« Bird Blog: Week 16 Open House Picks Open Thread »

August 29, 2008

Co-op of the Day: 154 South 3rd

154-South-3rd-Street-0808.jpg
If you made more than $59,500 in either of the last two years, you can stop reading now. That's the income cut-off to qualify as a buyer of this affordable one-bedroom co-op at 154 South 3rd Street in Williamsburg. Of course, just because it's "affordable" doesn't mean that it's affordable. In this case, the asking price of $279,000 for what's not exactly a large-looking apartment doesn't seem like a deal to us; and even if it were, the monthly nut on this place is still going to come in around $2,000, hardly a lay-up for someone pulling down $50,000 or $55,000 a year. The seller has to try for a high price, though, if he wants to make any money: The building has a 40% flip tax.
$279000 1 Bedroom Co-op [Pari Passu] GMAP P*Shark




Posted by Brownstoner at 12:37 PM | Comments (24)
Categories: Co-ops, Williamsburg

Trackback Pings

TrackBack URL for this entry:
http://www.brownstoner.com/mte/mt-tb.cgi/6029

Comments

I recently ranted about the cut-off points for "affordable" housing in this little town of ours. A couple of folks jumped on me to say "Oh no, you're lying... the cut off points are totally different."

Now what about this? A person (or couple) making $50-55k a year only brings home about $3k. To me, that's not a pauper's salary... at least almost anywhere else on earth.

So, this place is affordable? You have about $1k for EVERYTHING else. Take out a couple hundred for luxurious things like electricity, cooking gas and cable... You're down to probably somewhere in the neighborhood of $180-200 a week. Hopefully you are debt free and don't eat much.

So... $2000 a month. Pretty good if you earn a lot more than $55k.

But I suppose, you could have been working a minimum wage job for the last couple of years just so you can qualify.... then immediately after you take that $80k design job that's just been waiting for you.

Posted by: tybur6 at August 29, 2008 12:48 PM

Oh yeah... and the 40% flip tax. Yikes.

Posted by: tybur6 at August 29, 2008 12:50 PM

I'm not familiar with condos and co-ops and don't understand how the 40% flip tax works. Can someone explain?

Posted by: TownhouseLady at August 29, 2008 12:54 PM

Now THIS apartment makes me shudder! It looks tiny, dingy, and really isn't affordable for a lot of people, especially those under the income cap.

Re the 40% flip tax. It is huge, but probably makes sense given the way the building is structured. This is probably written into the proprietary lease/articles of incorporation as one way to 1) keep the building affordable 2) relatively maintained. If it's an HPD building--sounds like it--the maintenance is probably around $400, which is enough to pay the basic bills, but not enough to do capital improvements. Taking 40% as flip probably makes it possible for the building to do serious capital improvements without mortgaging the building (thus keeping maintenance down) or having an assessment (ditto, though different). We looked at a wreck in Manhattan with a 30% flip task and an asking price of about $500,000 IN AN "income-restricted building." And when I say wreck, I mean take this apartment and imagine it MUCH worse.

There are a variety of cut-off points for the affordable. In some places it's 50,000ish, others 65,000, and so forth, but the asking prices aren't anywhere near what would be affordable (ie 3 times more than the income cap.). Oh well.

Posted by: Minmin at August 29, 2008 1:02 PM

it would be good as a first apt where daddy is footing the bill (presuming daddy's income doesnt count) or for a retired individual w/o income.

40% flip tax is crazy though.

Posted by: slick at August 29, 2008 1:09 PM

is a flip tax assessed on the sales price or the profit?

Posted by: z at August 29, 2008 1:21 PM

So, 50% of your income annually, for these little boxes!
So what are the chances of resale on this, when you eventually ( if ever) can afford something bigger or better?

Posted by: binnyG at August 29, 2008 1:33 PM

I am guessing the building was designed for apartments to be sold as "affordable" at roughly 40% off the value, and that you are required to give back 40% when you leave to make up the difference. The longer you stay, the better it is for the building and community.

Posted by: MacD at August 29, 2008 1:35 PM

Yikes!

I guess my understanding of the definition of affordable is considerably different than theirs.

Posted by: TownhouseLady at August 29, 2008 1:39 PM

"Is a flip tax assessed on the sales price or the profit?"

--Depends on how the building's articles of incorporation are framed. My gut feeling, though, is the LARGER flip taxes tend to be on the PROFIT. Not the sales price. It's paid by the SELLER, not the buyer, though of course the seller will try to build it in, right?

Posted by: Minmin at August 29, 2008 1:46 PM

Those HPD's often have a huge flip tax, which prevents you from easily "flipping" the apt. I still don't understand how someone making 50K can afford this, unless they inherited money for the DP or they USED to make a lot, and saved it, and now they make 50K.
I've wondered (but never bothered to figure it out) if you qualified for the income restriction, but later got a job making 100K... does that mean you have to sell, or is there some sort of penalty applied?

Posted by: broadwayron at August 29, 2008 1:52 PM

A problem with a bunch of old southside buildings is the cockroach situation. Try to see how clean and fastidious the buildings other occupants are if you go to look around. And by other occupants, I mean people.

Posted by: dittoburg at August 29, 2008 2:07 PM

Yep, income restricted buildings NEED a huge flip tax on the profits to discourage, well, flipping. (tax is not on total price; also, there are a fair amount of non-restricted buildings that have 10-25% flips on profits.)

Do we know what the seller paid? It's possible that in that area if they bought 15 or 20 years ago, it was well under 100k. They're making a nice profit either way.

Posted by: Bolder at August 29, 2008 2:18 PM

Two additional comments re HPD buildings.

To answer broadwayron, your income CAN go above the stated income level after you purchase, move in. There's no penalty for that, as far as I know.

In response to Bolder's question about what the seller paid, there are all sorts of scenarios. (Too lazy to P-shark it right now.) If the seller is one of the original owners, s/he may have paid as little as $250 (!!!). The city sold distressed/foreclosed buildings to tenants (urban homesteaders) for about that much in the originally years of the program. The low price was justified by the fact that the owners of record had given up on the buildings. These buildings are generally in once-very-blighted neighborhoods.

Posted by: Minmin at August 29, 2008 2:45 PM

HDFC Co-ops

--------------------------------------------------------------------------------

There are 3 kinds of HDFC.
1. HDFC not-for-profit rentals, run by various not-for-profit organizations.
2. HDFC Mutual Housing Associations that operate basically as co-ops but the tenants do not have ownership of shares but memberships without equity. Some MAS's are self-managed by the tenants, some by outside not-for-profit sponsoring organizations. The most successful ones are the mixed managment ones run by Community Assisted Tenant Controlled Housing (CATCH).

3. HDFC Cooperatives of which there are about 1500 in the City most of which have come through various programs run by HPD in order to privatize the City's in rem stock.
Currently there are about 300 buildings in the Tenants Interim Lease Progam and once they are gut rehabilitated by HPD they will be converted to HDFC Cooperatives and sold to the tenants for $250 per apartment.

HDFC cooperatives originating from HPD Division of Alternative Management Programs (DAMP) have certain restictions and depending of when the covenrsion took place they are slighly different.

The most common restriction is income: Conversions prior to 1995 require income of new shareholders not to exceed 6 or 7 times the annual maintenance plus utilities. If the incoming family has less than 3 dependents you multiply the annual maintenance plus utilities times 6. If the family has 3 or more dependents then by 7.

There are a number of HDFC cooperatives covnerted from 1986 to 1995 that have a further restriction requiring the payment to the City of 40% of any profit on the resale of the shares.

Generally all HDFCs require a "Transfer Fee" commonly called a "Flip Tax" of at least 30%. It is necessary to review the Proproietary Leases and Offering Plans to ascertain exactly what the restrictions for any one particular HDFC coooperative as there are many variations.

Buyers should do their "due diligence" and ask for at least the last 3 years of financial reports as well as copies of the minutes of the Annual Shareholders Meeting and Election of the Board of Directors; proof of insurance, including Directors & Officeers and Fidelity Bond, as well as payments of Property Taxes and Water & Sewer charges.

For more information look up the HDFC Council's web-forum: http://forums.prospero.com/HDFCCentral/


J. Reyes-Montblanc
President
The HDFC Council

Posted by: bren at August 29, 2008 3:46 PM

Some more info on affordable housing:

http://www.nyc.gov/html/hpd/html/buyers/lotteries.shtml

Posted by: bren at August 29, 2008 3:55 PM

This is utterly ridiculous.

I fit the salary range - alone - but the notion that I would eliminate my wife's income and then afford a $279,000 purchase personally... Lunacy!!

More important, does anybody have an idea how somebody making the prescribed income manages to obtain a mortgage with a ~$2,000/month payment??

In this market that Bank would have to be psychotic.

Unless, could you have a co-signer and still qualify??

Posted by: Miguelpakalns at August 29, 2008 4:40 PM

hey - i know someone who did this in another building nearby -almost the exact same scenario. she moved into a pretty crappy place negotiated her a** off to get in crew to do renovations and now has a small 2 bedroom and rents out the second room. i know you all here are not burg fans per se, but the rents in the area are quite high. anyway, it's all really worked out, and she's even on the board now.

fyi - she had the cash from a payout to get out of a rent controlled place in the east village. also, she's mostly a free lancer who meets the income restrictions.

remember, you just have to find one person not thousands to make a sale.


Posted by: wine lover at August 29, 2008 8:25 PM

I don't get these kinds of buildings. They seem un-american.
This is the kind of thing you see in countries that are uncomfortable with the concept of private property.
Better to live in public housing, save your dough, and buy a retirement home in Pa or NC. You know? at least by buying a real home some day, you will be followng the American, rather than the Soviet, model.


Posted by: Gary Cooper at August 29, 2008 8:26 PM

i dont understand why the members dont elect to erase the income restriction.

they could double/triple their equity overnight.

Posted by: slick at August 29, 2008 11:36 PM

"the monthly nut on this place is still going to come in around $2,000"

what is monthly nut

Posted by: 11211 at August 30, 2008 12:15 AM

11211- that would be gary cooper.

gary- please. run home to daddy in your little bmw and please please please get an education before you post again. Please. Or take your own advice and live in public housing until you can retire. You'll be such an American. Like George!

Posted by: lurker in the mist at August 30, 2008 6:32 PM

Oh lurker, you're such a scary old Marxist.
your just make me quake in my Ferragamos.
Get a life asshole. Your side lost the Cold War.
Sell your vintage Che Guevara T-shirts on Ebay and
make some dough for once in your life.


Posted by: Gary Cooper at August 30, 2008 9:49 PM

awwww- struck a nerve? I do make dough. I don't need to live off daddy to pay for my ferragamos. I even know what marxism and communism are. But then, I had a better quality education than you did. And better manners. Even better shoes. Try again, little elitist.

Posted by: lurker in the mist at August 31, 2008 2:09 AM

Post a comment

Please be patient while your comment is published. It may take a moment.

Latest Restaurant Additions