Small Coop under 20 units but has no reserves?

Could be even worse since the costs for any unanticipated repairs will need to be made from a smaller pool of people. Need $100,000 in roof repairs and only have 10 apartments - well, you do the math. Also, in a small building, if someone defaults on their maintenance payment, it is much more likely to impact on the payment of the underlying mortgage. Without reserves, there is a greater threat of foreclosure.

Take any possible building expense and divide it by 20. That is the amount you would have to pony up or agree that the building should finance. Need new boilers or roof? Have to rebuild the sidewalk vault? Facade flaws letting water corrode structural beams? Need new common hall decor? New elevators? New windows? A support beam in the foundation sagging? Erect a scaffold to inspect the facade for a Local Law cycle at $20K per month? Get ready to pay for it out of pocket if there is no reserve fund. If you are on a budget and can't easily pony up a $10,000 or $20,000 or $50,000 special assessment, I wouldn't touch the building. Such large assessments might be unlikely, but should one hit, what would you do? You have to know the answer before you buy in that building.

Take any possible building expense and divide it by 20. That is the amount you would have to pony up or agree that the building should finance. Need new boilers or roof? Have to rebuild the sidewalk vault? Facade flaws letting water corrode structural beams? Need new common hall decor? New elevators? New windows? A support beam in the foundation sagging? Erect a scaffold to inspect the facade for a Local Law cycle at $20K per month? Get ready to pay for it out of pocket if there is no reserve fund. If you are on a budget and can't easily pony up a $10,000 or $20,000 or $50,000 special assessment, I wouldn't touch the building. Such large assessments might be unlikely, but should one hit, what would you do? You have to know the answer before you buy in that building.

It's really just a style of governance that you have to be comfortable with. As Kylewest has pointed out, a co-op with no reserves is running on a "pay-as-you-go" basis, so everything big that comes up will require a special assessment. (Make sure, as part of that tradeoff, that your maintenance is lower than in a comparable building with a reserve fund.)

The usual suspects for special assessments will be a new roof, heating/boilers, and compliance with Local Law 11 -- which requires regular facade maintenance.

You should be able to find out from the co-op when each of these things were last done, and that will help you a little. You should, however, have $10K tucked under the mattress after you buy no matter what, because leaks always come when you least expect them.

ali r.
{downtown broker}