Hi Scott,
Thank you so much for taking out the time to type your response. I've answered your questions in brackets. From the overall sound of it, it looks like you would not sell. Is that correct?
1. Are you renting it at, below, or above market? If below, and you could raise it to market, what would your cash flow look like? [ We are renting it at market and that covers the mortgage and maintenance. We had an assessment in place for about a year to cover major rennovations to the building which have resulted in appreciation.]
2. Could you do any improvements that would allow you to rent it out for more? [We could do improvements, but I am not sure whether the increase in rent would justify it. Our neighbor gut rennovated her unit and she rents her place out for the same amount we rent ours.]
3. When you say liberal sublet policy, what do you mean? Also, keep in mind that a new Board could take charge of the building and get rid of the liberal sublet policy. I have no idea whether that's a likely event, but just something for you to keep in mind. [Liberal sublet policy meaning we can rent out the place for as long as we like without restriction as long as its not a short term rental i.e. airbnb. This is unlikely to change as the sponsor owner % is high.]
4. I'm not a tax expert, so I don't know about the capital gains tax issue (though I'd be happy to try to put you in touch with someone who would know, although that would likely cost you). However, do you know about 1031 exchanges? If not, the general idea is, if you sell an "investment" property and buy another investment property with the proceeds, you don't pay tax on the proceeds. So even if you don't sell by August 2018, you could still avoid paying tax on the sale via a 1031 exchange (if it's still around by then). As I said, this isn't legal advice, though. [I am aware of 1031 exchanges and if we decided to keep the place would either not sell it or would try to do a 1031 to defer the tax payments.]
5. For the amount you're expecting on getting, what can you get in California? [Depending on the area, instead of owning one coop we could buy anywhere from a duplex to a fourplex in California if we invested all of the money from the sale.]
6. What's your "why"? Why are you investing? Cash flow now? Appreciation later? [We don't need the cash flow now but ideally we would like a place that cashflows and appreciates. One thing thats attractive about owning a property in California is that we are not obligated to pay maintenance to a coop which eats from the cashflow, however, that said we realize there will be maintenance expenses associated with owning any property.]
7.When considering your ROI in selling your co-op, also keep in mind that in NYC, you, as seller, will likely have to pay NYC and NYS transfer tax (buyer would likely pay "Mansion Tax" if the sale price is $1M, but everything is negotiable). [Yes, we have factored that tax into our calculation.]
8. In addition to transfer taxes, your co-op may also institute a flip tax, either on the buyer, the seller, or both. Something else to keep in mind in your sale. [Coop does not have a flip tax.]
9. Depending on how much equity you have in the property, and assuming you could raise the rent to help your cash-flow problem, might be worth considering a cash-out refinance and taking that money to invest in a MF in California, if that's your ultimate goal. My philosophy is to never sell anything. [Can you elaborate on your philosophy of never selling. Would you sell to buy something bigger? We could do a cash-out finance in a few years to buy another MF]
I don't mean to solicit on the forums, but if you'd like to discuss more, I can provide you with my phone number and work email. Just send me a PM and I'd be happy to help more in any way I can.
Good luck!
EDIT: A few of the other answers were given while I was typing this out, so please excuse any repeat information.
