We Want to Bring Our Building Back to Life...
We have an 8-unit coop, with an underlying mortgage that is probably too low, on a building that definitely needs some help coming back to life. To address both issues we are planning to design a capital project we can bring to the bank when refinancing. This project will likely include the following: re-pointing the…
We have an 8-unit coop, with an underlying mortgage that is probably too low, on a building that definitely needs some help coming back to life. To address both issues we are planning to design a capital project we can bring to the bank when refinancing. This project will likely include the following: re-pointing the front of the building; properly repairing the brickwork around the windows in back (where a couple of units have water coming in through the top of their window frames); repainting and checking the welds on the fire escape so that we are sure it is safe and functioning properly; re-painting the interior hallways; re-carpeting the interior hallways; re-glazing (is that the right word?) the front steps, which are starting to crumble; and adding a video camera system pointing at the street and vestibule. We would like to get several estimates on each part of the project and would love to hear any advice anyone has on such an undertaking (either on the securing of the loan, managing the process, the order of tasks, etc.) We would also love to have some referrals for vendors. We thank you in advance for any thoughts on any of these issues.
deanbh, that is a peculiar way to look at it but if it helps you think you are smart, so be it.
@Minard, i disagree. At the end of the day it’s still costing you money to borrow today and spending on credit what you should be paying off today.
none of those projects sound like something that couldnt be paid for with a one off capital raising of $3k per apartment.
we just went through a capital raising on our building and although 2 apartments asked for payments spread over 3 months it was in and done and we’re better for it.
Our co-op has a buffer of cash in the bank and while the current owners are in place have no intention of getting another mortgage.
it still surprises me when people buy into a co-op they rarely ask/know what the underlying mortgage is – we specifically bought our apartment because we knew that what we were buyign was the entire apartment and not 60% of it with the other 40% under water in a long term mortgage.
I disagree with some posters. While of course it is true that a private mortgage can never be too low, and paying it off is best, that is not the case for a coop. In fact the beauty of a co-op, and this is something a lot of people do not understand, is the ability to take out a mortgage that funds needed work. The biggest advantage of course is that the interest on the mortgage is tax deductible and you don’t have to dig into your pocket and pay off a major capital project all at once. The finest and most secure co-ops have underlying mortgages, just make sure yours is within the low-to-normal range of debt per share. It is silly not to use this important financial tool.
and notice that asia shills for Anthony
PS: THere is no such thing as a mortgage that is too low!
Leave the mortgage alone, assess this stuff. THis all seems like penny-ante shit. It costs a huge amount to do a refi in a coop and you could probably take care of 2/3 of the project with he fees you will pay. And you’ll have to raise the maintence to cover the higher payments, which will decrease the value of the units.
Also ML is right, get an architect or engineer to look the building over and do a real scope of work.
When I was President of an 8 unit cooperative I handled the refinancing with WaMu, now absorbed into Chase. Emigrant may work for you as well. You can always go to the Cooperative Bank but that should be your last choice. They
are a pain to deal with, lost documents that cost us over a grand to replicate and are highly bureaucratic. We paid them off and went to a 15 year self liquidating mortgage. Try to avoid 10 year balloon deals because you’ll only have to go through the entire process again. The extra monthly payment is not onerous since you have a small existing mortgage to pay off. Also, check your mechanicals and roof in doing your capital improvement plan. It would be wise to build in a reserve as well for contingencies in the future to avoid special assessments. Good luck!
Have you thought of hiring an architect or engineer?
It could be very helpful. They are professionals and have done this sort of thing many times.
Sounds like your building could use some work but there is nothing wrong with have a low or no mortgage.