Home Buying in 11232>Question Details

Rodrigo Mora, Real Estate Pro in 11232

Why do banks want to know how many units in a co-op are owner occupied vs. rented out?

Asked by Rodrigo Mora, 11232 Fri Aug 7, 2009

In the co-op questionnaire there is a question for how many units owner occupied vs. rented out. Why is that important?

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Mora:

Today, Banks are over protective! It is all about the risk involved on a loan. They want at least 50 to 70 percent of a building's units occupied by primary owners, no more than 20 percent investor-owned units, as well as strong financials, no outstanding litigation and a minimum of 10 or more units per building, which lessens the risk that one individual in default could drag an entire building into foreclosure.

For additional information please click below:
http://therealdeal.com/newyork/articles/lenders-tighten-up-s…

Good Luck!

Pierre S. King, Associate Broker
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1 vote Thank Flag Link Mon Aug 10, 2009
In addition to owner occupied, the maintenance is base on the prices that owner occupied verse tenant occupant because the lower the maintenance also plays a role in the price the building per apartment gets.
0 votes Thank Flag Link Mon Jul 29, 2013
Hello, I'm a co-op specialist and banks want to know the owner units vs. rented units because they want to know that this is an actual propertyt that people are buying into. Think about it, if you were a bank would you want to lend money to a buyer looking to buy into a co-op building that had a low percentage of owners. The banks want to make sure that if the person has to sell that the building is in demand. Also, when a building has to many renters usually it isn't well taken care of which brings down the value.

I hope this answer has helped you.
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0 votes Thank Flag Link Wed Aug 12, 2009
Lynn & Bill,

Thanks for your answer, What is the magic ratio banks want to see?

Sincerely,

Rodrigo Mora
0 votes Thank Flag Link Fri Aug 7, 2009
Bill is correct off statement, ALSO many times investment properties tenants have tendency not wanting to care for property over home owners,

If ratio is "off" lenders will decline where buyer can't purchase due ratio, prevents other properties owners lack of ability sale .

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0 votes Thank Flag Link Fri Aug 7, 2009
There is a definite connection between those that are rented out and the stability of any complex. Rented units may be viewed as investment property that during difficult times may be easily surrendered by the owner.

Good luck
0 votes Thank Flag Link Fri Aug 7, 2009
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