building at 160 East 2nd Street

The building is an HDFC co-op - check for an income restriction. If you're wondering about the seemingly cheap unit available, it is a 4th floor walkup (not a total deal-breaker, but a deterrent). There's no listed square footage and no figures in the floorplan. The pictures make it look very small. It may possibly be priced around $1k/sf, which I would never pay for a small, 4th floor, HDFC walkup.

Hell, the unit directly below it (more desirable in a walkup) sold for 53% less (yes, 53%) in March of 07, probably at the original conversion price.

Yeah, I saw the record on that past sale for 161,000 in 03/07. But what do you mean by "original conversion price"?

After speaking with the owner and broker, the apartment seems small, yet comfortable and well designed.

However, they made a series of pretty significant claims to which I'm skeptical.

1. the expiration of its HDFC status in 3 years, with the unit going market rate then, no more 60/40 security agreement, and no more income restriction (~34,000). Prior to this I hadn't heard of any HDFC going market rate or at least planning to.

2. For the current purchase, it was stated that the buyer would be would be able to circumvent the 34k income restriction, essentially opening the unit up to any buyer regardless of declared income (this is fraud as far as I understand).

3. Several units in the building were still rentals, but not rent stabilized/controlled, so they were providing positive cash flow to the CO-OP (I'm not sure how common it is for an HDFC to contain a certain number of rental units, and if they did, I'd expect them to be stabilized, considering the nature of HDFC).

4. I was repeatedly told that the maintenance would not be going up, regardless of the income restriction expiring, rising operating costs or the potential improvements they are considering. In fact, I was told that the board had turned down a maintenance increase on four recent occasions. But, with the rentals being unrestricted, they provide funds which could keep keep the maintenance of the co-op units stable, - makes sense.

In any case, all of these things could feasibly occur, but the asking price is entirely based on them, and they are big IFs.

pushlatency, I'm not an expert on HDFC buildings, but what I do know is that many (most? all?) were rental buildings until the city took possession from the owner, and that the tenants were allowed to buy in, often at ridiculously low prices, practically free in some cases. Even if the unit in question is only 400 square feet, 3B sold at $400/sf, which must be some kind of insider price, no matter what the condition. That's what I meant by "original conversion price." Could someone have been a renter the whole time the building's been HDFC, and they've only bought recently? I have no idea, but the other recent (Feb 08) sub-$200k sale makes me wonder.

Is there a renter in 5B who could make a similar deal (again, no idea)? What if 5B gets sold at a similarly low price? The current "market-price" apt would be sandwiched between comps more than 50% cheaper.

Regarding question #2, I know (electronically, anyway) a person who bought into an HDFC, "circumventing" the income restriction. It seemed very risky to me, but he's closed, FWIW.

Regarding question #4, there are a few brokers I like, particularly Noah and Ali, who make very important contributions here (also johnrealestate1), but most of them, in my experience, will lie about anything and everything to sell a place, so I wouldn't trust anything they told you. More likely, the building really does need to raise maintenance (why else would they have tried 4 times, recently?), but there are poor people in the building who can't afford it and are voting it down. That's the thing about HDFC buildings, the "owner class" may have gotten the apt for peanuts, their only expense is the maintenance and utilities, and they're very low-income.

"In any case, all of these things could feasibly occur, but the asking price is entirely based on them, and they are big IFs."

But if it's only 400sf for a 4th floor walk-up, in a building with low-income neighbors, it's not an especially good deal.

I'm going to start a thread with your HDFC-specific questions, since any reader not interested in a small East Village unit has passed this by.

Tenemental, thanks for all info, it's very helpful. I'm in agreement that it's not a good deal at 340k, or anything close to that.

Let me know when you post an HDFC thread, I'd be interested in some more discussion about this topic.

My pleasure. The thread is http://www.streeteasy.com/nyc/talk/discussion/4923-eah-anyone-else-questions-about-an-hdfc-building. Eah owns a number of HDFC properties, which is why I asked for him specifically. Alanhart and some others also have great info on the subject. Check out the searches I mentioned in the 3rd post.