Sale at 27 West 87th Street #1

financing a coop w few units is difficult. Interest may be high but few maybe qualified

Hi delbel, thanks for the response. Even with the financing issue, the pricing seems low to me... I have a SE search on my email and this was the first apartment of its ilk within my search parameters (under $2.75 million) to come up. I assumed it's because other similar apartments would be priced at higher? I've seen much worse apartments priced for much more in this neighborhood and this apartment in fact looks better in person than in the photos. I'm in no way affiliated with the apartment, btw. I'm checking out this neighborhood in hopes of buying a place next year or so and am wondering what my budget gets me. It'd be great if I could afford something like this, but I suspect that I can't. If anyone who knows the neighborhood has insights, please share! Thanks

A co-op with three units at this price point is likely to require portfolio lender financing, if the co-op even allows financing. You're going to be at the whim of the two other units, as is your ability to resell your unit in the future.

A small co-op like this is also a big lifestyle choice. You will know your neighbors, and for decisions involving the building, you may as well be married to them. You will be intimately involved in all details of the building finances, upkeep, etc. If one of the other two neighbors defaults, dies, etc., you're going to be in a difficult situation during which your unit will be unmarketable at almost any price and your maintenance charges will rise to keep the building afloat (barring a large reserve fund). If you and one of your neighbors by some freak chance need to sell at the same time, it will also be a very big problem.

A property like this is not like a normal co-op, or even a normal small co-op. Less than four unit buildings have many more risks than even 5-9 unit buildings. You need to treat this like you're going into business with your two neighbors, except you won't really get to do the thorough audit on their finances/situation that they'll do on yours.

All of these things warrant a lower price point. I did look at a few four unit co-ops at a much lower price point ($700k-900k) during my search three years ago. As a general rule, these units tended to trade at a 20-25% discount if portfolio lending was available, and even more than that if no financing was allowed.

My perspective is that condo is a preferable structure below five units, from a risk mitigation and financing perspective. From five to about twenty units, co-op is actually preferable from my POV since there are enough voices at the table to prevent insanity (usually), while the corporation has more flexibility with financing and being able to collect in the event of default. Beyond that, it's a crapshoot.

I agree.

My guess is that this became a coop during the Upper West Side's radical-chic bourgeoise hippie years (1968-1978), with cooperation in mind. Good luck with that today.

Pass.

lad - Thank you for that great explanation! You've definitely given me some reservations about buying into a small coop. AH - I'm with you, I would probably have to pass, too. The most troubling thing is the assymetry of information - the other owners get to audit my finances, but I can't audit theirs. I guess I will have to wait until I can buy the whole building (yeah, right) to move into a place like this.

How does this compare to small condos?