Converting Brownstone to Co-op
Hi — My husband and I are considering purchasing a 5-story house together with another couple. We’d divide the house into an apartment for each couple plus a rental. We’re having a hard time finding information about converting the house into condos or a co-op. Has anyone done this before, or can anyone recommend a…
Hi —
My husband and I are considering purchasing a 5-story house together with another couple. We’d divide the house into an apartment for each couple plus a rental. We’re having a hard time finding information about converting the house into condos or a co-op. Has anyone done this before, or can anyone recommend a good source of information on this? Our main question is how much work has to be done to the house in order to make this legal, and is it the same for condo or co-op?
Many thanks for any advice.
Years ago there was something called “tenants in common” (not sure if it is still on the books).
“Tenants in common” is basically for what you’re talking about. 1 building, 2 owners, etc. The last time I heard of someone do it was a while ago, but they did it because it was much cheaper and easier than co-op or condo.
Forming an LLC can be tough. If you buy as an LLC (or any corporation) you’ll get a “commercial” loan as opposed to a traditional personal mortgage. Rates are much different, levels of financing, etc.
I believe you can get a pretty standard loan with a “tenants in common” situation.
Good luck
I think (total guess) if you wanted to do a coop, you might form a non-profit organization with the other couple to buy the building like Rick said. A non-profit may afford you better financing options (total guess) and also the possibility of tax credits if the building is in either a landmarked neighborhood or on the National Register of Historic Places (not a guess) which a lot of Brooklyn neighborhoods are.
Condo is definitely the better bet for resale – you would still need to start a business to buy the building, then that business would sell each unit to you and your friends and retain ownership of the third unit to rent out. In effect you and your friends would become developers. However, the offering plan process is a total nightmare. But for all I know coop could be as well.
You will definitely need an architect but in the meantime, check the NYC DOB BIS (just google that) website to determine what the use of the building is currently. If it is already listed as a multifamily walk-up apartment you are set. If it is listed as a one or two family residence, you, your architect, your contractor, and your expeditor will have a little more work to do, but it should not be terrible (handicapped access, maybe sprinklers in the stairs, etc.). Condo or coop is not a factor for how you renovate the building, only in how the paperwork is drawn up and how much the paperwork costs.
marcus attorneys in fort greene is another source, they do offering plans. Its a lengthy process, that involves the state attorneys generals office’s approval, filing with the tax surveyor to split the tax lots up. You need an architect to do a bunch of drawings, you also will likely have some construction to split the building. I have done four of five of these in bed stuy, I never know if the numbers work out , because i dont see them. Three family is also multiple dwelling, which is more complicated form a building code perspective. I think ricks idea is an interesting one too.
If you do it I would go CONDO. Better for resale. Speak with an attorney that has experience in this process. I recomended Harold Gruber in Park Slope. He has done thousands of conversions. His office in the North Slope is literaly covered wall to wall with condo offering plans.
My guess is that creating a 3 unit co-op is going to be very difficult to get financing for in light of today’s economy. I think is might be a better idea to form a partnership or corporation – and have the business buy the house, with you and your friends owning all of the shares of the corporation.
Interested to hear what the lawyers and real estate pros on this blog have to say on the subject.
good luck