Financing Renovation

You can't get a "mortgage" for the renovation cost. You need a more expensive construction loan, some of which have provisions that automatically revert into a mortgage loan upon completion or revert in pieces upon completion of certain milestones.

Typically, renovations are paid for in cash, which is taken into account by the board during the process of board approval (if it's a co-op).

So if you're buying a "handyman special" apartment, the board is going to look to make sure that you have sufficient reserves to carry the apartment after you spend whatever the estimate is that the renovation will cost.

ali r.
DG Neary Realty

nyc_sport - can't see how that applies to co-ops. You only get cash back from a mortgage if the mortgage is greater than the cost of the apt. This is not allowed for any co-op that I've seen. The only work that would work is if you had a HELOC that enabled you to tap into the equity in the apt - which again, has to be approved by the co-op. Can't see them approving it in this (apt wreck) scenario. Can't see the bank approving a HELOC either in this situation.

Those kind of construction loans would apply if you were building on land/ tearing down/gutting a building. I've looked into it - and these days, they want you to pay for the land or the tear down in cash and then will lend up to what you paid (effectively making it a 50% loan).

UWS - this makes the cost of buying an estate condition apt greater (cash for down + cash for reno) than putting the sum as a down payment on an apt in better condition.

So, in the case of 845WEA, say it goes for 1.5m. You would need 300k for dp + 500k (for reno on the cheaper end of things) + rent for 12 months + whatever liquid the board wants on top of that. If you don't have at least 1m in the bank, it's not really a good proposition. Unless you're fine with living in the apt with minor cleanup (sand the floors, deep clean, paint job). Someone lived in the apt before, so that's not out of the question either.

typo - 895 wea

what is the down req by this board?? 20% sounds light to me

Just giving a minimum, could be 30%, 40%, 50%.

Stated minimum at 895 WEA is 25%. Not sure how the condition of the apartment might affect that standard.

Thanks for your help. The apt seems uninhabitable to me without a major overhaul. Amazed that someone lived there. The floor visibly sunk about a foot in places.