Home Buying in New York>Question Details

Az123, Home Buyer in New York, NY

Can a parent buy a coop in nyc for an adult (22) year old child? What charges beyond the mortgage are there to coop ownership?

Asked by Az123, New York, NY Thu Aug 11, 2011

I'm weighing buying vs renting nyc. We've been spending 2000 a month on a rental for a year and I wonder if we wouldn't be better off buying something instead. Our 22 year old daughter expects to be in nyc for a year or more and possibly settle there. How can we sort through the rules of individual coops as far as percentage down required, rules on subletting and resale to make a benefits vs costs analysis? Do coop fees cover maintenance, taxes, staff, water&sewer and fuel for heating? Do individual shareholders pay for their own electricity, cable, and gas?

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Hi Az123,

As my colleagues mentioned all coops are different. Some allow parents purchasing for adult child and some only allow co-purchasing. Usually they will want your daughter to be able to cover maintenance and/or mortgage payments if there is a mortgage. The rule of thumb is that her housing payments should not be more than 25% of her monthly income.

I recently found a "sponsor" coop apartment on the Upper West Side for parents in Ohio that bought the apartment for their son with a limited income. A sponsor apartment is "unsold shares" in a coop it is not a resale. There is no board approval or application in a "sponsor sale."

If you want less rules and minimum financial scrutiny a condo is ideal but costs more than coops. A sponsor coop sale will have little or no financial disclosure required but once the shares are transferred to either you or your daughter the coop rules such as sublet and pet policy will apply to your daughter.

An experienced local broker can help you find the right apartment for your daughter and manage the transaction for you and your daughter all the way through to the closing.

Best,

Mitchell Hall, Associate Broker
The Corcoran Group
917-312-0924
mhall@corcoran.com
1 vote Thank Flag Link Thu Aug 11, 2011
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
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Dear Az123,

Parents can buy for an adult child however, not all coops allow that. Each coop has their own set of rules and bylaws. Generally you will have to put down a minimum of 25% in a coop and in some a lot more. Subletting rules again depend on the individual coop. Some won’t allow any subletting at all and some will allow subletting for a certain period – 2 years after living in the apartment – but only for that two year period. This is just an example. However coop rules are getting stricter.

Maintenance covers real estate taxes, water, sewer and fuel charges. In some rare instances electric may be included in the maintenance. For the most part you would pay for your own electric and/or gas and your own cable which you need in Manhattan. Tax deductibility again depends on the coop.

With all of the complications of purchasing a coop for your specific needs, why not consider purchasing a condo or a condop where rules are more lenient?

It's best to consult with a good broker who knows coops, condops and condos in Manhattan.

Ross Ellis
Licensed Real Estate Salesperson
Member of Real Estate Board of New York
Halstead Property, LLC
212.317.7828 direct
646.472.7875 fax
770 Lexington Avenue, 10th Floor
New York, NY 10065
rellis@halstead.com
1 vote Thank Flag Link Thu Aug 11, 2011
Az123,
Your questions are excellent. It makes absolute perfect sense that it is a smart move to buy an apt. rather than throw that rent money away on a place for your daughter to live.

You are right that there are lots of rules and regulations, etc. on co-ops, though if you work with an experienced agent, we can easily navigate you through it and explain everything. Most co-ops do expect that the unit be owner-occupied ,and with you the purchaser, that would not be the case. However, there are some less strict co-ops that are what we call "kiddie co-ops" because they allow parents buying for children. You wouldn't easily know this on your own, but an experienced agent usually knows where these are, or knows how to find out. Several immediately come to mind. Even some of those, however, require the child to be able to afford the mortgage and maintenance going forward - i.e. that she be working and not a student. I don't know if your daughter is a student or working. I would say in your situation a condo is a much better option, because the owner-occupancy rule does not apply, and if your daughter ends up staying only the year or so you mention and doesn't settle here, you will have the ability to rent it out. What if she were to get a job offer where she had to relocate? Co-ops are strict about subletting. Condos give you that option.

Best,
Jenet Levy
Halstead Property, LLC
212 381-4268
jlevy@halstead.com
http://jenetlevy.halstead.com for all NYC listings
1 vote Thank Flag Link Thu Aug 11, 2011
Thanks everyone for your responses. I will keep reading about the city's many neighborhoods and consider the condo idea and the small multifamily idea also (I'm thinking a 2 family home with my daughter and a roommate on one floor and a renter in another). I think she needs to get to know the city a little more before we buy anything. Right now she is living on the west coast so nyc will be a new experience. I just hate to keep paying rent. It would be great if there were a search tool which allowed one to overlay criteria on a map instead of having to jump from one webpage to another. Here's what I mean: start with a neighborhood map of nyc and surrounding communities, overlay a crime incidence map (or shading), overlay subway stations with express service and local service in different colors, and overlay census date for racial makeup.
0 votes Thank Flag Link Wed Aug 17, 2011
Dearest AZ123,
The first question you would need to answer in this struggle is, If I were to take this leap, how could I minimize the risk of owning a second home when it comes to the tax implication associated with it. You really need to go over this question with your Tax adviser. Sure the basic answers are simple. Assets depreciate. Cost of living rises. Not knowing your tax basis puts everyone at odds!
If you are willing to undergo the transaction costs of ownership here in NYC. You might best be served looking into Multi family dwelling rather then a condo. If that transaction is beyond your means then a Condo with Tax abatement might serve as a safe thought. It is quite clear here in NYC that rental rates increase on average of 3% Year over year. Answer: have some one look into the ROI of a small income producing property based on a location that meets your Daughter's needs for community, safety, and that answer will come to light! I recently placed someone into such a property only after 6 months of research.
0 votes Thank Flag Link Wed Aug 17, 2011
It is not such a bad idea to buy an apartment for your daughter. Coop rules vary so it is best you work with a broker who is able to pinpoint the buildings that would accept your situation. Not all buildings allow parents buying for their children. Some coops do not like non-working children. Consult a professional who would focus on your interest. Go over the differences between a coop and condo and understand where your financials would make the most sense. Please don't hesitate to give me a call.
zlo@elliman.com
212.350.2825
0 votes Thank Flag Link Sat Aug 13, 2011
Hi Az123

Co-ops are like people - each one is different! There is no general rule of thumb that applies accross the board to all of them as far as subletting or in terms of parents buying for their children.

Co-ops charge maintenance which usually includes real estate taxes, fuel as well as water & sewer. Additional expenses would be electricity, phone & cable along with mortgage payments. The portion of the maintainence that goes towards paying for the underlying mortgage of the co-op is expressed as a percentage value of the monthly expense and is tax deductable.

Your best bet would be to speak to a few real estate agents and deal with one that you feel most comfortable with. The purchase price net cost analysis can be explained by most of the better agents.

Call or email me if you wish to discuss further.

Sincerely
Anoop Punjabi
City Connections Realty Inc.
T: 212-994-3247
C: 917-972-6009
apunjabi@ccrny.com
0 votes Thank Flag Link Thu Aug 11, 2011
You can purchase for your child but that will depend from building to building. Some co-ops allow it and some do not. The less do0wn that is required, the more liberal the boards and the better chances of them allowing parents buying for kids situations.

Subletting will also depend on the buildings rules that vary case to case.

Maintenance generally includes all the stuff you mentioned.

Jennifer A. Chiongbian
SVP/ Associate Broker
Rutenberg Realty NYC
9172502284
0 votes Thank Flag Link Thu Aug 11, 2011
The basic is yes depending on the building. From there it's complicated based on what you would like to accomplish in the end. You are about to get a slew of "you need to work with a good broker".

Call me to discuss 9am - Midnight 7 days a week. 212.866.8717 cell
I recently sold a studio on the upper east side and the total cash out of pocket after 20% down was about $1,600. Not a large studio but a clean part time doorman building.

Arthur “Ungie” Golden | Licensed Real Estate Associate| REBNY Member
Prudential Douglas Elliman | 1995 Broadway, 4th Fl | New York, NY 10023
C: 212.866.8717| P: 212.712.6078| F: 646.497.5476 | E: agolden@elliman.com
Listings: http://www.elliman.com/aug
Web Reference: http://www.elliman.com/aug
0 votes Thank Flag Link Thu Aug 11, 2011
Az123,

All COOPS are different with their own rules. There are coops out there that do allow "parents to co-purchase." Even if you are the one with money, all must be involved. Coops can be very tough and turn you down from moving forward. It's complicated but very doable. However, I would recommend for you to give me a call at (646) 221-8321 so I can tell you what to expect and what a coop will look for financially. My number is (646) 221-8321.

Sincerely,

Nick Rafello, V.P.
Associate Broker
The Corcoran Group
(212) 444-7852 office
(646) 221-8321 cell
nrafello@corcoran.com
http://www.corcoran.com/nrafello
0 votes Thank Flag Link Thu Aug 11, 2011
Short answer is that every co-op is different regarding parents purchasing for a 22yo child. Many do allow but some may have restrictions depending if child works, etc. Apart from the mortgage, you are required to pay the monthly maintenance fee which usually covers heat, hot water, sewage, garbage, common charges (staff, maint, etc) and real estate taxes. You can be upfront with the broker regarding each co-op to see in advance what their rules are in terms of financing, subletting and such.
0 votes Thank Flag Link Thu Aug 11, 2011
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