Sale at 102 West 75th Street #76

A one-time assessment or monthly?

Monthly until May next year. Seems very high, esp. given the already somewhat high maintenance in the building (non doorman). You're basically paying almost $3K/mo. in monthly charges for the next 8 months. I suppose it's not the end of the world, but might be a sign of underlying financial problems in the building?

what are the elevators like?

Elevators are fine. There are 4-5 steps leading up to the lobby from the front door if accessibility is a concern, otherwise building is lovely and very well-kept.

Don't you think the price reflects this? I'm not sure what else you can get in a 2 BR in this location for $900,000.

30yrs_RE_20_in_REO, ya, agree with you!

Well, not that there is a ton out there but on the same block is a 2 bedroom with a $1200 maintenance and no assessment as far as I can tell asking for 1,025,000 in renovated condition (136 W 75). That ends up being $25K more in down payment but less in monthly payments, even if you don't include the assessment. So yes, price probably reflects the assessment and I'm sure someone will want to be in that area badly enough to disregard the likely financial issues with the building, but that doesn't make it a sound purchase to my mind. The apartment at 102 also needs a whole lot of work. It's got great bones but hasn't been updated in at least 2 decades. I'd say you need to add $75-100K to the price for that, and that's assuming there are no structural issues you'd need to address which in an old building and an old apartment isn't always a given.

I don't get the big concern with the assessment. You are looking at maybe $5K extra out of the 200K+ you will need to close.

what exactly is the local law work being done? Not necessarily a problem with building finances if it is a one-off maintenance issue (or one that occurs every few decades).

Generally speaking an assessment that high on top of a relatively high maintenance for a non-doorman building indicates that there may be some financial issues with the building. Obviously anyone serious about it should do their own DD. I'm just saying that for me the assessment is less about the money as a one time thing than about the overall health of the building. YMMV.

One reason assessments are preferable to maintenance increases to get capital work done is they get added into your cost basis and then get deducted off your capital gain when you sell.

30yrs has a good point, and it highlights that there are other ways to run a building than funding entirely through maintenance increases. There are of course pros and cons to each of the ways, and that of funding major work via assessments may not be appropriate for those without the ability to raise a block of cash reasonably quickly. It's my understanding that there are some high-end buildings that have almost no reserve fund, choosing instead to hit up the owners for each major capital improvement (could be several hundred thousand $$ per project) -- of course, the owners have significant wealth, so this isn't a big issue for them, and they prefer to keep their money in higher return investments than in the building's cash reserve fund.

Does LL11 count as a capital improvement?

I can see a certain logic in that but that's not a sound long term plan and more importantly it would be less objectionable if it was a more typical assessment of $150-350/mo.; having to cough up an extra $900 a month for a year would not be something I'd want to have just randomly imposed on me by a board.

joandark,
I am pretty sure the answer is yes.

UES_Ida: It can be a sound long-term plan if it's done correctly. You have the same problem in home ownership: wake up one winter morning, the furnace has gone out, and you have to get a new one, pronto. You the homeowner have to assess yourself a couple thousand dollars so you can pay the furnace guy by the end of the month (if he's generous about billing). Maybe you keep some cash under the mattress, maybe you sell some stock, maybe you take out a home equity loan or put it on your credit card. All valid financial actions, but not for every person. You object to paying an extra 900/month for a year, so you should be in a building that prefers to fund out of reserves. If I had just paid $37mill *cash* to be in a building where the board requires net wealth in liquid assets of 10x the purchase price, I (and the other 11 wealthy residents in my exclusive building) would be fine with the board policy of assessing significant expenses as they occurred (or as they planned), because a request to pay $200k to fix the roof within the next 6 months would not be a financial burden.

Money is fungible: if you pay for the capital job out of assessments or from the reserve fund, it's the same money. And how did the money get into the reserve fund in the first place? One of the problems with large reserve funds is that boards tend to see them as "free money" and spend them on projects which really don't need doing and then when the building actually HAS to do some project it's not there any more. It's also the reason you see flip taxes because that is also seen as "free money" from people who are no longer shareholders.

Hi - most of the time in the case there aren't other offers on the apartment you can negotiate and have the seller pay planned assessments. In this case, the seller would probably prefer to close and pay the $5,000.

If you would like to send me the building financials I can take a look: Danielle.Nazinitsky@corcoran.com.

How does a tiny room without a closet carved out of a living room make this a 2 bedroom apt?

It's not a 2 bedroom, except to a real estate agent, trying to sell an apartment. It's a one bedroom, one bath with high maintenance.

It's actually not quite that straightforward in this instance. The whole building was constructed as much larger apartments and then broken up into smaller units when people's lifestyles changed in the 30s or whenever. So as much as we all hate agents who label Junior Fours as Two Beds or better yet just plop a wall down of a straight living room, this is not that scenario.