My partner and I were looking at an apartment in Sunnyside and have gotten pretty serious in the negotiations. But then we realized that the building sponsor owns more than 50% of the building, so a lot of banks won't do that loan since it doesn't meet Fannie Mae guidelines. In fact, only one out of the six major banks we asked so far will even consider making us a fair loan. One bank even wanted... [more]
My partner and I were looking at an apartment in Sunnyside and have gotten pretty serious in the negotiations. But then we realized that the building sponsor owns more than 50% of the building, so a lot of banks won't do that loan since it doesn't meet Fannie Mae guidelines. In fact, only one out of the six major banks we asked so far will even consider making us a fair loan. One bank even wanted 40% down and a 5yr ARM at 6.5%! We thought we were getting a good deal at $257 per sq ft. The maintenance is pretty reasonable as well. However, we don't plan on living there for more than 5 years (if that), so we are worried that when it comes time to sell, it might be very difficult for future buyers since it's so hard to get a loan. After two years We should be able to sublet indefinetly if we need to.
The sponsor needs to sell 5 or 6 more units to get below 50%, but so far they have not shown any signs of selling.
So what do you guys think? Is it a good investment? Is it worth the risk? What are other people's experience in getting financing for a building like that?
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Response by alanhart
over 15 years ago
Posts: 12397
Member since: Feb 2007
Transaction (buying, selling) costs are so high in NY that you are nearly guaranteed to lose money if you sell within 5 years, even if the market appreciates.
Run and rent!
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Response by ab_11218
over 15 years ago
Posts: 2017
Member since: May 2009
you're getting a private mortgage. you're lucky to get 6.5% for a 5 yr ARM. don't be surprised if they stick you will 2-3 points in closing costs on top of that horrible rate. you could do worse though. i've heard rates upwards of 12% for a 5 yr ARM.
Transaction (buying, selling) costs are so high in NY that you are nearly guaranteed to lose money if you sell within 5 years, even if the market appreciates.
Run and rent!
you're getting a private mortgage. you're lucky to get 6.5% for a 5 yr ARM. don't be surprised if they stick you will 2-3 points in closing costs on top of that horrible rate. you could do worse though. i've heard rates upwards of 12% for a 5 yr ARM.