small condo building risks

It's nuts to think it should sell at any discount whatsoever. You have a bigger ownership stake, more control, fewer neighbors to deal with, etc.

In a small building, take out your own trash, do some or all of your own management, hire service providers as needed, maybe have no elevators, and you're spending way less than the 20-unit group where they buy everything -- possibly meaning sale values jump up as compared to places with higher common charges.

The hard part at 4 units is financial risk is barely spread out. Confront the scenarios of lost individual income (stop paying common charges = giant hole in the budget) or losses at the building (major repair = big individual checks to write and limited potential for the condo, rather than individuals, to borrow and smooth it out). I think it's hard to price this in, though; it's more about the three other owners and their resources. Would you buy a vacation house jointly with these people? Same idea except more at stake.

Thanks Joe. Besides the default risk, which one can become comfortable with, how do you adjust for boiler repair cost of 4 unit vs 10 units building being roughly the same? The same for elevator yearly maintenance etc, lobby renovation etc. Perhaps assume in the long run it will cost 50c per sq ft per month extra due to a lack of scale which will be in form of assessments.

So it is no longer an "everything else being equal" question.

I'm just not sure that will swing the sales-price needle in a systematic way, especially if the assessments are hard to predict and "lumpy" (thus hard for buyers to pin down pre-sale, and causing personal cash-flow concerns on top of the actual expense) rather than well-disclosed and smoothed out over months of maintenance and/or building-financed assessments.

Plus small buildings are going to be relatively particular scenarios -- a set of neighbor-owners, a particular space or amenity, self-management and some self-service, a boiler that is known to need a $70K overhaul, or whatever. Those factors seem more likely to swing the price in a visible way.

You might be better off using single-family or 2-family housing as the comparable, and then try adjusting for sqft. Curious to hear others' thoughts - anyone?

For me, it will be 15 percent discount to comparable space and service unless the condo is 3000 sq ft each in which case luminescent of expenses should not be an issue for most residents.

Lumpiness

Also considering the differences in building structure. A townhouse conversion with 4 apartments and no elevator requires far less regulatory compliance than a 4 unit converted loft building with super tall ceilings or duplex's in each unit that now requires Local Law 11/ Facade Inspection Safety Program filings every 5 years. Elevators require inspections annually and there is a 5 year inspection as well. All of these inspection programs are not only expensive- but require a tremendous amount of time from the board members. It's not easy to find managing agents for very small buildings- so the building might be self-managed, and that is a huge responsibility.

Very helpful. Thank you.

We use condobackoffice.com. They do 99% of what our old management company did at half the cost. Our bank account balances have grown exponentially since we're no longer paying 30% of our budget in management fees and/or being margined/nickel and dimed on other services...

Issue is, what kind of staff do you need? Doorman? Porter?

hoodia, There is no staff in such buildings. Part time cleaner and part time super. No window in the kitchen or bathroom either necessarily.