Maintenance & Price, what's the relationship?

Curious about this too, are there any specifics in NYC RE tax law that keep certain types of buildings assessed lower.

E.g.
Brownstones built before 1900, historic districts, walkups without commercial unit etc etc

1-family dwelling have the lowest tax rates - but don't get too excited. That doesn't buy you too much because if you've done a recent renovation & market values being what they are, it's not unusual for a 6m brownstone to have 30k+ annual taxes. What keeps taxes low on a specific building is legacy. Much as long-time tenants have price protection in the form of RC/RS laws, NYC puts a cap on how much the assessment value can be raised on any dwelling - less than 6% annually or 20% over 5 years UNLESS there have been "improvements" to the property that increase its value. The actual tax is a percentage of the assessment value (which in turn is a % of the market value which IS changed annually) depending on the type of building. Is this clear as mud?

Bottom line: your taxes remain the lowest and most stable if you own a 1-family dwelling and you've made no improvements (that the city knows about) for a long time. This primarily benefits property owners in the outer boroughs. Taxes on many properties in brownstone Bk, even those worth several million can be less than 5000 annually...

For historical reasons, the taxes on condos in the Ansonia on UWS are very low compared to condos of similar prices on the UWS. The exact reason for this is unknown but there was a lot of press about the death (suicide?, can't remember) of a certain tax assessor who was known/alleged to have taken bribes.

Correction - it was a stroke. http://www.nytimes.com/2003/01/08/nyregion/man-at-center-of-bribe-case-dies-of-stroke.html

But google him.

Excellent info!
What about price comps?
How does that figure in comparisons of similars in different building?
How does a maintence effect the asking price?
I have seen 2 bedroom 1700sq/ft aparrtments with the same maintence of a 4 bedroom 3500 sq/ft apt.(different building/same 'hood).
I see this most in older larger coops.

Every building is different - things that drive up the maintenance in a building so it's hard to give you an exact
equation as to how it affects selling price. Obviously everyone would like maintenance to be close to zero. Anyway, here are the factors:

1) Mortgage - in many 80s era conversions, the sponsor saddled building with a large mortgage as they were converting. In some cases, it helped matters if the sponsor defaulted on that mortgage as the co-op was then
able to take over the sponsor's commercial space and/or unsold units and negotiate better terms as well as generate
income.

2) Services - in a unionized full-service building (think multiple doorman entrances, handymen, well compensated
supers, manually operated elevators), you are paying for this.

3) Fuel, insurance - etc. You can't expect heat & hot water for free. Think about it. Even a 1-bedroom will consume 200+/month in the winter. Some buildings also include cable and phone with the maintenance.

4) Commercial income - as alluded to above, some buildings own their commercial space which then subsidizes the maintenance. Up until last year, no more than 20% of the building's revenues can come from rents. This is no longer true, so look for buildings with commercial income now. There are some lofts downtown that have incredibly
low maintenance because the co-op owns the commercial space downstairs.

5) History - as I mentioned before and you can search for this on NYT, some buildings are assessed lower than other buildings - so an UES townhouse worth 30m may be paying more taxes than a prewar co-op worth 30m.

I was using as a rough estimate $100/mo. maint. ~= $25k apt. price. It varies depending on tax bracket, mortgage rate, maint. deductibility.

I actually use a spreadsheet to figure actual monthly costs (including lost opportunity costs) but it is only as good as your assumptions for the future.

Cap rate = (equivalent rent - (maintenance/cc/tax))/price

Solving backwards,

Price = (equivalent rent - (maintenance/cc/tax))/cap rate

Current market has (an absurdly low) cap rate of around 3%.

So in the current market, each increase in annual maintenance/cc/tax should be equivalent to 1/.03 = 33 times in price. Example: $1000 per month excess maintenance => $12000 per year => 33*12000=$396000 per year lower price.

If some portion is tax deductable, the effect will be slightly lower. For most people with mortgages over $1 mm, the tax deduction gets phased out.

Alternative real estate investments in REITs (AVB, EQR) have cap rates around 8 to 9%. I think Manhattan real-estate is overpriced by 2 to 3 times. If it comes down, the maintenance will have a lower impact on pricing.

What becomes interesting however is if rents fall below maintenance. At that point, the real-estate has no economic value, as the rental landlord cannot get enough to cover the expense of owning the property ignorring the capital cost. A new resident would be better off renting than buying for zero.