With a number of diverse neighborhoods, types of residences and contract variations to choose from, purchasing real estate in New York City can be both a unique and daunting process. To better navigate the Manhattan real estate market, here are some key tips presented by our friends at HGTV’s FrontDoor.com that buyers should know before purchasing in The Big Apple.
Level with your co-op broker about your financial situation.
In the high-priced market of New York City, co-ops are the easiest way to break into home ownership. About 80 percent of the housing stock in Manhattan is cooperatives, and each one has different financial standards. It’s important to be up front with your broker so they know what you’re qualified to buy.
If you don’t have the cash to make a 20 to 25 percent down payment, some co-ops will allow you to use gift money, while others will not.
Also, some co-ops require that you have a certain amount of cash reserves after the purchase — sometimes equal to the purchase price. Putting all your financial information on the table can help your broker find a co-op that’s perfect for you.
Explore emerging neighborhoods.
You might be able to get a deal on an urban property in an up-and-coming area, but make sure the area is well on the upswing before you buy. An emerging neighborhood can take several years to redevelop. To make sure it’s a good time to buy, investigate the area.
Investigate a potential building’s financial condition.
When you buy a condo, loft or co-op, you’re not just buying a property — you’re also buying into the building or community. HOAs govern condo communities, collecting dues and maintaining the common areas. A board of directors takes care of these tasks in a cooperative.
Hire an attorney to research the association’s financial stability and its rules before you sign on the dotted line. Your attorney should look at the corporation’s yearly financial statements to see how much money it has on hand.
If a building doesn’t have a large reserve, they can charge a special assessment fee to cover a big repair. These fees are typically announced fairly far in advance (a year or more is normal), so your attorney should also read the minutes of corporation meetings to see if any fees have been proposed.
Don’t forget to find out about the surrounding buildings and their construction plans as well. You don’t want to buy a home overlooking the water, then find out the week you move in that someone is building something taller that blocks your view.
Don’t plan to buy a co-op as an investment property.
Multi-family homes can be great investment properties, but cooperatives (co-ops) have very restrictive rules about renting. While condos are typically much more lenient about rentals, be sure to check the property’s covenants, conditions and restrictions (CC&Rs) to make sure you’re allowed to lease it to a tenant.
Be prepared for your co-op interview.
After you’ve applied to become part of a co-op, the next step is an interview with the board of directors. If you’re called for an interview, it’s likely your finances are satisfactory for the building. Start out by impressing the board with a professional appearance.
If you’re asked a question point blank, tell the truth. But the less information you volunteer, the better. Ask your burning questions after you get board approval.
Know what your HOA fees buy.
The monthly HOA fee covers exterior insurance on the building, so the only thing you need to insure is the contents of your apartment. However, if you’re in a waterfront area, the fees for the exterior insurance can be steep. HOA fees also don’t cover individual property taxes for condos, so be sure to factor that into your budget.
Look for bargains in overdeveloped areas.
Even if you think an area is out of your price range, don’t rule it out. If market conditions change and property demand slows, you could get a bargain.
Know the trade-offs of living in a multi-family building.
Living in a loft, condo or co-op definitely has its perks — minimal exterior maintenance, a sense of community and lots of amenities — but expect to sacrifice some freedom.
Read the full article on frontdoor.com.