pre-war townhouse condominium

You will hate your neighbors within 1 year. also, you will likely need to pitch in on doing random crap all the time.

I'm in a 7-unit co-op and in a postmodern conversion, but the same general principles apply.

True, you will need to pitch in on doing random crap all of the time. You will also need to be prepared for lots of e-mail exchanges about minutiae and a board that doesn't really know what it's doing (but usually has good intentions.) You will know all of your neighbors. I happen to like mine - one of them cooks constantly and leaves containers of tasty food on our doorstep at least twice a week; can't beat that!

When it comes to renovations and the like, the board could be very inflexible or very flexible; you'll have to ferret that out. Ours board is extremely flexible and allowing us to do all sorts of renovations that a typical co-op board would never allow in a million years. (Granted, it's all being done responsibly and on the up-and-up, and at great cost to us.) We are all reasonable people and allow reasonable things to be done (e.g., wet over dry) when the shareholders has a good explanation and a good place in place. There aren't a lot of hard-and-fast rules, as with other boards.

If you want to be nameless and uninvolved, this isn't for you. If you want to know your neighbors and take an active role in how your building is run, this is a great situation. We went from a huge, 1,000 unit building to a small, 7-unit building and love the change.

Thanks for the input. Sounds like it will require a lot of involvement in the building's operational decisions. Any pros/cons from a finance perspective - e.g. maintenance/assessment?

If you're a people person, you'll really get a feeling of deep inner satisfaction when you and your three other shareholders get to pick up the slack from the fifth shareholder who stops paying his maintenance and assessments.

You get to split the cost of a new roof with only four other people!

You have the soundproofing that was intended for a single family sharing the entire building!

Common areas (stairs, halls) are in generous proportion to your living space ... and maybe you'll even have interior stairs in your own apartment, in addition to the common stairs!

>fifth shareholder who stops paying his maintenance and assessments.

This just instantaneously happens in all of these buildings?

When the sidewalk vault in front needs to be replaced, you get to pay for 1/6 of it. Same for the roof. Same for the furnace, the windows, the public spaces, the facade. When the basements floods and the electrical system needs replacing, you get to pay for 1/6 of that, too. Then, when Con-Ed comes and tells you not only does the transformer need replacing, but the entire feed in from the grid is 60 years out of date and needs replacing at a cost of $200,000, you get to write another check. In the meantime, you get to know your neighbors super well as you spend the unbelievable hours it takes together to coordinate all this and figure it out. Unfortunately, 1-2 of the people you really like in the building are having a tough time right now. One lost a job and the other is sick or has a sick family member, and the have priorities that mean they can't pay these special assessment or at least they want to push off as much work into the future as possible. You, on the other hand, just want it all fixed correctly right now. If they aren't paying, your share of the money you must cough up just shot up. Not to worry, you can also pay for an attorney for the building to sue the person who owes and get this worked out. That might cost as much as the person owes, but what's a little more aggravation.

I'd rather live in a cardboard box than depend upon just 5 other units and have to maintain a house in the middle of NYC. IMO, I'd be crazy to invite these headaches into my life.

Wow, all those people who own single family homes are 5 times as nuts then, right?

You need to do due diligence. I have a few friends who live in townhouse co-ops on the UWS. None of them have had any issues, but all of the co-ops are of very long standing. It's potentially too risky but as always it comes down to tradeoffs. The same space in a larger co-op would have been much more $ for the location.

First, they don't own single family homes in Manh. Those who do, are generally rich and these expenses are nothing. Also, when you own a single family home, you think more in terms of how will I afford to maintain a house. When you buy an apartment in a town house, too many people do not think of it like buying a house--they still think in apartment terms. That's the fallacy. Owning in a town house is a lot different. If you accept that, and plan for it, you are not insane--you are thoughtful and responsible.

But when you say something like "I get so much more space in the town house than I could afford in an apartment building," you worry me. A lot. There are no bargains--only trade offs. The town house true costs may be more accurately reflected in the large maintenance costs that you are hit with periodically. And the management you have to participate in. And the commensurate time suck and headaches. Ain't no free lunch.

It is all about the tradeoffs, kw. But you cannot issue a blanket statement and say that it won't work for anyone. I know people for whom it works. Is it perfect? No. Because otherwise, prices would reflect that.

nyc: you needn't instruct me that it is about trade-offs. I actually wrote, "There are no bargains--only trade offs." Thanks, though. I didn't say it isn't for anyone. I said my experience is that most people don't properly weigh the trade offs and behave in financially naive ways seeing only the bargain purchase price in light of space they would get.

Kylewest, Thanks for your insight. We have looked at various loft building with 8-10 units. It is good to know all these issues upfront. While the costs may be ok, co-ordination seems to be a big headache.

Thanks for pointing out the potential downsides. I've never lived in a small building, so it's good to hear other people's experience. The place I am considering is not really a bargain in terms of space. I was interested in the unit mainly because of its location and no-frills environment, but I guess I will reconsider...

kyle is right--all else equal, buy in as big a building as possible--if only to spread risk

small bldg charm?? yeah right

Imagine your neighbor is a guy named after his own ass.

If I were considering a small building, I think I would pay for a home inspector. If you're responsible for such a huge portion, it might be wise to figure out when/if that roof will need replacing, when the boiler will blow, etc.

I have to say though, I have been down the RE road many times over the years, and I haven't met a normal neighbor yet. Sooner or later, you figure out what their particular brand of crazy is. if you're close to your neighbors, it's because you are not yet fully informed. It's just a matter of time . . .

Keep your distance.

A problem with someone that lives that close to you is a problem MULTIPLIED.

If one of your neighbors defaults YOU and the other tenants will have to pick up the slack. Obviously this is true in any co-op situation but when there are only 6 units sharing the burden that can be a pretty hefty gut-punch. Also, getting a mortgage will be difficult in a building with so few units. And Alan is correct re: the soundproofing issue--brownstones were just not built in the same way as buildings that were intended to be multiple dwellings.

Six-unit buildings are generally fine for mortgages (building or unit), as long as there are no tenants in arrears, rent controlled units with negative cash flow, or more than one unit that is not owner occupied. You may need to qualify the building with Fannie Mae and/or with a lender, but it's a simple process that a good mortgage broker can handle. Most of the issues start below five units.

Yes, definitely get a home inspector and get them to look at the building systems as well as the apartment systems. That said, some of the repair costs are being blown completely out of proportion. A roof on a brownstone building is a very small job. Most of them are about 25' x 50' and cost about $10k (or less) every 15-20 years. In my building, each unit has its own HVAC, but even if the cost were socialized, they're about $6k each, including the exterior compressor. Water heaters are also the unit owner's responsibility and are about $500 installed. Unless you have historical windows, normal-sized can be had for less than $500 apiece, installed. Painting the hallway, two or three grand total every 5-7 years. (It's just not that big.) Carpets, around the same. Facade repairs are expensive, but we're doing complete repairs to our front and rear facade for about $30k, and this is the only facade work that has been done in 40 years. It helps tremendously not to have to use union labor.

A good building will have all of this mapped out and budgeted for. If the building has an underlying mortgage, the lender will map it out for them and do yearly inspections to ensure that the building is maintained.

To me, small condo is a little scarier than small co-op because you don't have control over who gets into the building or the same financial requirements to entry, but then again, you're not directly on the hook for the unit's real estate taxes, which are 50% of our annual budget anyway (and would be 80% of our budget without a building mortgage), the way a co-op would be.

And about tradeoffs, every day I walk past London Terrace, where there has been scaffolding up for four years with no end in sight, and I read stories about the $30mm assessment at 2 Fifth Ave.... To me, it all comes down to how the building is maintained, not whether it's a big or small.

If you have any questions about the day-to-day operations of a very small, self-managed building, I am happy to answer them honestly.

lad, is your building in NYC?

Yes, in Chelsea.

>fifth shareholder who stops paying his maintenance and assessments.

This just instantaneously happens in all of these buildings?

*****

In this economy, anything can happen.

And increasingly -- even to "rich" people -- it is.

Does anyone know how the Fitzroy townhouses work? Is each house its own co-op, or is the whole row a co-op? They seem lovely.

Folks: This Should help: When Bigger Isn't Better--Buying in a Small Co-op or Condo...http://bit.ly/f3LOpo

Ron Gitter
www.coopandcondo.com