question about co-op fees for Queens, NY cooperative apartments
May 12, 2018 11:44 AM Subscribe
So I'm in the market for a co-op apartment in Queens, NY and I have a question about the monthly co-op fees.
I've noticed that a lot of these places I'm looking at (in the Forest Hills/Rego Park/Kew Gardens area) have co-op fees that are, for lack of a better word, outrageous. Some of these places charge $900 a month, $1045 a month. And this is in addition to the monthly mortgage. By way of perspective, I am now paying $1100 a month in rent. I have seen also seen a one-bedroom with a monthly co-op fee of $540 a month.
What causes these fees to be so damned high? What sorts of buildings should I focus on to find more buildings in the $500-$700 co-op fee range?
Thanks for your help.
I've noticed that a lot of these places I'm looking at (in the Forest Hills/Rego Park/Kew Gardens area) have co-op fees that are, for lack of a better word, outrageous. Some of these places charge $900 a month, $1045 a month. And this is in addition to the monthly mortgage. By way of perspective, I am now paying $1100 a month in rent. I have seen also seen a one-bedroom with a monthly co-op fee of $540 a month.
What causes these fees to be so damned high? What sorts of buildings should I focus on to find more buildings in the $500-$700 co-op fee range?
Thanks for your help.
Best answer: Probably about half of that fee is property taxes, which you'd just be paying as plain taxes if you bought a condo or house. The other half is a combination of your apartment's share of the water bill, building staff salaries, building maintenance, utilities for common areas, the building's underlying mortgage if it has one, and, hopefully, a small amount to set aside in the building's reserve fund.
To minimize coop fees, you probably want to look for low or no service buildings, walk-ups, and buildings with no underlying mortgage (relatively rare, but possible to find). Fancier buildings with complicated systems, elevators, doormen, etc are going to have higher maintenance costs than simpler ones, assuming the underlying mortgage and property tax situations are similar. Super low maintenance can also be a red flag that the building has not been maintained over the years and it's possible you could face a major assessment as a result (you'd want to look at board minutes and other building documents to get a sense of whether the building has been putting off basic maintenance to save money or if they have a healthy reserve fund).
posted by snaw at 12:20 PM on May 12, 2018 [1 favorite]
To minimize coop fees, you probably want to look for low or no service buildings, walk-ups, and buildings with no underlying mortgage (relatively rare, but possible to find). Fancier buildings with complicated systems, elevators, doormen, etc are going to have higher maintenance costs than simpler ones, assuming the underlying mortgage and property tax situations are similar. Super low maintenance can also be a red flag that the building has not been maintained over the years and it's possible you could face a major assessment as a result (you'd want to look at board minutes and other building documents to get a sense of whether the building has been putting off basic maintenance to save money or if they have a healthy reserve fund).
posted by snaw at 12:20 PM on May 12, 2018 [1 favorite]
Best answer: A lot of it will be going towards paying the underlying building mortgage and real estate taxes. If there's no underlying mortgage on the building the fees will be cheaper, though a lot of buildings have interest only mortgages, meaning the mortgage never goes away, but some buildings do pay off their mortgage over time.
It's not like it's a secret where the money goes, you can get a copy of the building financials from a real estate agent which will include a budget, it'll be some combination of building employees (super and the like), real estate taxes, mortgage, and general building maintenance and upkeep. There may also be special assessments to pay for one-off issues like replacing a boiler or something. If a building has recently gone the significant upgrades already (i.e. fixing the roof, facade fixes, boiler) then fees may be lower.
If it's a building that's been decently maintained and don't have an major repair issues and has few amenities fees will generally be cheaper. On the other hand if a building has fees that are too low and is not saving any money to pay for one-offs, you may be stuck with a large assessment as issues come up and need to be paid for.
Keep in mind that if you're itemizing your tax return (which many people may not this year after the various changes) the real estate taxes and interest on the building will be mostly/all deductible.
posted by jourman2 at 12:20 PM on May 12, 2018 [1 favorite]
It's not like it's a secret where the money goes, you can get a copy of the building financials from a real estate agent which will include a budget, it'll be some combination of building employees (super and the like), real estate taxes, mortgage, and general building maintenance and upkeep. There may also be special assessments to pay for one-off issues like replacing a boiler or something. If a building has recently gone the significant upgrades already (i.e. fixing the roof, facade fixes, boiler) then fees may be lower.
If it's a building that's been decently maintained and don't have an major repair issues and has few amenities fees will generally be cheaper. On the other hand if a building has fees that are too low and is not saving any money to pay for one-offs, you may be stuck with a large assessment as issues come up and need to be paid for.
Keep in mind that if you're itemizing your tax return (which many people may not this year after the various changes) the real estate taxes and interest on the building will be mostly/all deductible.
posted by jourman2 at 12:20 PM on May 12, 2018 [1 favorite]
Best answer: Sorry, maybe dumb question, but...you get that both the property taxes/fees (virtually always) and even some utilities (some times; heat/hw often in the older buildings) are rolled into the monthly maintenance? Run some comparisons with condos that include realistic property tax assessments and see how outrageous they look. Co-ops will generally come out cheaper.
Substantially cheaper units may only be "land-leases," meaning they don't own and don't have a mortgage on the underlying property lot(s), but merely lease it. They're cheaper because, at the end of the lease, you have dum-diddly-doo.
To be honest, co-op maintenance between $500-$900 for a one-bed doesn't sound outrageous to me. It should be towards the lower end if the building has a skeleton staff/no amenities/no elevators, more if there's, e.g., a full-time doorman or more substantial common facilities. Too high can be a sign of waste, inefficiency, or even embezzlement; too low, though, can mean a building that is skimping on physical maintenance and not funding proper reserve funds. When the roof caves in, though, you're going to have to pay to fix it one way or the other, and a reserve fund is usually less painful than having to do a special assessment for 100% of the cost. Those costs don't vary dramatically across the boroughs, except staff (to a limited degree, much of NYC residential building staff is unionized).
You should be able to (and definitely should!) see a building's financials as a serious applicant, which should answer your questions about a specific building. But if you're thinking you can buy a truly comparable apartment for about what you're paying now in rent anywhere in the five boroughs, you need to cut back on the wet a bit.
P.S. Always worth keeping an eye on the Homeownership Opportunities to see if you qualify for any income-restricted new condos.
posted by praemunire at 3:16 PM on May 12, 2018 [1 favorite]
Substantially cheaper units may only be "land-leases," meaning they don't own and don't have a mortgage on the underlying property lot(s), but merely lease it. They're cheaper because, at the end of the lease, you have dum-diddly-doo.
To be honest, co-op maintenance between $500-$900 for a one-bed doesn't sound outrageous to me. It should be towards the lower end if the building has a skeleton staff/no amenities/no elevators, more if there's, e.g., a full-time doorman or more substantial common facilities. Too high can be a sign of waste, inefficiency, or even embezzlement; too low, though, can mean a building that is skimping on physical maintenance and not funding proper reserve funds. When the roof caves in, though, you're going to have to pay to fix it one way or the other, and a reserve fund is usually less painful than having to do a special assessment for 100% of the cost. Those costs don't vary dramatically across the boroughs, except staff (to a limited degree, much of NYC residential building staff is unionized).
You should be able to (and definitely should!) see a building's financials as a serious applicant, which should answer your questions about a specific building. But if you're thinking you can buy a truly comparable apartment for about what you're paying now in rent anywhere in the five boroughs, you need to cut back on the wet a bit.
P.S. Always worth keeping an eye on the Homeownership Opportunities to see if you qualify for any income-restricted new condos.
posted by praemunire at 3:16 PM on May 12, 2018 [1 favorite]
Best answer: Just want to second what jourman2 and praemunire say about the pitfalls of low maintenance costs, and to reiterate that you can and should be looking at the building's financials. I backed out of getting a studio in Brooklyn with quite inexpensive maintenance after I checked out the financials. Instead, I picked a one-bedroom where I have roughly twice as high maintenance bills, and it's been pretty good to me. (Feel free to memail for more details/dollar amounts if you'd like more info for reference.)
posted by ferret branca at 3:33 PM on May 12, 2018 [2 favorites]
posted by ferret branca at 3:33 PM on May 12, 2018 [2 favorites]
Best answer: In addition to taxes, mortgage on the land, salaries for the super, electricity for the common areas, etc.. the co-op may be charging a temporary assessment in order to cover the cost of new paint, new fire escapes, new awnings, etc. Your co-op also should have a healthy reserve fund (something you should ask about) so you are covered in case of an emergency like the boiler breaking in the middle of the winter.
posted by brookeb at 8:07 PM on May 12, 2018
posted by brookeb at 8:07 PM on May 12, 2018
This thread is closed to new comments.
When I was condo shopping a decade ago, there was a rule of thumb for making sure fees were in an appropriate range for the value of the property. I suspect this is area dependent, so ask friends and coworkers if they’ve heard any guidelines there. You don’t want them to be too high, but you also don’t want them too low, or it indicates the building is deferring appropriate maintenance. And the bill for that will eventually come due — my friend thought her building was great for keeping fees low until it came out that they were in arrears on utilities(!) and they had a massive fee increase to make it up.
posted by Blue Jello Elf at 12:19 PM on May 12, 2018 [2 favorites]