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June 8, 2009
Building mortgage-what's normal?
Are there any red flags to look for concerning the underlying mortgage of a co-op building? For example, a place I looked at (didn't end up making an offer) was a 4 unit brownstone co-op with, according to the broker, an underlying mortgage of about $500,000. Bad? Good? Okay? Any advice on the topic would be appreciated.
Comments
Good is u get to deduct the interest on the underlying mortgage. Bad is of course you pay for it.
I'd be more interested in the terms of the mortgage. Self-liquidating? Balloon? Rate? prepay penalty?
Posted by: denton at June 8, 2009 7:23 PM
Underlying mortgages for coops are not like SFH -- term (7-15 years at best). What you realy need to be concerned with is the reserve fund. If you have a $500K mortgage and $200K reserve -- great, if the reserve fund is $50K, not so much.
Posted by: BH76 at June 9, 2009 9:25 AM
I'd be interested in why the mortgage is high... did they need to take out a loan for repairs? Also, probably makes the maintenance pretty high.
I wouldn't be too concerned about it if the reason it is high is legit, unless the reserves are low, or if the co-op is losing money every year and dipping into reserves to cover it.
Posted by: wishinone at June 9, 2009 1:18 PM
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