question re eligibility with coop boards

If anything, boards are becoming more and more cautious about the financials of buyers. It is inevitable that coop maintenance will go up in the coming years. They want to know that you can absolutely make all of your payments. Your freelance status might be a huge detriment in the eyes of a coop board. If you have a large cash reserve and/or a guarantor, it might fly. If you can manage to buy while you are still in a salaried position, I would do so.

Yes your freelance status will hurt you -- especially because you won't have a long record of freelancing. You'll no longer be able to count your income dollar-for-dollar.

You will have to buy off your 2007 and 2008 tax returns, explain to the board that there has been a change in your status, and attempt to show some way to lock in that income -- escrow of maintenance and mortgage is one way, a guarantor is another, a show of contracts (such as apartment leases and/or contracts from people you sell to) is a third.

If you plan to freelance for a long time, run everything through a single bank account -- the records of that account can eventually be used to give the board some kind of substantiation that you're not fly-by-night.

ali r.
{downtown broker}

Yes,I agree with front porch, if this is the first year free-lancing. How will you substantiate your income? How will you substantiate your income to a bank? If you were to potentially default the co-op would have no means of putting a lien on a foreign property/income. Fifty percent d.p. is great and shows your committment to the property but you have no guarantee of income unless you have contracts. Narrow your search to co-ops with guarantors/co-purchasers permitted.

Front-porch, why use a single bank-account? I'm not a big fan, currently, of putting all my eggs in one basket.

Co-op boards HATE the word "freelance."

Try buying into a cond-op. They might be easier to get into since they are co-ops with condo rules.

W69, I initially found out about the "one-bank-account" trick because there are certain mortgage products that will let a freelancer submit records from one bank account (just one) as a statement of income. For a board, it's helpful to see the record of deposits, because a freelancer's gross is way higher than the net that shows on taxes.

And this year, you're safe up to the first $250K in any one bank. If you make more than that, I understand the impulse to split it, but then the board is going to start looking at your non-pretty tax returns.

ali r.
{downtown broker}

I've served on boards. Most are not stupid. They are conservative and thorough. Someone who just started "freelancing" translates as just fired or laid off. It is a red flag in a down economy and 50% or not, the board is going to struggle with what your remaining cash position is. Foreign income is unverifiable most often, as is the source and details. Guarantors are worth something, but they will have to fully meet all requirements on their own merits, and even then, many buildings don't like non-residents playing a role in the financial solvency of the coop. The more upscale the building, the stricter their criteria will be.

My advice: if you are set on buying, do it now and don't start the freelancing until you close on the unit.

try renting, it's much easier and it's better for you