This HDFC will become private & other Scams

I know you are looking for more "scams", not questions about your assumptions, but I do question your starting point. Is it not the case that all HDFC co-ops will eventually become normal market rate buildings?

As I understand it, the goal of the city is to get out of the oversight of these buildings gradually over time. The city is encouraging home ownership rather than renting through this program That's why the buildings became HDFCs in the first place--the city didn't want to play landlord, and preferred to encourage residents of the buildings to become home owners in a co-op rather than stay tenants of a building owned by a slum lord. Some buildings transition out of HDFC-dom fast, some slow. But 100 years from now, I doubt many HDFCs will be left.

So there's no scam here if sellers indicate that HDFC status is not a forever thing. There may, however, be uninformed would-be buyers ...

the reason why it's a scam is that realtors totally overplay the probability on the hopes that the buyers will consider the purchase an investment and overpay.

in reality, as soon as there's even a few of elderly with fixed income on the building it just can't happen. these guys aren't on budgets that can afford to pay regular taxes / maintenance w/out the tax breaks that come along with income limits.

I agree with elements of what both notadmin and Uptown2012 have said. HDFC's are not a scam, though in recent years the marketing of apartments in many HDFC's apartments through brokers do border on misrepresentation. It's the buyers responsibility to do their due diligence and understand the implications of what it means to be an HDFC building and to ignore the broker hype. I have often seen apartments marketed as "X years remaining" as an HDFC. While the restrictions may disappear after year X, there is also the possibility they may not, because it also tends to correspond with an increase in maintenance as the tax breaks, energy discounts, etc. as a result of giving up those restrictions.

Well, older folks with fixed incomes do tend to be people in favor of keeping maintenance payments low. But these are also shareholders who are more than averagely likely to cash out and move away, or--not to be ghoulish, but we now it's true--die. HDFC apts aren't investments, primarily--they are homes. For those who buy them and live in them, the reward will be great when in due course the buildings become market rate ...

> HDFC's are not a scam, though in recent years the marketing of apartments in many HDFC's apartments through brokers do border on misrepresentation.

very true, the structure is sound. the idea of buying one with income restrictions with the expectation that those restrictions will be lifted is where the scam is.

HDFC are fine for those who want to build wealth through the savings from housing costs on a monthly basis. it's not a recipe for wealth building based on equity accumulated and appreciating prices.

> the reward will be great when in due course the buildings become market rate ...

that's the scam, that expectation. the smart buyer of an HDFC buys there instead for the monthly savings, the rest are 99% suckers that fell for that "once it becomes mkt rate" BS.

notadmin--

Sorry, maybe it's just me, but I don't see how it's BS that HDFC buildings are all on a march toward becoming standard co-ops without income restrictions. That really is the goal. How long it will take varies from building to building and according to circumstance, and sure, some brokers get it wrong or are less than honest about how it works.

But eventually, all the apartments now under HDFC protection and regulation won't be any more, and at least for Manhattan apartments, it's very reasonable to expect that eventually (maybe decades away) when that happens, they will be worth far more than they were at the time of purchase. Check back here in about 20 years when the lovely HDFC building where I just bought an apartment no longer has income restrictions. i won't be selling then--I plan never to leave--but I will probably be making a nostalgic post about how great the HDFC program was, and how much it did to help my building, neighborhood and the city ...

"Check back here in about 20 years when the lovely HDFC building where I just bought an apartment "

LOL that says it all. you aren't being objective and you clearly fell for this scam.

As the city has changed, so has the value of these apartments. While the program discourages buying these apartments as a speculative investment, they are certainly an investment. I had a friend in the 90's that had bought his HDFC apartment in Hells Kitchen for $250. It was speculative in many ways- speculating on the apartment, the building and even the neighborhood. I don't know if the restrictions are still in place today, but I would suspect his apartment is worth at least 250k. While the restrictions could still be in place 20 years later- I doubt they would be in place in another 20 or 30 years- though it is possible. While I don't buy into the hype of the broker babble- over time- some at the program mimumum, others decades longer than the program minimum- the program restrictions will likely disappear in a great deal of the buildings. Each building will have to make their own decisions- and expect some will endure using the program out of principal to keep affordable middle class income apartments available.

HDFC coops are created with 20-30 year lifetimes in mind from the start. There's nothing wrong with that, and the info isn't concealed. One can still consider an apartment an "investment" even though the pay-off is distant rather than imminent. As usual, Semerun puts it very clearly when he explains this. But as I said already, in my opinions these apartments are better understood as homes than as investments in the usual sense.

There's no need to get personal here: I am as objective as anyone ever is about my choices and the logic underlying them. Right now, non-HDFC apartments quite similar to mine and nearby sell for about twice what I've paid for mine. I plan on living here for decades to come, but if in that distant future I choose to sell, there will come a time when my building leaves the HDFC program and at that point, apartments in it will be worth what those which never were in the HDFC program are worth. Looked at as an investment then, I think my apartment will have performed very creditably. And there was no scam--no one suckered me into doing anything. I learned of the HDFC program, researched it carefully, and actively conducted an extensive search for just the right HDFC property for me.

You seem to have a chip on your shoulder regarding the whole HDFC thing--what did this program ever do to you?

There are a great number of HDFC's that hit the market without the broker truly understanding the nature of the product. This is true of many market rate apartments as well- but HDFC's are a whole different animal. I have been helping my friend find the right apartment (an HDFC) for more than 5 years (we now have the right building for her- but it's rare units become available)- and the brokers representing these apartments have been horrible. In most cases, they don't know or care that these apartments require a great deal of speciality expertise. In one building we are familiar with - the brokers often ignored the price restrictions or took them too lightly- insisting that the income allowed was much higher than it was. Well, we had met a few of the board members of the building on more than a few occassions- and not only were they strictly enforcing the income limits- but they were cautious about the source of funds as well (i.e. parents buying for children was not allowed). My point is too many brokers sell the vision of an HDFC opting out of the program restrictions simply because they met the minimum time horizon- but the same can be said of the rest of their marketing efforts as well. I do agree than no one should buy these apartments with the idea that Year X hits- and the building will automatically opt out of the restrictions, but at some point there is a possibility that the building might.

Uptown2012 - I totally agree with you - what is the scam here - the bylaws are recorded on ACRIS - how much more transparent do you need to be???

notadmin - you seem to be under the impression that an HDFC with three elderly tenants could never go co-op/condo. I don't understand why you think this is true. Sure these tenants may be more likely to vote against the conversion - but these votes to convert don't need to be unanimous.
Further, many elderly tenants would love to go condo - get some comps in the building and then put an 80% LTV loan on their place. They would use these refinance proceeds to fund travel, health care, kid's educations etc etc.

I own in an HDFC and our regulatory agreement is up in 2017. We are renewing early to get out of the tax burden that agreement carried with it - only 30% profit to owner (40% city/30 coop). Those advocates of holding out and waiting have been told 'once an hdfc always an hdfc' by the city. Ie once the regulatory agreement expires, there is no chance to go market rate. What I have been trying to find out is whether it's possible to get the income limits adjusted or changed. I think the laws would seriously have to change for these to become millionaire dwellings, and the residents aren't particularly interested in making that happen either. Our building, like many others, wants to retain its status as moderate income and to work with the city on that. For people like myself who bought into a total wreck and had to do a gut renovation (for which the expenditures are still likely to be vulnerable to flip taxes), the profits will be much more modest than in market rate coops. This market has caps already built into it.
HDFCs are anything but scams.

Haven't seen him post in a while, but if c0lumbiac0unty would return, he might be able to help you with the scam.

You just can't let things go, can you? So derivative. Nothing unique or insightful, just regurgitation.

Like every building a buyer is considering each one must be analysed individually and it's not helpful to generalize. Some HDFCs are managed very badly and have very weak financials. Some are well run and have excellent financials and community culture. They can be both excellent as an investment and a place to live, depending on the price, location and financial health.

Oh no, aboutready called me "so derivative". That's deserving of a slap: http://hiphopwired.com/2014/11/10/man-slaps-fire-woman-clowned-8-ball-jacket-brawl-ensues-video/

HDFCs never become private because of restrictions in the building's deed. Find the property's deed and it's very clear what the property can be used for.

HDFCs never become private because of restrictions in the building's deed. Find the property's deed and it's very clear what the property can be used for.

>HDFCs never become private because of restrictions in the building's deed.

Things change. Laws are passed. Illegal aliens vote.