Liquidity post closing: 401K, bonds, stocks, cash

Query: Of the 150K left what % is retirement. Aside from what a co-op board allows, I think you're crazy not to have 100K in liquid assets (includes stocks and bonds and cash, but not retirement money).

I'm curious about this question - Are you saying I, the buyer, am crazy not to have 100K in liquid assets? Or the board would be crazy to accept as much?

From my searching and discussion I have not heard of that high level post closing cash requirements.

But to answer your question, its about 50/50. Year end, a deferred comp bonus will make the cash reserves (including bonds and stocks) closer to 100K but I dont know if a board cares much about what bonus I'm "supposed" to get. I'd be thrilled if they do care.

Teh $100k seems to be a bit random....I thought the rule of thumb is 6 months of all in living expenses. Would appreciate more insight. Thanks.

OP, the current thinking is closer to 1 yr of mortgage and maintenance. this means that at a $700K apartment (20% down) with $2K maintenance, you'll need approx $60K. i would expect that the board, typically in brooklyn, will want to see at least $50K in very liquid assets, then look at the 401K. they will definitely want to see $20K in cash out of that.

if you are tight, they start looking at what % of gross the apartment will cost you. if you have kids, the % of gross has to be lower, as expenses are expected to be higher.

thanks ab. definitely helpful.
i think i'm just pleased to hear that 401k, bonds will/might count for something.
i'm trying to buy as much square footage as possible while the market is relatively low. but i dont want to stretch myself, and find i'm not approved.

My co-op (and several others I had looked at) take note of the 401k, but $0 is counted in their post-closing liquidity calculations. Not even an after-penalty number. I guess the argument is that anyone accessing their 401k is in pretty bad shape, but it seems to penalize those who max out contributions rather than keeping it in cash.

Bob, can you please provide some details as to how you came to the conclusion that "the market is relatively low?" It is low relative to when? Where do you expect prices to be at a year from now; up how many percent?

Thanks in advance.

I can only speak to Manhattan coops of decent size and doorman buildings. Generally speaking, 401k funds are essentially ignored by most admissions committees and boards. You cannot/would not access the funds but for an emergency, and the buildings I've worked with don't like applicants who are in a financial situation where they would need to invade a retirement account in an emergency. That isn't financial stability with reserves for a rainy day.

That said, the 401k funds and other retirement accounts matter to the extent they reflect on the overall stability and maturity of the applicant. Someone without retirement plans in place--at any age--is not acting prudently. That is a concern. To save money simply to spend it on an apartment without regard to savings for the future is odd in my view. It calls the applicant's judgment into question. So it matters in that way.

Sunday, why do you care what i think about the market?
I truly don't mean my reply rudely or in mean spirits, but you should hardly be concerned about a collateral comment in an unrelated conversation, on a message board, posted by a stranger of an intellect which you are completely unaware.

As far you know, I'm a reclusive idiot who knows little to nothing about anything. So why do you care? I don't think anyone else does.

I'm no expert so I can't explain anything other than my observations, and will not prognosticate about unstable markets.

But if you're only asking because you want to know for yourself -- are markets low? -- the best I've been able to come up with is to watch listings for long periods of time to see how they act. Read what you can and make thoughtful decisions about what you see happening.

Kylewest - thanks for the feedback it helps.
I may have to shoot lower so I can have larger cash reserves. But I'm sure you right, that a healthy retirement plan, like good credit, help speak positively about an applicant.

bob, it doesn't matter to me who the opinion comes from. I will evaluate each opinion based on the supporting detail. Sometimes I have a certain opinion about something, but another might have a totally different opinion based on information I did not know about or considered.

Thanks for answering my question.

"As far you know, I'm a reclusive idiot who knows little to nothing about anything. So why do you care? I don't think anyone else does."

I care. Entire markets can be driven by masses of idiots who know little to nothing about anything. Peering into the thoughts of such people, as well as intelligent ones, is part of "read what you can and make intelligent decisions". You came to this board to ask peoples' opinions, and now they're asking yours. You don't have to reply, but it's strange that you're surprised by it.

a coop i lived in took ira's into consideration (provided investments were liquid), but required 50% down with additional liquid assets equalto at least 48 times monthly mntnce plus mtge pmt--a B building UES

401k is not considered a liquid asset, typically

"Entire markets can be driven by masses of idiots who know little to nothing about anything." Well said!

"Entire markets can be driven by masses of idiots who know little to nothing about anything." Well said!

Except being in tune with the masses.

actually markets ARE driven by masses of idiots.....

and what those masses will be hurt most by, is what always happens

re markets, i know i shouldnt have replied - i didnt want to digress.

thanks for the 401K related feedback. in looking at coops, hearing about potential assessments, and talking to current coop owners -- esp in bklyn heights where there are often only a few units per building -- i guess its for my own good to have a reasonable amount of cash reserves. (friends of ours are facing an unanticipated 20K assessment to redo balconies in their walkup coop). and i agree that borrowing against your 401K should be a last, "emergency" resort -- at least that's the way I treat my own retirement savings.

do boards consider government bonds nearly as good as cash? I only ask because I'd like to avoid the taxes associated with cashing them, but if cashing them will improve my board package, i'd consider it...

read readily marketable secuties--