Do I have any chance?

I’m on the board in my co-op building in Bay Ridge and to be perfectly honest, I do not think you will have a problem getting board approval as long as you are able to put a little bit of money into escrow for the maintenance, and come across as a good neighbor. Bay Ridge has notoriously lenient boards as long as you aren’t looking on Shore Rd.

Most 1-bedrooms in Bay Ridge are going to cost you less than $500/maintenance per month, so that’s about $6000 to put aside for the year. $12k if you can put aside 2 years. Factor that in to the cost of the apartment, and be prepared with that information when you submit your application to the co-op board. You will still have no problem finding something under $250k, and sellers will love hearing you want to do an all-cash transaction.

I appreciated the long reply and learned a lot from it, thank you!

I know buying a condo would be much easier, but it would also be more expensive than a co-op. I have the cash to buy a co-op for $250, and I have seen plenty of listings in Bay Ridge for this price or less. I have yet to find a 1 bedroom condo for $250 in Bay Ridge. I don’t mind moving to a different part of Brooklyn if I have to, but I don’t think I can find a condo for that price in any safe area. Maybe I’m wrong and I’ll keep looking.

From my experience as board member in a 4-unit Brooklyn brownstone coop, and experiences of others I have known in Brooklyn coops:

1. If you can pay all-cash, you can buy a (a) condo, (b) sponsor sale no-board-approval-needed coop, or (c) coop with lenient financial standards.

2. Lenient coops do exist – especially in small buildings in Brooklyn. Some will ignore the sketchy financials of an all-cash buyer for things they do like about you – do you have anything the coop would see as useful? They could like you if you have talents or skills the building lacks and are willing to put them to work for the coop – like bookkeeping, other financial, sometimes legal or building/contracting skills, depending on the issues the particular coop is dealing with. This may be especially true in a building that was cooped relatively recently, or one that still has rent control or rent stabilized tenants in place (granted, neither are as common these days as awhile back.) Remember that small coops are self-managed buildings – the owners do all the work themselves that a managing agent does for larger buildings.

Or, you might find a lenient board in a larger coop building that still has a lot of rentals and where the sponsor still controls the board.

3. Sometimes the board members are friends with the seller, and won’t want to mess with their sale by turning you down, even if they your finances are a bit dubious.

4. Some coops like all cash buyers, because they figure the owners only have to come up with the maintenance, and how hard is that, they could figure. Especially if the apartment costs a lot to buy and you thus have a large investment in the building. Others, however, don’t like all cash buyers in general, because if the buyer does default on payment of maintenance, the coop must sue them; while if the maintenance defaulter has a mortgage, the coop can be sure the mortgage bank will foreclose on the apartment.

5. The amount of cash you have left after buying is also a relevant factor, especially when you don’t have an income. A small coop wants to know that you will be able to pony up for any unforeseen expenses that the coop may have that the maintenance and reserve can’t cover. If you have a substantial amount of money in the bank, your chances are greater of getting in with no income.

6. Putting a year’s worth of maintenance in escrow can help a lot – but don’t expect that you will necessarily get it back in a few years, even if you pay on time every month, until you have had reasonable amount of income (relative to your maintenance)for two years. Even if you do this, they might still require a guarantor.

7. Some coops will allow cosigners (your husband’s parents); some will insist buyers qualify on their own and will not allow it. If they don’t have a blanket policy against it, as some do, they are more likely to allow it for an all-cash buyer. Whether the board will think that a co-signer will overcome your husband’s lousy credit is unpredictable. Some small coops won’t even bother to do a credit check on you – they aren’t run by professionals.

8. Some coops will make you put down your husband’s financial information and check his credit; others will ignore him completely (and his credit problems) if you are the sole purchaser of the apartment. They might ask you the name of anyone who will be living in the apartment with you, but they won’t necessarily ask for that person’s finances. And even if they don’t ask, you do have the right to have another person live with you, so there is no problem with him living there with you, as long as you are also living there.

9. You can tell a lot about the coop’s standards by the application form they use. Some are formal and detailed; some are not. The broker should be able to get you an idea of the standards from the seller before you get into contract, but the seller won’t always be able to get answer detailed questions about whether your details would work for the board – you might have to go through a costly and timely process to find out. But this is also true for financially well-qualified buyers – it is part of the stuff that coops put buyers through.

10. So, if you do go this route, know that you will have expended anywhere from $500 to $2000 before you are turned down by a coop board. You will have attorneys fees to pay your attorney for getting into contract, which will a hefty percentage of what they charge for a closing that actually happens, and the cost of an inspection if you choose to get one to determine the shape the building is in before you get into contract. You will have lost about 1-3 months time during the contracting and board consideration period. And no, you can’t change your mind and move on to buy a different place once you are in contract(unless the seller agrees to let you out of the contract) – you just have to wait it out until the board either accepts or rejects you, or else you will lose the deposit you put down with the seller’s attorney with the contract (usually 10% of the purchase price) if you try to get out before the contract allows you to.

This is why people suggest you buy a condo or a sponsor-sale unit – you don’t waste time and money on board rejections. Most sponsor sales now are in larger buildings, so you will have to look hard to find one if you prefer brownstones. And most condos are new construction, so ditto if you like brownstones, though there are some brownstone condo conversions now – there just aren’t a lot of such units, as each building is small.

Unless you decide you don’t care about finding an apartment in a brownstone and don’t want to risk the expense and delay of a coop board rejection, I’d suggest you keep looking at all types of apartments in your size and price range, and just keep all these factors in mind. You learn by looking. For example, you could see an apartment in a building you like and not go for it, and then find out later that a sponsor apartment is coming on the market in that building. This matters, because for attractive (and attractively-priced) apartments, you have to act fast, and the more you know about a building already, the faster you can act.

Also, you may find that at lot of sponsor-sale coops are not advertised – you may find out about them by letting some brokers know you’d like to hear about them.

Don’t be discouraged from trying, even if you have your heart set on living in a small brownstone-type building. I waited until I was financially unlikely to get turned down, but in hindsight, I wish I’d thought about buying 15 years earlier, when I was just post-college and had little money. Prices in Park Slope went up by a factor of 8 times in those 15 years – I not only lost out on a few hundred thousand in appreciation, but but I spent a lot on increasing rents as well. And had I got on that first step of the property ownership ladder then, I’d likely have been able to buy a whole brownstone in the Slope before prices ran up so high in the last decade.

One, there’s plenty of condos out there – no board approval. Two, when I was in a co-op, had a couple of cash buyers in the building. The biggest issues for us (admittedly a rather lenient building) was could they pay the maintenance and would they be good neighbors. If you’ve got enough income for the first part, you just have to convince a board of the second part. So you might be able to find something.

Good luck!

I think the no co-op board route is a good one if you are denied. It may be more of a challenge to find a place you like but have you searched out more “up and coming” areas like Bed Stuy? You may be able to get something quite nice for less money than in a more established neighborhood. I think buying a home while you are young and even if it may seem like a giant obstacle course is a great immigrant tradition in this country. I was still a student when I bought my first place 8 years ago and I do not regret any of it. Ciao!