Sponsor Sale - Condo Conversion with Rent Controlled Apt
All – today I visited a condo in proper Park Slope that is a “sponsor sale”. The 8 family building was just converted to a condo. Currently 4 of the apartments are on the market (3 in contract), 3 of them are being rented out and the last one is rent controlled. The apartment is…
All – today I visited a condo in proper Park Slope that is a “sponsor sale”. The 8 family building was just converted to a condo. Currently 4 of the apartments are on the market (3 in contract), 3 of them are being rented out and the last one is rent controlled. The apartment is approximately 580 square feet and listed for 315k. I think they are willing to go well below 300k. My questions to the community:
1- anything I should look out for when units are “sponsor sales”?
2- will the fact there is a rent controlled apartment in the building hurt for future resell? (who knows when the tenant is going to give up the apartment)
3- any questions i should be asking for newly converted condos?
4- is it safe to assume value of apartment will appreciate if the 3 rentals and 1 rent controlled apt are eventually sold?
Sidenote: I currently live in Bay Ridge in an apartment thats well over 750 square feet and I have my own private backyard that is another 700 square feet. (attached is a picture of my yard). I only pay 1100 a month. Buying this condo would approximately cost me 1800 a month. Do you guys/gals think its worth buying a condo at this “low price” at a pre-approved rate of under 5%. I dont want to regret 5-10 years down the line of having the opportunity to buy in Park Slope at such a low rate!
Thanks in advance.
It is unlikely that you’ll be able to finance the property unless 75% (i.e. 6) of the units are owner occupied. Mortgage companies don’t like financing individual units in what are essentially rental buildings. If it were a co-op the board could finance it using a commercial mortgage. The rent controlled tenant may or may not be an issue, if, as most are, s/he is a nice person that interacts well with his/her neighbors, no issue. There are a few RC/RS tenants that are obnoxious, but the same is true of some condo and co-op owners and some market rate tenants. The only difference being that it is harder to get rid of obnoxious R$/RC tenants and condo owners than market rate tenants and co-op shareholders.
@NYguy – general
@bowl – i love bay ridge 🙂 but i prefer slope.
thanks everyone for the input!
The sponsor probably has a preferred lender that’s willing to lend out under the 50% mark. It’s still possible to get financing but you may not get a good interest rate. When you said you were pre-approved, was that just a general pre-approval or did your bank pre-approve you for this project?
I would also ask for the Sponsor’s rental income vs maintenance/tax payments. If Sponsor is operating at a big monthly loss it might mean trouble down the road
You probably won’t be able to get a mortgage until at least 50% of the units are sold. With 4 units out of 8 being rented, sounds like you are going to need all cash to buy one of the remaining 4. There are probably no financials to speak of yet since the project was just put on the market. I would ask the sponsor if they have worked out a financing deal for the units with any banks before worrying about this too much more, unless you have the cash.
aww quikazoid but you just moved here, buddy! giving up already? I have been here exactly 1 year and until only recently did I start meeting local people to hang out with at the local spots. BR royally sucked for me before having no one local to hang with. Now I don’t ever find the need to leave. Eff all my friends from downtown bklyn who won’t schlep down here.
Are you willing to pay 70% more for less space and no backyard in order to live in that location? Have you checked rents in that immediate vicinity for comparable space to what you would have in the condo?
Personally, I would not touch a condo with half of it rentals and the rc tenant which all the owners will be carrying.
I’m thinking around 270k. I like my spot in bay ridge, its bay ridge ave. I just don’t hang out much in this hood much. The condo is on sackett near 5th. Not sure about condos financials yet.
Questions to ask yourself – How much well below $300K? And how good a location? And is it really 580 sf? Does the building appear to be well managed? How are the financials , esp. the level of RE tax and amount of underlying mortgage?
Backyard-wise at least, it looks like you have a really great place in Bay Ridge and it’s significantly cheaper than your projected monthlies with this place. How do you feel about your current location?