coops with liberal sublet policy

Case-by-case. Ask for the house rules before you buy. Rules are subject to change by board vote. We have a lot of resourceful board commentators, but I doubt such a list exists. If it does, it may not be accurate. If this is a concern, focus on condos.

coops couldn't be farthest from your targeted sublet policy. Most will have 2 yr lifetime limit.

buyfolio has a pretty neat search function that lets you see co-op units that allow sublets. But, as others say this is deceiving, as there usually are limitations and more generally the policy can and often does change. I wanted a place that I could buy and then easily rent and after seeing a few co-ops with "liberal policies" quickly realized that condos were really the only way to go. And also make sure to avoid Condops, which should really not be a category as it is not a real ownership modality.

"Co-ops" and "liberal sublet policy" are mutually exclusive, but not because the boards are trying to make their buildings themselves exclusive.

Because of their legal structure, if too high a percentage of units are being sublet, it could pose a problem for someone trying to sell their unit in the building because banks simply will not approve a mortgage on that apartment until that percentage slips back down below the threshold.

There are co-ops with liberal sublet policies. The most liberal I'm aware of is unlimited subletting after two years of ownership... and I don't think the building has ever come close to falling below 50% owner occupancy.

Matt, this has nothing to do with legal structure, if a condo falls below 50% banks won't lend there either.

Jason (or anybody else), are there stats kept on what percentage of co-ops have what kinds of subletting policies?

A month ago I was back in the city and visited an open house at a great apartment on 21st Street. Great location; square footage ideal for me; price was OK. According to the broker, though, the board hates subletting of any kind, so for someone who might want to live there for five years or so and then sublet it out for many years afterward, the apartment becomes much less desirable.

If you had family members who wanted to occupy it when you move, you're in the clear, but not everybody has that advantage -- nor will the average person know in advance that the family members will want to live in your place five or ten years from now.

I'm surprised that buildings don't publicize these rules better, so as to appeal to people who want to live in certain kinds of environments.

Each coop sets its own rules, but most are amenable to subletting for two years (with board approval). A few won't allow it at all. Much of it has to do with keeping owner occupancy at levels that banks will write mortgages on (like Matt said) and much of it (maybe more) is to keep buildings occupied by people who care for and have a vested interest in the building. Renters (to generalize) don't care as much about their building as owners. The rule is a means to safeguard everyone's investment.

You should probably only look for condos. Or, if you can pay cash, look for coops that say "cash only" in the ad. Nine times out of ten those units are in buildings with too many renters to obtain mortgages. On the down side, you can't get financing. On the up side, they nearly always mention "liberal subletting" as an attribute in the ad. Many let you rent out from day one.

I understand the desire to have residents who have a vested interest in the building, but at the same time, what are board interviews for if not to weed out potential renters who have the potential to become problems? Owners can be terrible tenants too, particularly elderly entrenched ones who have ways of making fellow occupants miserable and without affording them the hope that in few years they will have moved on.

The "only look at condos" advice limits your choices so severely that it really shouldn't be said so glibly. (Not attacking you here, Unsure; I also received from a bank representative when looking into getting a mortgage.)

As I type this, the total ratio of co-ops to condos available for $400k or under on Manhattan island is 704 to 72, meaning that just one in eleven units is a condo. Expanding to the whole five boroughs gets you a ratio of 2840 to 880, which is a little better, but even that is skewed by the fact that many of the "condo" listings aren't condos at all, but parking spaces listed as condos. (What, you want us to set up tents on the concrete and live in them?)

I'd love to see SE add more detailed parameters to use when searching, such as "Co-op, unlimited subletting after N years", "Co-op, sublet up to X years after Y years of occupancy", et cetera. It would allow co-ops with specific policies to appeal more directly to people who want those policies (whether liberal or strict), and allow potential buyers to screen out undesirable listings and save themselves some hassle.

The elderly entrenched ones afford them the hope that in a few years they will have died.

One lovely old lady (RS) in my former condo building lived to be 98-years-old.
She was out walking (with walker) until a few weeks before she died.
The Sponsor probably had a voodoo doll in her image and was sticking pins in it.

I totally get it. When I was looking to buy ( I ended up continuing to rent) I was very concerned about the sublet issue. I had no plans to rent it out, but had seen so many people lose jobs in the last few years that I wanted to feel protected by the safety net of being able to rent my place should I need to. In my experience the listing agents almost never knew the coops sublet policy. Which made me insane. It seems like such an easy thing to inquire about and have on hand at an open house. It seems like something that would happen in the preparation stages of a listing. Rarely, though, could anyone answer that question.

As a rough indicator, how about looking on SE at the number of rental listings for a particular co-op?

http://streeteasy.com/nyc/building/25-west-13-street-new_york I considered buying in this co-op a while ago and am pretty sure it still allows unlimited subletting. I liked that it was doorman building however I did not buy there because there was no interior staircase in the event the elevators broke down. Only fire escapes. But if that doesn't bother you it's worth a look...

And this one I looked at is unlimited subletting after two years. http://streeteasy.com/nyc/building/140-west-69-street-new_york

I know of at least one smaller building that alllows unlimited perpetual
subletting because it is investor owned, TGhere are probbaly others

"I understand the desire to have residents who have a vested interest in the building, but at the same time, what are board interviews for if not to weed out potential renters who have the potential to become problems?"

As a co-op board president, I can give you two reasons:

1. Reviewing board packages and interviewing potential tenants is extremely time-consuming. It's one thing to interview for an apartment that comes on the market perhaps only once every 7 years. It's quite another to have to go through the interview process EVERY YEAR for that same apartment.

2. Owners inherently are much less likely to be a "problem" because they're buying into a building for the long haul -- they have not only a financial vested interest, but a personal one, as well, and realize that becoming a problem for the rest of the building would become very costly in terms of both money and time. RENTERS, on the other hand, know full well that they can become "problems" from day one and there's absolutely no incentive NOT to become a problem because they'll be out within a year anyway.

>RENTERS, on the other hand, know full well that they can become "problems" from day one and there's absolutely no incentive NOT to become a problem because they'll be out within a year anyway.

Really?

@nikinyc: 420 E. 64th Street and 425 E 63rd Street (same coop board) runs like a condop. Easy sublet rules.

Yes, really.

I represent investors in real estate transactions involving "investor friendly" co-op buildings in Manhattan. These buildings are known for their "unlimited sublet policies from day one", i.e., investor can purchase an apartment and start subletting it from day one.

There are approximately 30 buildings of this kind in Manhattan. At any given month, no more than 2-3 apartments are offered for sale in these buildings. Many change ownership via off-market transactions. Average time to get such units in contract is less than 4 weeks. Average time to get a traditional co-op unit in contract is 40 weeks. "Investor friendly" co-op apartments are highly liquid and attract a solid demand.

On average, a cash investors earn more than 15% annually on his/her investment by purchasing and subleasing a cooperative apartment in these "investor friendly" co-op buildings.
The math is quite simple.

Let's consider Upper East Side co-ops in pre-war low-rise buildings.

Average co-op studio price is $300,000; $600 - $650 per square foot (Average 1BR price is $350,000). An average monthly rent for a studio is $1900. Average monthly maintenance for a studio apartment is $750. Annual Net Operating Income (NOI) = $13,800. CAP = 4.6%. Compared to investing in condos - by purchasing and renting a condo in Manhattan, an investor will not earn more than 2.00% - 2.50% annually.

Moreover, over the last year, on the average, co-op prices increased by more than 15% in Manhattan (see most recent Market Reports published by the most leading real estate brokerage companies in Manhattan.)

For example:

-1-Bdrm in investor friendly co-op building recently went under contract for $369,000 on the Upper East Side. Anticipated monthly rent $2,200. Monthly maintenance is $678. http://www.townrealestate.com/sale/id-748495/215-East-88TH-Street-2D-Upper-East-Side

Undisputedly, there is always a chance that a board might amend the co-op bylaws and forbid investors to purchase units in the building or create restrictions on subleasing. However, the chances of this happening are very slim. Usually, the board needs 66% voting approval from all of the shareholders in the co-op in order to to amend bylaws. Most of the shareholders in such buildings are investors who sublease the units once they close on a purchase. Such shareholders/investors will never vote against their own interests. Thus, it is nearly impossible for the board to gather the necessary 66%. That's precisely the reason why these buildings are called "investor friendly".

Today, this type of co-op deals is an incredible investment opportunity that certainly deserves a careful consideration.

If you are interested in investing in co-op “investor friendly” buildings in Manhattan or would like to get more information about this type of deals, please contact me at md@findsider.com.

There are approximately 30 buildings of this kind in Manhattan. At any given month, no more than 2-3 apartments are offered for sale in these buildings. Many change ownership via off-market transactions. Average time to get such units in contract is less than 4 weeks. Average time to get a traditional co-op unit in contract is 40 weeks. "Investor friendly" co-op apartments are highly liquid and attract a solid demand.

On average, a cash investors earn more than 15% annually on his/her investment by purchasing and subleasing a cooperative apartment in these "investor friendly" co-op buildings.
The math is quite simple.

Let's consider Upper East Side co-ops in pre-war low-rise buildings.

Average co-op studio price is $300,000; $600 - $650 per square foot (Average 1BR price is $350,000). An average monthly rent for a studio is $1900. Average monthly maintenance for a studio apartment is $750. Annual Net Operating Income (NOI) = $13,800. CAP = 4.6%. Compared to investing in condos - by purchasing and renting a condo in Manhattan, an investor will not earn more than 2.00% - 2.50% annually.

Moreover, over the last year, on the average, co-op prices increased by more than 15% in Manhattan (see most recent Market Reports published by the most leading real estate brokerage companies in Manhattan.)

Undisputedly, there is always a chance that a board might amend the co-op bylaws and forbid investors to purchase units in the building or create restrictions on subleasing. However, the chances of this happening are very slim. Usually, the board needs 66% voting approval from all of the shareholders in the co-op in order to to amend bylaws. Most of the shareholders in such buildings are investors who sublease the units once they close on a purchase. Such shareholders/investors will never vote against their own interests. Thus, it is nearly impossible for the board to gather the necessary 66%. That's precisely the reason why these buildings are called "investor friendly".

Today, this type of co-op deals is an incredible investment opportunity that certainly deserves a careful consideration.

If you are interested in investing in co-op “investor friendly” buildings in Manhattan or would like to get more information about this type of deals, please contact me at md@findsider.com.

The risk in buying an 'investor friendly' coop due to a liberal sublet policy and then relying on renting it out indefinitely is that this policy could change over time. A new board could do anything from restrict subletting to imposing higher and higher 'tariffs' (fees) the longer you sublet the unit (http://www.hauseit.com/nyc-coop-sublet-policy-rules-fees/). Once that happens, you may decided to sell around the time when every other investor in the building decides to. Then you will have lots of competition on the market, and the board may not even approve all of the transactions...