All Forum Posts by: Morris Cohen

This may be a tall order. How much can you put down? The issue you will have is that most properties in that price range are co-ops and the VA doesn't lend on co-ops. They also typically require a minimum of 20% down. I'm not sure how large of a down payment you have, but finding an HDFC co-op that has a lenient sublet policy may not be a bad idea. Financing is usually tough on HDFC co-ops since there are income restrictions (which restricts who you can resell the property to), appreciation is usually not so great and the co-op tends to take a large percentage of any profit you make on the resale (some buildings take 50% of the profit as a flip tax). If I get some more specifics, I can probably advise you a little better, but your best bet may be to go deep into Queens or Brooklyn (near a subway, but making a pretty long commute), south Bronx or Staten Island (which doesn't have a navigable subway to the city (but relatively close if you can take the staten island ferry, which is free). Feel free to PM me if you want to discuss further.

@Basit Siddiqi is correct as well. Moving into Jersey City may not be a bad idea at that price point, but VA loans may still be an issue if the building is not VA approved.

agreed- condos and co-ops tend to go for drastically different prices for that reason. it's also difficult to get financing on an investment co-op as opposed to an investment condo. you can do it, but the rate will likely be higher and there are only a handful of banks that would consider lending there if it were an investment co-op. For an investment co-op you will max out at around 70% financing on a purchase as opposed to 80% or even 85% in some cases on an investment condo. 

On the refinance side, it may be difficult to get the refinance through. Most banks won't lend to investment co-ops at all let a lone a cash out refinance. I have a couple banks that will (I am in the midst of doing one right now for a client), but they will likely cap the LTV at 60% on any cash out investment co-op refinance and the rate won't be great. Your best bet is probably to sell it in order to ensure you get enough cash.

it depends on the building, but you may not even need to disclose it. My instinct is enough time has past though. Banks typically only ask if you have declared bankruptcy in the past 7 years. How is the question worded on the application? It shouldn’t show up on your credit report either. The issue with Co-ops is that they are not subject to fair lending laws, so they won’t need to disclose the reason for a declination should they choose to do so. 

I do mortgages for a living and mostly focus on co-op lending. Management companies are the worst. Recently, I had a similar issue with unresponsiveness (this is not an isolated incident). In order to get a loan we usually need some documentation from the management company (in this case the building's financials) for which they frequently charge a fee for (why someone would charge to literally send an e-mail is beyond me, but it is it what it is). The worst part about it is after I mail them a check (they don't accept credit card) it took them two weeks to send me what I need! And that was only after e-mailing them and calling them three times!

I know this response adds no value to how to deal with your situation, but I feel your pain! :(

It may take longer than your usual flip because the Co-op may need to approve your renovation plans. Also, keep in mind that Co-ops usually sell for less than condos because your end buyer will also need to be approved by the co-op board and not every buyer is Co-op board material. As such, you should extend your holding timeline and lower your expected sale price (unless you are only comping it out to other Co-op, which would be advisable) to ensure you’re being conservative with your numbers. Lastly, Co-ops usually have some sort of flip tax (they either charge a percentage of the purchase price or a percentage of the profits), so make sure you know what that is going in and plan accordingly. Good luck!!

Hi Andrew, 

I would suggest at least getting it up to a livable standard. As the property sits vacant not only will your property insurance be more expensive, but you subject yourself to break ins, pipes bursting with no one around and overall decay of the property. Although having a renter or airBnB tenant both have their own set of challenges, at a bare minimum there is someone on premises to let you know if there are any issues so they can be corrected. In a vacant home, a pipe can burst and it can sit there for weeks without anyone knowing (which can not only ruin the whole house, but can cause mold, etc). As such, I think making it habitable at a bare minimum and renting it out on a month to month lease would benefit you in the long run. 

I'm not sure how much your co-op is worth, but you can consider doing a cash out refinance of that property to help pay for the renovations. Assuming you have enough income to qualify and lenders have recently lent in the building that should be relatively easier to do than to get a construction loan. 

If you're interested in discussing further, feel free to pm me. 

Thanks,

Morris

I'm not sure how close you are with your grandmother, but first I would say speak to an estate attorney. If it goes through probate, that could hurt you from a tax perspective. Not to mention that if you do this as purchase, you (or your grandmother) will have to pay flip tax which is based off the profit depending on the building. The best bet would be for you to be added to the stock and lease (in other words a co-owner) and after some time remove her from the stock and lease. This would potentially allow you to skip board approval if the process for adding an occupant to the stock and lease is less burdensome. Co-ops are not subject to fair housing laws, so they have the right to decline you from purchasing without having to give any reason at all. depending on how close you are with your grandmother and how often you visit, it may make sense for you to find out who is on the board in the building and befriend them. I'm sure that relationship will come in handy at some point. 

I was thinking it should be closer to 7-8k when I initially walked through the house. I think I'm going to get some more estimate just to make sure. 

I am in contract to purchase a SFR in Lithia Springs, GA just outside Atlanta. I am going to keep it as a rental. I need a brand new HVAC system. JI was quoted $10k for a new system including duct work, which seems high for a 1,100 sq ft house. Does anyone have an HVAC guy in the Atlanta area they can recommend?