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August 14, 2009
Underlying Mortgages
We are a 10-unit Coop with a relatively small underlying mortgage. We need some major repairs and need to refinance or get a line of credit. We seem to be in a predicament, as no one can offer us any assistance. They either don't do 10 unit, commerical underlying mortgages for $100-150,000
Does anyone have ANY advise.
Comments
This is one of the reasons that a reserve fund is so important.
I know that this advise doesn't specifically help you at this time, but it may help others:
Maintanence must be high enough to contribute to a reserve fund. That fund must be large enough to afford to replace a boiler or the roof. Once that fund is established and sitting in the bank, maintanence can be lowered.
This can also be acomplished with a limited time assessment established solely for this purpose.
Posted by: SenatorStreet at August 13, 2009 12:31 PM
what ss says at the end, these don't seem to be insurmountable numbers. 100-150k among ten people is 10-15k per shareholder. Assess it and spread it out over 12 months, you have the same deal, and no debt. A refi will cost you a bundle for that amt. An assessment for a capital improvement can be added to each shareholder's capital base.
Posted by: denton at August 13, 2009 1:25 PM
Try calling Community Bank of NY- they do commerical loans for small co-op building. the building where I am is similar to yours, also with small amount of mortgage. The rate is relatively reasonable compare to the few banks who are writing this type of commerical loans.
Posted by: ClintonHillGal at August 13, 2009 1:35 PM
Have you tried National Cooperative Bank? All they do is loans to co-ops.
Posted by: NorthHeights at August 13, 2009 2:18 PM
I second National Cooperative Bank. They worked for us before.
Posted by: Kensingtonian at August 13, 2009 2:47 PM
I'd be interested to know what big jobs you need to do.
Lot's of stuff can be fixed decently for much much less than if you were to do a complete gut replacement.
For example, instead of tearing off an old roof and rebuilding the parapet walls, you could just have an additional layer of roofing installed, re-flash the parapet walls, and call it a day.
Or if the boiler is ancient, instead of replacing it with a new system for $30,000, you could just buy a new burner for $1,000.
Then again, if you have to do major structural work, you have to do it or the building could fall down, so I suppose you do need a loan.
I second NY Community Bank, but I wouldn't hesitate calling the big banks like HSBC too.
They're still doing refi's.
Posted by: IronBalls at August 13, 2009 7:00 PM
Huh? Assessment.
Posted by: mopar at August 13, 2009 10:14 PM
A reserve of $150,000 in a ten-unit coop would be pretty high, but I agree that coops need healthy coops.
My advice, for what it's worth: contact NY Community Bank, get a line of credit (not as expensive generally as a coop mortgage) and generally far less restrictive in terms of penalties, etc.
If the repairs REALLY need to be done right away, start assessing people for the cost of the repairs, but make sure that people know why they are being assessed.
At least in a ten-unit coop people probably have a better sense of the actual costs involved in running a building!
Posted by: Minmin at August 14, 2009 6:56 AM
Try NCB-National Cooperative Bank, our coop over the years has had a 75K and 150K mortgage.
denton, asking shareholders for 10k over 1 year period in this climate would get me shot. I've got some fixed incomers in my coop.
Posted by: DeLepp at August 14, 2009 3:08 PM
Stay away from National Coop Bank! I handled a refinance for my 8 family cooperative last year where we paid off NCB. NCB is a bureaucratic nightmare, they lost virtually all original documents and we had to pay over a thousand dollars to replace them with certified copies. We refinanced with Washington Mutual, now taken over by Chase and got a 6.54% self liquidating loan for 15 years. Not sure if this is still available since the merger but you may want to inquire. We took out 255k. Good luck!
Posted by: MarionG at August 14, 2009 5:19 PM
marionG, thanks for the info, our refinancing is next year, you got a great rate!
Posted by: DeLepp at August 14, 2009 5:23 PM
Our 8 unit coop with a small mortgage (although larger than yours) refinanced last year with Sovereign. They were one of the few banks willing to finance such a low mortgage and had the best rate and terms. We also got a line-of-credit so we can go ahead with any big jobs that cost more than our reserve, and then assess over time to repay the l-o-c.
As some others have indicated, the cost of borrowing such a small amount is high (the total cost with Sovereign was less than with either NCB or HSBC) and you might be better off paying it off and just getting a line-of-credit.
Good luck!
Posted by: the_why at August 14, 2009 6:21 PM
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