is HIGH maintenance always bad?

I usually find unusually high maintenance to be caused by one of possible three things -

1.) The building is a land lease. In almost all cases, a thing to avoid.

2.) A small-ish building with lots of white glove services, where all these (expensive) costs are divided by a smaller group of unit/share holders.

3.) A building with an unusually large mortgage and/or assessment due to bad financial planning.

Anyone else?

You'll find some units have relatively higher maintenance because they're combos or are considered more desirable (higher floor, great views). Also, smaller buildings tend to have relatively high maintenances because there are simply fewer tenants to share the costs of running the building.

I don't think having a higher-than-average maintenance is a deal-breaker at all--in fact, you may be able to get a better sales price because of it. To wit--I've seen apartments with average maintenances trade considerably higher than comparables with lower carrying costs.

As mj points out, you should definitely think twice about land lease buildings or buildings with odd assessments or out-of-the-ordinary mortgages. Otherwise, if the building is financially sound, I wouldn't necessarily let a high maintenance scare me, as long as it worked within my budget.

Or heavy on built-in services. This can include fancy stuff - pools, large staffs, whatever - but can also include things built in that would otherwise be charged separately. Like cable service or AC costs or whatever.

Also, age/type of building. Older co-ops work off strange old rules to dictate taxes. newer buildings can have temporary abatements, but then the actual taxes can be much higher.

Thanks for the advice. This building does not have a doorman, nor a gym, etc, and maintenance can be up to $1375 for a 750 sft one bedroom. Building is 17 stories high. I just happen to love the view, light and layout, and location, but am concerned about such a high number for a building that doesn't offer any costly amenities.

matsonjones: there is an underlying mortgage on this building for $2.4 million - is this bad for a 58 unit building?

bramstar: I do agree that I could probably get a good price for a unit here because of the high maintenance, but I'm worried that by the time I sell it the maintenance might have gone up so much to the point where I'd have to sell the unit for a lower-than-average price. Isn't maintenance cost money that you throw away?

It's not only the amount of the mortgage that matters, but also what type of mortgage, when it was last negotiated, the term of the mortgage, etc.

oymog, that mortgage is interest-only, 5.25% through 2015, then 5.75% until 2020, when it comes due. The building's been taking on more debt every time it refinances. As I said in the other thread, it's just a couple of hundred per month tops for a typical apartment, so there's something else going on there.

oymog--

Maintenance is not comparable to rent in terms of 'throwing money away' because there will always be a portion that is tax deductible (representing the amount that covers the building's mortgage). Generally that can range anywhere from around 22% up to as high as 50% (though the latter is somewhat rare).

As far as future resale is concerned, yes, a higher-than-average maintenance will always exert some downward pressure on the sales price but if the building is well-run, the maintenance shouldn't skyrocket out of control so it's not likely the maintenance/sales price ratio would be terribly different from when you purchased.

You mention that the apartment you're interested in has terrific views--remember that (plus higher floor, more space, etc) is a factor in determining shares, which happens when the building originally goes co-op. More shares = higher maintenance.

Oh--in my first post I realize that I' made a typo--sentence should read: I've seen apartments with average maintenances trade considerably higher than comparables with HIGHER carrying costs.

NWT: Thanks so much for all your input on my various threads, really really helpful.

"As I said in the other thread, it's just a couple of hundred per month tops for a typical apartment, so there's something else going on there."

How do I investigate this? Is this something my lawyer would analize into AFTER I made an offer that is accepted, or is this something that can be found in the financial documents of the building BEFORE I even make an offer? Thanks again.

Tell the broker you're interested but bothered by the maintenance, and ask her to get a copy of the 2009 (or 2010, when they're out) financials from the owner. It doesn't have to be this big deal subject of protocol. A seller should know it's going to be an issue when maintenance runs high. FedEx is half a block away, and it's easy enough to run off ten copies and leave them out for potential buyers. Buildings with nothing to hide even put them up unprotected on the web.

This one isn't going anywhere soon, so no rush.

http://streeteasy.com/nyc/folders/21875-saved-items#1050341

They dropped the price again. This is not good. Even if it can be grabbed for $499,000, is that still going to be a risk? I too like this building, but I think I would pass as well. Not to change gears but, The book/film "Looking for Mr Goodbar" was based on a true story of a woman murdered by a pick-up in either this building or the one next door. There was a cafe downstairs in front called the Copper Hatch which had a peppy little bar. They told me I was underage which is another thread.

This building has quite a few units for sale - many on the market for a while. What is the history of maintenance costs? Assessments? Flip taxes? I think that $1400 / month with essentially no amenities is on the high side by several hundred dollars. Other buildings in the area, many w/ excellent views and terraces, have lower maintenance costs w/ more amenities (201 W 70, etc)

"Other buildings in the area, many w/ excellent views and terraces, have lower maintenance costs w/ more amenities (201 W 70, etc)"

Funny you should mention 201 W 70. I had friends that lived there when it cooped in the late 70's(?). Between Mr Becker's management and Marty Stampler's legal expertise, they were off to a great start and have had little to no issues as I recall. If you like that kind of building, it is a really well run coop as it has been from day one.

If a brand new condo has high maintenance, then you're paying for amenities and so-called "white glove services."

But if the building is old you're paying to fix old stuff, and if it's a co-op you are likely paying for a big loan on the building.

This is what's frustrating about searching co-op listings. You'll see what appears to be a good value, then discover that yearly maintenance fees are 7% of the listing price. Ouch!

yes---all else equal, the higher maintenance should be avoided

^ As far as NYC apartments go, all else is *never* equal.

There are too many things to consider besides maintenance and price.....views, amenities, size, neighborhood, pre-war, post-war, convenience to subways/shopping/parks/fave restaurants, # beds, # baths, distance to work, overall "feel-goodness" of the place, outdoor space, condo vs. coop vs. townhouse, etc. etc.

It's impossible to simply say "avoid high maintenance", as that leaves out 23 other factors to consider when purchasing an apartment. And it's also impossible to simply say "all else equal, higher maintenance should be avoided", as obviously it's impossible for all else to ever be equal.

That's what makes NYC real estate so interesting.

I'm not sure if low maintenance is necessarily a good sign either. My neighbor has an argument (don't know his source) that some sponsors for new construction keeps it low in order to make sales more attractive. And when all the units have sold that the maintenance will only rise. We used a large high-rise white glove condo next to us a potential example.

one could conjure up hundreds of things other than maintenance that one could consider while shopping for an apt--glad you find the 23 that concern you interesting

any apt with an exceptionally high maintenance, given basic comp parameters, would be completely uninteresting to me, as a purchaser

With maintenance, I think you want to avoid anything more than two standard deviations from the norm for certain. Beyond that, I think it's best to ask questions -- and a LOT of questions -- before determining whether maintenance is high or low. One to one comparisons are very hard.

Focus on the true cost of ownership. E.g., when I bought, my maintenance was $1,150, but accounting for my atypical electric heat and water heat, I figured that for comparison purposes the effective monthly maintenance on my unit was really more like $1,300 - $1,350 when compared to units in other buildings. When we took a look at building financials, we upped that to about $1,400 accounting for for a likely increase, which came six months later.

On the other hand, when we looked at buildings where electric was included and there were discounts on cable and internet, we subtracted about $200 per month and the maintenance no longer seemed quite so intimidating.

One looked low and the other looked high, but in reality they were about the same once we adjusted. Point being, you're always going to have a range, and (IMO) it's OK to buy a place with maintenance in the high end of the range if there's value in what you get.

I would, however, stay away from land leases and from the building that has the highest maintenance in the neighborhood. Building financial problems tend to take a long time to go away, if ever, because shareholder nature tends to be to pass the buck rather than deal with it.

What is considered a too high maintenance for a regular coop with no ammenities. I know this ia a difficult question and as mentioned there are many factors. But what I am asking is at what point the maintenance would have a negative imact on the pricing? Possibly more than $1.50 psf?

always

By a "regular co-op," do you mean a small building? If so, I've found that maintenance usually isn't any cheaper for a few reasons:

(1) Fewer owners from which to subsidize major repairs, like roof and facade / unfavorable economies of scale.
(2) Tendency to have larger pro rata debt because of the above, and because small underlying mortgages (sub-$500k) are hard to find
(3) Non-professional management can lead to some sub-optimal decisions and less ability to negotiate real estate tax increases with the city.

We looked at plenty of 700-800 square foot walkups with maintenance of $1,100 - $1,600 in Chelsea and the Village. In fact, anything less than $1,100 usually meant the building had no debt.

The good news, if there is any, is that the lion's share of maintenance (70-80%) tends to be tax deductible in smaller buildings, though you'll lose the real estate tax portion if you get hit with the AMT, which applies to most people in Manhattan.

The advantages of a walkup tend to be greater likelihood to get "house-like" things. E.g., we have a woodburning fireplace, central air, a washer and dryer, a jacuzzi tub, and will soon have a 300 square roof deck. Any one of those things is hard to find in a bigger building, especially a co-op. All of them combined is impossible in the sub-$1mm range, which is where we are even with all renovation expenses.

The key is value and how you define it. Sure larger buildings offer economies of scale, but smaller buildings provide privacy. Focus on what you want and just make sure the building is being run efficiently versus its peer group and in relation to the services provided.

i am thinking about a large coop building (no economy of scale in this one). No gym or roof deck. door people. has a relatively high maintenance-almost $2 psf. midway apartment (not top of the building).

Why do higher floors have more maintenance charges? Is it because they use the elevator more or what? Okay maybe I can understand that a bit but then why does a view mean more maintenance? Surely they aren't cleaning the windows so you can see better?

Any updates of feedback on the experience at 269 W 72nd St? I see a number of 1 bedrooms are on the market but the maintenance is over $1,500.

Hi. I'm an agent. And I'd be happy to help out. If you'd like--feel free to give me a call and I'll check the building out for you and should be able to tell you why the maintenance is so high. It can be fine-though sometimes it's not. Depends on why it is in place (and also the rate at which it has been increasing ((which I can tell you too)). 646-269-1072 Promise no hard sell to be your buyers agent if you don't want one-- just happy to help.

Best of luck!
Alexandra

Just wanted to bump this thread up and see if anyone had some additional feedback.

Now days, $2 a sqft for maintenance isn't unusual for a full service co-op with less than 200 apartments. You can thank NYC for that, about a third of that is for real estate taxes.

The difficult part is determining the true square footage.

No, you get what you pay for.
High maintenance means better maintenance.

dumbboy!

perfect!

bravo!

I agree with yickes.