Can I still live in Manhattan?

I have typo in my post. I meant to say...."What I am terrified of is selling my place, having all of the cash ready to go only to discover that no building will allow me in despite having arranged an all cash purchase with the seller"

Dear Cuegis, ideally this is something to discuss with a financial planner, considering all your obligations and assets, not just your real estate holding(s).

I'm guessing, but it sounds like you used the equity in your home to live on during the financial crisis/unemployment, and went through bankruptcy (or perhaps should have).

I don't think any top co-op or condop (in general condops operate as co-ops on the residential side) will accept you with a poor credit history or a bankruptcy. The latter is public information and easy to look up for free, you can't hide it; the credit check you will give consent to on any co-op board application.

I'm an AARP member like you. If I were you, I would sell my GV apartment and move someplace that doesn't tax my social security and out of the city with the highest cost of living in the United States. AARP is full of advice as to where and how to relocate in retirement.

Find someplace cheap you like, and then plan on a few trips back each year to the Big Apple to visit the friends you have here. This would be cheaper than sticking it out in NYC.

That said, you could in theory buy a condo unit. I suggest you carefully research any condo, in my experience it's better to live in a co-op, but that's just my opinion. Best wishes to you.

Thank you for your reply.. Just for the record...I have never declared bankruptcy or been foreclosed upon.
I know very often with rentals, if the person has bad credit, or unemployed....if they pay the full amount of the lease up front there is no risk to the lessor and they allow it......

But, with a NYC rental we are talking about $2500+++ per month.

If I buy a $500,000 coop for all cash and my monthly charges are $700 ($8400 per YEAR) I could easily give them several YEARS up front to put in escrow. What is the difference. I has to mean something that I was sold enough to pay all cash and $700 per month is such a nominal amount of money.

I have been researching other parts of the world to live (Costa Rica, Panama...even Florida), but it's not time yet.
I have a mother who is 93 and this is not the time to start moving to another part of the world.

I meant to say $2500as an absolute minimum....$4000 plus is more like it.

OK, I'm not sure how you ended up with bad credit without bankruptcy, but no matter. If it's not time to move yet, it's not time. You would need to find a board that thinks a huge escrow is compensation for a poor FICO. I personally would not think so.

The other problem you have is, in general, GV is highly desirable to buyers, and however much the market may be softening (see related conversation) I think it is still a seller's market there. A seller would probably not have to work with you, they could sell to somebody with good or excellent credit. So why take a risk with you. The board might feel the same way, if you got that far; reject this buyer and let the seller find a stronger candidate. The classic thing to do to help yourself compete is to pay too much for the apartment, to go well above what other buyers are willing to pay. I'm sorry all this happened to you, by the way. At least you've got a great apartment and a great financial asset.

That's why I sublet it. To make sure that if I ever sold it. then it would be something that I thought was the best thing to do but, I will not sell it under duress...... I was going to sell it 1 year ago when it was $1.25, but I sublet it instead and now it is approaching $2 million. The average time on the market in my building is less than 1 week.
I am toying with the idea of marketing it to "investment buyers" only. There is the best best tenant, paying top dollar and the buyer does not have to put a dime into fixing it up.....The minute they close they immediately receive income.

But, if I literally cannot buy an apartment, all cash, when I have more than enough money to do so...it is pretty scary.
I guess I will have to keep on subletting it....it is a "condop" with "condo" sublet rules.

Also, I got a HAMP 3 years ago so my mortgage is a 25 year fixed at 1%... That means 95% of my monthly payment is principle so everyday I own it I am making money whether prices go up or not.

Well...maybe those unrealized gains are kind of burning a theoretical hole in your pocket. Understandably. But I like my original reaction: move out of NYC, when family circumstances allow.

cuegis, In my humble opinion, best to rent out you current $1.7mm condop (guessing it is Georgetown) for $5+k per month and rent somewhere cheaper till the time you find a reasonable job. You will be in a better state of mind to make financial decisions. No coop will let you buy without a steady stream of income - as unreasonable as it sounds. Good luck.

300 Mercer...That is EXACTLY what I did... I sublet it for $5000 for 2 years but it expires in June.....I have the best tenant and they are begging me to give them another year, or 2 after that and also agreed to pay all of my expenses (sublet fee etc)..BUT.....BUT, even though I paid less than $100K for it, I borrowed against it ($800,000) along the way.

It was a safe thing to do when I did it but the crash and depression of 2008 destroyed my business.
I was VERY lucky to get a HAMP (loan modification) where my loan is fixed at 1% so I am paying the place off at a lightening speed but, even without me living there, the $5000 per month just covers all of my expenses (mortg, maint etc) and there is nothing left over to rent anything plus if I cannot pass a board with $1 million in cash in the bank and unemployed....how will I pass a board for a rental with nothing in the bank.

I dont think they consider the fact that I own a $2 million home when they are evaluating me because it is not liquid.
Although my building is about as close to a liquid asset as any piece of real estate. The average time on market is always less than 1 week.

If prices stay the same and I sell it in 4 years I will make another $300,000 on top of what I would make today.

What about another building just like mine? a "no board approval" building.

If I paid all cash couldnt I buy something in a place like that?

I am looking at a studio in my own building today for $700,000...maybe a swap would work.

The bottom line is...right now my place costs around $4300 per month.

A very nice studio anywhere, in the $500,000 range, with a $600-$700 maint. ( and they are all over the place) would cost me $8000 per YEAR if I pay all cash.

If I have $300,000 in the bank after buying it, that would pay my maint for the next 40 years. would a building REALLY reject me under those circumstances?

So, if someone is retired they basically CANNOT buy a home in manhattan?

Cuevas, you can buy into a building that is FHA approved; you can then get a reverse mortgage. A reverse mortgage is not contingent on your income and credit, just your age.
Ellen Silverman
E. S. Funding Co.
Tel:212-786-9682
esfundingco@aol.com
Licensed mortgage broker since 1990
Licensed real estate broker since 1987

Some buildings do not require any board approval if you own in the building already--we lived in one like that in Manhattan--you might want to check that out if you like that $700,000 place! That might work for you.

We were advised to buy something before hubby retired, exactly for the reason you state. In the end we went condo so it didn't matter.

Of course your tenants love the apartment!! What a fantastic deal they have. You're making NO money, and they're assuming no ownership risk. Always a sweet deal for tenants, anywhere in the world. This is why smart money rarely buys Manhattan apartments for cash flow, you invest for appreciation, and why your idea of marketing to investors won't see a lot of traction. People investing at that price point know how to run the numbers, and rarely do they work in Manhattan.

BTW, how was the price of your apartment right after the crash? What were the days on market for apartments like yours? Over 60 DOM maybe? This is why boards are so conservative.

Liquidity in real estate is a mercurial thing.

The only reason I'm not making money is because , where I should no mortgage at this point I borrowed along the way up so I only have 60% equity in the place, which is still not bad..

If an investor bought my apt for all cash he would NET $4000 per month....almost $50,000 per year. This is what I SHOULD be making.
If I sold it and bought the studio all cash for $700,000 and rented it for $4000 per month I would net $3200 per month.

So it is a great investment and there is great cash flow with tremendous appreciation on top of that.

During the 2008-2010 period my building did not go down in value at all....it just paused going up for a few months and the time on mkt for sales were still weeks, not months...and this was at the worst part of it all.

Also, not all investors are looking for cash flow....it is a fact that at least half of the residential purchases in Manhattan over the past 2 years were by FOREIGN investors looking for a place to "park" cash...most were purchased by offshore corporations....So the "investor" demand has never been higher than it is right now.

I have never seen illiquidity in my building.

You have it backwards....my tenants are paying off my (1%) loan at a hyper-accelerated rate while I'm assuming no risk....My basis is $90,000

What is the difference between my property going up another $300,000.... or my property staying where it is and my debt goes down by $300,000?.....The latter, less tax when I sell!.....But, in all likelihood I will wind up with both.

This discussion jumped the shark several comments ago. Flutistic has provided some sound, reasonable advice. You make a case that it's not time to move out of NYC. Okay, then your only prayer if you insist on buying as a sponsor unit or perhaps buying a studio in the same building. That said, your insistence is considering an $800k debt as an asset is frightening... in my mind, your basis is not $90k, it's what you have into (owe) on the unit. Also a $4,000 monthly return on a $2 million investment is less that 2.5% annually. Not much of a return...

I'm sure you know as well as I do that NYC has never been a cash flow city....
Nobody buys a property and receives an immediate positive cash flow.

So, how has everyone who has bought property that, at best, is cash flow neutral, made 1000%+++ returns over a 5-10 period...And unlike the stock market, that would include those who have bought near the high end and sat through the , 2-3 downturns over the past 40 years.

Historically, anything that is better than breaking even in terms of cash flow is a great buy in Manhattan which is not a cash flow city.. It is an appreciation city.
As for my $800,000.....that was a bad decision on my part that I consider an $800,000 loss...Yet since that time I am coming out of the situation, after 5 years with a $1,000,000 net profit..
THIS shows how forgiving NYC real estate is to turn an $800,000 mistake into a huge profit.

This is why I do not like emails and trying to have a dialogue online....It usually gets misunderstood.

I never said an $800,000 debt was an asset.

This will be my final comment...I probably should have kept my trap shut. I usually try to stand on the sidelines and let these and let these discussions play out.

I am not attacking you or trolling you. You seem like a nice person in need of thoughtful advice who is asking a serious question. However, you also seem very stubborn and unwilling to consider viable and reasonable POVs on your situation that don;t align with your perception.

From my POV, you have a large debt with significant monthly payments and limited cash flow. You asset is somewhat speculative (in terms of its value) and not terribly liquid. This puts you in a significant bind when it comes to your RE options. There have been a couple of decent suggestions to your original post. You don't seem willing to consider them.

I want to address this as sweetly as I can -- I am a broker and I sell $1.7 million apartments -- but I think that before you start trying to buy you might want to tweak some of your assumptions.

First, if you got hit by the financial crisis seven years ago, your credit should not still be sh3tty. Three or four years of on-time payments should have pulled you back into a decent place.

Second, you need to raise your tenant's rent. If your condop is where the posters on this thread seem to think it is, $5K is too low.

Third, the only choices of a place to live are not Greenwich Village and Florida. Where are you living now? (You mention that you aren't in your condop but you don't tell us where you are -- we also don't know how many years you have to gap before you get retirement funds, if any, and Social Security) . If GV is just a lifestyle call for you, it's probably not worth sinking two-thirds of your entire net worth into the place; you could probably do better in other areas of New York, even Manhattan -- I might look at something like 255 Cabrini, which is a condo.

ali r.
{downtown broker}

This is great.

Hi, Cue, I understand better now. It's complicated. You initial post says you live in the place, and you also sublet it, so it sounds like you might have roommates, which is understandable if so and not too pertinent to other discussions.

Re: Front Porch's point, you might want to pull your credit report and see what it says now, if you haven't already, in case your credit is better than you might think. You can do this for *free* at www.annualcreditreport.com , which is a federally authorized source for this info.

You can pull one free credit report from each major recording agency for free each year. So, you can pull TransUnion now, and then Experian in 4 months, etc., so that you pull a report for free every four months. And no, it will not affect your credit in any way to do this.

Parking money to get it in the United States is not what I think of as investing. There are many other investing costs, including maintenance, upgrade/renovations, vacancy time. That's why yes the rent is too low. What sometimes happens with accidental landlords is, they form relationships with their nice tenants and then they get taken advantage of. You can choose to go that way of course, it's your life. I give talks on financial literacy from time to time so I just like folks to be aware of the choices they're making and how they affect their lives. Best wishes

front porch.....yes $5000 is a little bit too low but I started this 2 year lease in June 2014 and it was the right price at that time. If I decide to renew it when June 2016 comes around, then $5500 will be more like it.... But I have to decide whether to give the tenant a break because they have been very helpful to me along the way...mostly, they offered to pay all sublet fees ( $2200/year) and there was just a $6000 special assessment that they offered to pay half of.

So, I don't want to seem greedy and then squeeze them on the rent just because I can.

As for my credit, I don't fully understand it....for example many of the things that I do pay on time are not tracked on the reports. Also , maybe because I received the "Hamp" (loan modification) might indicate some sort of settlement even though it is a real government program that I only got because I qualified for it.

But , the way that they list my mortgage, and Heloc is by creating a 4 year box with 4 rows of 12 (months) .

There was a period where I did not pay either of these for like 30+ months. So, the way it works is that now that I have had the Hamp for about 18 months, it shows the past 18 months as on time payments and the remainder of the boxes as 180 day late boxes.

But, every month a "bad" box falls off and a new "good" box is added.....This is because it took alot of work a lawyer and several years to get the Hamp. The box for my 1st mortgage and Heloc will not be perfect for another 12 months.

This may be a factor but I'm just guessing.
As for where I am living....on the upper west side with family....
This is a plus and a minus.
It is a plus if I actually DID sell my place and had all of that cash in the bank, ready to go to pay all cash while giving me plenty of time to shop around and not be pressured to quickly buy something that I really dont like because I'm forced to.

But, back to my original worry....if I have
1- $700,000 cash
2- unemployed
3- poor credit

Even though I could easily buy something all cash for $400,000-$500,000 with a $600-$700 maintenance. $8000 per YEAR would be my only living expense and with $250,000 in the bank, that would cover me for the next 30 years assuming I NEVER find employment.

I am basically terrified of letting go of a gem and THEN finding out nobody will allow me in their building.

Yes, I AM very attached to the Village because I have lived there my whole life.

I have researched other areas like Murray Hill, Gramercy Park, Tudor City...all nice areas and much cheaper but, it does not solve the original concern of mine.

Flutistic: I have been tracking my credit on "Credit Karma". I know this is not an optimal resource but I am confused because My Capital One account offers a free credit tracker and it is based on TransUnion data.

There is a 75 point difference on my Fico between them every month. The Transunion is always 75 points higher.
And, get this, as a "bad month" falls off each month and a "good month is added, Credit Karma shows my fico going down......My Credit Karma Fico has gone down 50 points in the past 6 months while I have never been late on ANYTHING.....so who to believe?

I guess I need to pull a "real" report. But, I would think the TransUnion one that I have access to would be a "real" one.
Another thing that could happen, but it is just a hopeful guess.....if I sell my home I will have ZERO debt and all cash and I could pay $59 month to one of the "legitimate" credit score improvement firms ... They should be able to make my "picture" improve alot in just a few months.

Maybe this is true or just hopeful thinking.

The #1 ultimate solution is to get employed and move back home and put this whole thing to rest.... But, you can't just snap your fingers and get employed.

But, I am DEFINATELY NOT being taken advantage of by my tenant!

As for those looking to park money....there will be ZERO costs for them. It is a turnkey operation. They do not have to put one dime into fixing the place up and don't have let the place sit idle while they look for a tenant and then fill out paperwork. All of this has been done and they will be receiving close to top dollar rent the day they close.

Also, it is a "no board approval" building with "condo" rental rules.

If you have a good tenant who pays the rent on time, cherish them and don't look for the last buck. A bad tenant will make your life miserable and potentially mess up your cash flow when they don't pay the rent. It can take months to get a bad tenant out and a month or two to find another. Good luck.

Thank you....yes thats why I said I'm not going to try to squeeze the last dollar out of them just because their lease is up and they REALLY want another year or 2....As I mentioned, they offered to help me with other things, that they are not required to.

My only worry is if I decide to sell it and they are in there for another year+ will this hurt my ability to sell?

This is the reason why I spoke about "investment buyers" who are only looking for a good Manhattan building to park cash...usually foreign.

I won't be able to "list" it the traditional way with open houses, many showings etc.

I need someone who either does not plan to live there, or the rare person who dosn't mind waiting until the lease is over.

There is a constant, huge demand to get into my building, and never anything for sale and it has always been this way. So my chances are better here than somewhere else.

....and if I sell it, this does not hurt my tenant in any way because the new owner just takes over the lease and , if it is an investment buyer,then they will be very happy to keep this tenant.

Flutistic..."The classic thing to do to help yourself compete is to pay too much for the apartment, to go well above what other buyers are willing to pay."

But, even if I did this, it dosn't change anything about the original problem that I was writing about..

There are so many places I can easily buy for all cash without overpaying but, even though the seller will be happy to sell to me ( an all cash buyer) It's that application process that I fear would kill the deal AFTER it's already been consummated.

I have heard, with regard to rentals, that you need to have an income that is 40 times what the rent is ($1000 = $40,000 per year etc).

If I pay all cash for a more lenient coop ( and there are many of these), then if I gave them 40 months maintenance wouldn't that amount to the same thing?

I'd offer them a 1 year renewal at the current rent. If you sell, it will take the better part of a year to go from listing, contract, closing, and the new owner moving in.

Well, I am targeting investment buyers who do not intend to live there for this very reason.

I know of at least 3 people, in my building, who "leaked" that their place was for sale last May and they closed and moved out by July 1st....That seems, historically, how quickly the process takes...In MY building. 2 months is not unusual. 6 months would be very unusual. And 1 year, unprecedented.

Looking Glass: "your insistence is considering an $800k debt as an asset is frightening".

Sorry , I was writing so fast I left out the main part of what I was saying with regard to the $800,000...

I have a long term capital loss of $800,000 from the 2008 debacle. This is a 100% deduction against any capital gains I will have if/when I sell. Plus I also get the normal $250,000 writeoff that everyone gets when they sell their home.
So I will barely have to pay any taxes.....in this sense an $800,000 deduction is sort of a roundabout asset!

best of luck to you , let us know how things go

Thank you .....all of you, for listening to me carry on.
I really appreciate all the advice that has been offered.

Keep in mind that you can only deduct $3000 every year from long term capital loss carryover, so you will still have to pay significant taxes on capital gains when you sell. Also, the 250k only applies when you sell your primary residence. As a rental property though, you should be able to take depreciation deduction. It's best to talk to a tax guy first to get a better idea before you decide to sell.

One thing I don't understand though - if you have a tenant who pays enough rent for you to make on-time mortgage payments, shouldn't your credit have improved enough after all these years? Another thing to consider is having the rental property to make more on-time mtge payments could help cure your credit, provided that you stay current on your other debts as well.

Best of luck

"Keep in mind that you can only deduct $3000 every year from long term capital loss carryover, so you will still have to pay significant taxes on capital gains when you sell."

This is not true. You can only deduct $3000 per year against "ordinary Income" but, you can deduct 100% of a Capital Loss Carryover from a Long Term Capital Gain.

Here is something else I just found, and verified from the IRS website....

"If you're in the 10% or 15% tax bracket for ordinary income, then your long-term capital gains rate is 0%. "

I am selling my home next month after all, and will be in that 10%-15% "ordinary Income" tax bracket for 2016....So, as the IRS says, my tax rate for "Long Term Capital gains" will be 0%.

So there will not be any tax involved but, even if there were, I have enough items to bring my "basis" just about to the price I am selling for. So, in either case there will not be any taxes.

Under no conditions will I rent. The plan is to buy a $400,000-$600,000 co op for ALL cash with a $ 500 maintenance so that my total housing costs will be $500 per month.

There are MANY co ops that fit this criteria so buying one will not be a problem.
The only problem I will have is being accepted by the co op.

By the way, I am not looking at A1 "top of the food chain" Park Avenue co ops....I'm looking at what is more of a normal, somewhat lenient type of co op. And, in addition to paying all cash, and also having ZERO debt anywhere else in my life, if there were any concern on the part of the co op, I would be more than happy to provide them with any amount of years of maintenance, up front, to be held in escrow so there will be ZERO risk on the part of the co op.

After alot of thinking I decided that this was the best decision for me. How can ALL cash and ZERO debt be a bad decision to put oneself in?

" Also, the 250k only applies when you sell your primary residence. As a rental property though, you should be able to take depreciation deduction. It's best to talk to a tax guy first to get a better idea before you decide to sell."

The tax law regarding Primary Residence is....".In order to qualify for the home to be your Primary Residence, you must have lived in it for a minimum of 2 years in the 5 year period leading up to the sale".

In that 5 year period, only I lived in it as my Primary Residence for 3 1/2+ years.
I had rented it for 1 1/2 years and the tenant has just moved out, so I will also be living in it at the time of the sale, even though it is not required.......
There are no conditions under which, for tax purposes, it was a rental/business etc.