I've been buying in NYC for 25 years, including many foreclosures. Some things to look and adjust for in your due diligence: 1. ground leases 2. expiring J-51 tax benefits 3. older, not below market rate underlying mortgages 4. small Coops: especially those under 8-10 units 5. relatively high maintenance arrears 6. charge-offs of maintenance arrears 7. loans from Sponsors or other large unit... [more]
I've been buying in NYC for 25 years, including many foreclosures.
Some things to look and adjust for in your due diligence:
1. ground leases
2. expiring J-51 tax benefits
3. older, not below market rate underlying mortgages
4. small Coops: especially those under 8-10 units
5. relatively high maintenance arrears
6. charge-offs of maintenance arrears
7. loans from Sponsors or other large unit owners
8. the 3-5 prior year:
A. ratio of income from all sources to all operating expenses
B. the follar differenxe as expressed in percentage terms
C. currently low ratios: could mean large maintenancr increase due
9. Coops and Condos which own stores and historically have received
a significant portion of their annual income from store rents be-
cause vacancies/evictions are soaring while rents are plummetting
10. everything disclosed in annual report footnotes
Stuff I ignore:
1. board meeting notes
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Response by Brooklyn1
almost 16 years ago
Posts: 18
Member since: May 2009
I like your list, however I disagree with ignoring the board minutes.
Over the last several years I have found very useful information from the board minutes, which include, but not limited to, major capital improvements planed in the near future; forecasting maintenance increases for various reasons (water bill increase, staff, mortgage, etc.); problem owners that have complaints against them for noise, smells, garbage, etc.; how the coop/condo board does business in selecting management companies and how the management company conducts its business (multiple bids for projects, cost over run, etc.).
While it is sometimes a pain to sit there and review the minutes, sometimes red flags just jump off the pages.
Ignored comment.
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Response by rb345
almost 16 years ago
Posts: 1273
Member since: Jun 2009
Brooklyn I:
Most of what you would learn from board minutes can be inferred from studio annual
income statements and looking for changes in costs, and/or fro general knowledge.
I have always ignored board minutes partly to save time, because asa buyer I wanted
to lock my deals in.
That much said, many new issues have arised within the last several years, e.g.,
problems with bedbugs and emotionally disturbed, Pullman-type shareholders, which
information might be found in board minutes but not elsewhere.
Ignored comment.
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Response by Truth
almost 16 years ago
Posts: 5641
Member since: Dec 2009
In my experience: The board minutes are vague and intentionally misleading. No details about problems in the building, and cover-ups galore. Brooklyn1 is lucky to have found that info.
I like your list, however I disagree with ignoring the board minutes.
Over the last several years I have found very useful information from the board minutes, which include, but not limited to, major capital improvements planed in the near future; forecasting maintenance increases for various reasons (water bill increase, staff, mortgage, etc.); problem owners that have complaints against them for noise, smells, garbage, etc.; how the coop/condo board does business in selecting management companies and how the management company conducts its business (multiple bids for projects, cost over run, etc.).
While it is sometimes a pain to sit there and review the minutes, sometimes red flags just jump off the pages.
Brooklyn I:
Most of what you would learn from board minutes can be inferred from studio annual
income statements and looking for changes in costs, and/or fro general knowledge.
I have always ignored board minutes partly to save time, because asa buyer I wanted
to lock my deals in.
That much said, many new issues have arised within the last several years, e.g.,
problems with bedbugs and emotionally disturbed, Pullman-type shareholders, which
information might be found in board minutes but not elsewhere.
In my experience: The board minutes are vague and intentionally misleading. No details about problems in the building, and cover-ups galore. Brooklyn1 is lucky to have found that info.