie Hill, but I really like walking at night on Second and Third and seeing all the people and activity. For me, Fifth and Park are just too quiet at night.

Its nice to be near the park, but Madison is annoying as hell. We live there. I'd much prefer closer to Lex, especially in the 70s. I think 70s and Lex is a very cool little stretch. 80s and 3rd is not bad, but its definitely lower rent. 2nd can be fun but its too young.

You don't find the area by Madison too empty in the evening? The 70s and Lex is nice in the low 70s and then gets a little less nice near the subway and hospital and then gets nice again once you cross 79th.

You asked for it, you got it:

1 bed, 1 bath, 1 half bath

$500,000 Common Charges: $3,398

http://www.streeteasy.com/nyc/sale/478386-condop-110-central-park-south-central-park-south-new-york

I find it empty fancy and expensive. But I do love being so close to the park. I wish lex was
next to fifth.

columbiacounty
about 12 months ago
stop ignoring this person
report abuse
so....30 yrs is marching off in a huff?