Low price, high maintenance

julia, I missed the article you cited, but I can't imagine why someone would ignore the cost of monthly maintenance. In some ways, it seems almost as important as the cost of the apartment. You have to pay the maintenance each month and, of course, it increases over time. The longer I look for an apartment, the more I've focused on what the monthly maintenance is. Your point is very important.

People seems to ignore so many things when buying an apartment, can't say I'm surprised that some don't pay much attention to that.

If the difference in price is great enough, it may more than make up for the higher maintenance. Calculate the difference between the mortgage payment you'd have to make on the lower priced property to tge mortgage payment required for a similar property at a higher price, then compare the savings on the monthly mortgage payments to the higher monthly maintenance cost to determine if it does make sense.

My opinion, maintenance can tell you if the building is well run vs mediocre. If well run, maintenance should be lower than other neighbors and fewer surprise adjustments. offcourse amenities can be the main driver for the diff but should not be more than 50% more than the surrounding buildings.

Some people also over estimate the amount that is tax deductible. Most don't bother to talk to their accountants first. They don't realize that the 'RE tax' part was offset by AMT until they do their taxes the following year.

n a coop the portion of the maintenance that is paid for interest on the underlying mortgage is as tax deductible as the interest the buyer is paying on their mortgage for the purchase

ph41, your statement is true, but my point is that people just assume that the irs would treat the 'mortgage interest' and the 'RE tax' part the same.

Sunday, I understand your point. My point is just that a buyer may not be "ignoring' a somewhat higher than usual maintenance, they may simply be making their own calculations re: lower purchase price economic costs vs. economic costs of higher maintenance. And the higher maintenance product might prove to be economically advantageous.

For example, most condos are more expensive (at least on purchase price) than most coops. Very few people actually equivalize both products. That is, add the portion of the building's underlying mortgage assignable to the apartment to the purchase price and THEN compare it to the condo. Just in terms of getting a mortgage for purchase, some people might prefer that the building has already obtained part of their mortgage for them (well, assuming the building mortgage is at favorable rates)

ph41, again, a very valid point, but very few people will look at it that way probably because the control they have over their condo apartment is probably considered priceless for those who hate coop boards.

i looked at a studio for $419k and the maintenance was $417.

Julia - that seems like really low maintenance. How was the space compared to other apartments you'd seen. And how much were the other apartments/maintenance?

the bldg. is 360 east 72nd street..my offer of $380 was rejected..another studio, same layout is now available asking $380k, maintenance is the same..it's a large (410 apartments) bldg. with stores leasing in the bldg. which probably keeps the monthly costs low.

the monthly maintenance also includes gas and electric.

julia, I didn't have a chance to read the article you cited ("Shoe Leather and a Shoestring Budget" in today's NY Times RE section) before today.

Most of the apartments mentioned in the article do have monthly maintenance charges slightly below or at $1000. As compared to the buyer's renting of a studio for $1,500/month that does seem high.

I know the building that you mentioned - 360 East 72nd Street.

With respect to possible resale, a high monthly maintenance will limit your pool of potential buyers. Many people want low fixed monthly charges and might prefer (if able to) to pay down the mortgage so that their monthly total maintenance/mortgage expenses decrease as they get older.

Lobster - the apartment julia's talking about has a very low maintenance of just over $400, but she feels the price is on the high side. Which, if you look at the sale of the higher floor unit last year for $387k is very well may be. And the currently available unit is on the 2nd floor (?) which is definitely not as desirable as the 8th floor unit that is now in contract.
The only other thing I will say about the apartment is that the alcove is a dining alcove, not a sleeping alcove. That would make a difference to me, but different people have different preferences.

Found this:

http://streeteasy.com/nyc/sale/532744-coop-205-east-78th-street-upper-east-side-new-york

http://streeteasy.com/nyc/sales/ues-manhattan/price:200000-400000|amenities:laundry,doorman?page=1&sort_by=price_asc

dwell...exactly..i can find lower priced studios but the maintenance is usually very high...i really don't like the ues so I'll probably rent again and throw out almost $30k a year.

but dwell, would you call that an alcove? closet for a murphy bed?

julia, if commercial rent is bringing the maintenance down, that is a special situation. You should borrow more in the purchase if you can get a lower maintenance like that. On the other extreme, head over to Miravel Living at 515 e 72nd st where a studio has re taxes of $784 monthly + cc of $583 for a grand total of $1367 (now that's living!). When you saw the studio with the very low maintenance--it sounds like a rarity unless you travel to norther Manhattan.

PMG..that was my original post...do I pay a higher purchase price if it comes with a lower maintenance...east 72nd just isn't for me and the apartment i looked at that went into contract at $419k was in bad shape. If that was on the uws i would have jumped in immediately at $419k with low maintenance.

Julia, would a small studio work for you? You missed a well renovated straight studio here with low cc + re taxes, prewar, steps from Riverside Park and express transit, new Whole Foods.

http://streeteasy.com/nyc/sale/469032-condo-230-riverside-drive-upper-west-side-new-york

Other, less well renovated studios of the same line (which is not the best in the building) are on the market sub $400k. And being a condo, you have the flexibility to rent it, which i can assure you, helps you sleep better. Only a condo or flexible co-op can serve as a retirement annuity if you decide to flee for a no income tax state.

"but dwell, would you call that an alcove? closet for a murphy bed?"
I know, it kinda sux.

Julia: Are you really throwing out $30K per yr? As a renter, you are footloose & fancy free. But, if you want to buy, how bout saving $ so you can get a 1 bdrm? I am not a big fan of buying studios, but, that's me. However, if you want to buy, perhaps check out some less expensive areas, like the east 20s by 2nd Ave?

http://streeteasy.com/nyc/sale/541447-coop-160-west-end-avenue-lincoln-square-new-york

http://streeteasy.com/nyc/building/lincoln-towers-160-west-end-avenue-new_york

http://streeteasy.com/nyc/building/lincoln-towers-160-west-end-avenue-new_york

dwell, that's a good suggestion, a spacious alcove studio at Lincoln Towers for around $300k. CO-OPS are definitely more affordable. It's interesting that Park West Village, built around the same time and design as Lincoln Towers, 30 blocks north, were converted into CONDOS instead, and have a market value a couple hundred thousand MORE per studio. This despite the fact that the location is not as central. A part of the reason is that Park West Village has super low re taxes, so the carrying charges are a lot lower than Lincoln Towers. The other part is that added flexibility and value to CONDOS.

http://streeteasy.com/nyc/sale/493041-condo-382-central-park-west-upper-west-side-new-york

PWV's cheapest is a ground floor unit for $480k. The cc + re taxes is $484 or less than $1 psf, as low as it gets.

dwell and pmg..thank you..i saved 230 riverside. My current lease isn't up until 2/1..i was paying $2500 and the LL lowered it to $2125 but i'm sure he will raise it right back up in february. I agree an alcove or small one bedroom is the way to go but of course with the economy i'm always worried about taking on too much.

PMG: interesting about PWV.
Julia: Someone else made the following comment & I agree with it: Unless Congress acts before the end of the year, the Bush tax cuts will expire & if they expire, taxes are going to much go higher & that may be a game changer. So, I think it's a prudent idea to wait & see what happens because the housing budget you now contemplate may be reduced if your taxes zoom. Likewise, if taxes zoom, I think prices will decrease.

its not just how well the building is run, its the underlying mortgage. It can be used by developers to be not quite on the level.

I think of citylights. They sold for $25k originally, but the maintnenace was HUGE. $1500-2k I think, which at the time was like double everything else.

All they're doing is, instead of charging you $100k and you take the $75k or whatever mortgage, they were taking it for you so you thought you were getting a deal... but you're paying it either way.