Showing posts with label Affordable Apartments income restricted apartments. Show all posts
Showing posts with label Affordable Apartments income restricted apartments. Show all posts

Jul 17, 2014

HDC Affordable Condos and Coops.

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Q: What is an HDC condo, coop, condop or rental building.

A. New York City Housing Development Corporation (HDC) provides financing for affordable housing.  

Strivers Gardens Condominium
HDC provides financing for large-scale developments, issues bonds and provides subsidy and low-cost loans to develop and preserve a variety of housing, ranging from large to small rental and condo, condop and coop home ownership. 

HDC-financed apartments are sold to low and middle-income households. They may have different income tiers within the building. Some apartments may have higher maximum income restriction than others. Often some of the original owners purchased their units through a city lottery.

HDC finances the construction of residential buildings. A portion of the unit is subsidized. In some HDC financed buildings if an owner sells a unit prior to the HDC mortgage expiration date a percentage of the unit's profits are paid to HDC. 

HDC approves the buyer's eligibility based on their current gross income. Income is calculated using annual gross (pre-tax) income, and also includes interest income earned from assets. 

Currently I have a  top floor 1 bedroom coop at  255 West 148th St. Apt 6C, The Washington a post-modern (built in 2004) six story 15 unit elevator coop through HDC. Maximum income allowed 255% of area median income (AMI) $214,750 =$214,750. There is no flip tax.

255 West 148th Street Apt 6C
I also recently listed a 2 bedroom 2 bath at Strivers Gardens Condominium at  300 West 135th Street A full service condo building with a garden atrium, state of the art gym, Zen Garden, resident lounge and On-Site Garage with valet parking. 75% of units at Strivers Gardens have an income max at 175% of Area median Income $150,325 (AMI) and 25% at 250% AMI - $214,750.

300 West 135th Street Strivers Gardens Condominium
HDC uses the proceeds from the sale of tax-exempt bonds to make first position mortgages and also uses its corporate reserves to make 1% second mortgage loans. HDC projects are aligned with the city's plaNYC green building policy. 

Jun 29, 2014

HDFC Coops Affordable Apartments No "But No Catch"

2 comments
Contrary to a recent article in the NY Times, most H.D.F.C. coops still provide affordable home ownership for low to moderate income households. Currently there is pent-up demand from qualified buyers for affordable apartments. Large affordable apartments are in extreme demand and sell quickly when priced right.

In my opinion the article in the Times is an urban myth perpetuated by it's reporter based on anecdotal evidence that may cause some consumers to make wrong real estate decisions.

I've been writing and publishing this blog about Manhattan real estate since 2006 as a transparent consumer service to help Manhattan buyers and sellers make informed real estate decisions. Having represented numerous sellers and buyers of H.D.F.C. coops in successful transactions, I would be remiss if I did not write this post.

I was surprised that HPD (New York City Housing Preservation Department), the city agency that administers H.D.F.C. coops was not included, quoted or represented in the article particularly since the new Mayor Bill de Blasio has made the goal of affordable housing a top priority of his administration.  

In my opinion, there is no "catch" or "bargains with a but" as the headline alludes and the article insinuates. Most of the HDFC listings the article included are anomalies.

The only 'But" and "catch" is when an H.D.F.C. unit is not priced right, not below market and not affordable for the intended low to moderate income buyer that can qualify for and needs a coop loan.

They are not "bargains" for low and moderate income home buyers that meet the maximum income allowed that will need to make monthly mortgage and maintenance payments but they are affordable. 

They are only bargains for fortunate cash buyers mentioned in the article that can also afford to purchase market priced apartments.

Like most coops, many H.D.F.C. coop boards use debt to income ratio to determine affordability. Typically, no more than approximately 30% of gross income should go toward housing expenses to be considered affordable. Most lenders will allow a significantly higher percentage than most coops.

NYC landlords use an income formula when renting an apartment: Income must be 40x rent. For example to qualify for a $3500/month rental apartment the tenant must have an income of $140,000.

30% of a household of 4 with a $140,000 income (165% of area median income) can qualify for a coop loan, with principle and interest payments plus monthly maintenance totaling $3500/month.

Do the math. If it doesn't work something is not Kosher.

With a 20% down conventional loan, a household of 4 earning the maximum $141,000 at a 4.5% interest rate $3500/month can afford a maximum price of approx $600,000 +/- with maintenance around $1000 +/- Households of 5 -8 people with a higher maximum income allowed can afford more. A 1 person household can afford less.

There is a correlation between household size, household income, apartment size, apartment price and affordability.

My advice to buyers looking to purchase an H.D.F.C coop: If you can find the same size non HDFC apartment in the same neighborhood in a similar building comparably priced then the HDFC is certainly NO BARGAIN. The HDFC coop should sell below market. Hence 'affordable'.

If a lender won't finance in the building or the coop won't disclose their financials that is a red flag. Why? The three largest banks in America (Citibank, JP Morgan Chase and Bank of America) are all eager to loan in H.D.F.C coops as long as the coop cooperates with lender and can meet FHA (Federal Housing Authority) guidelines. My preferred H.D.F.C. coop lender is Michael Most at Citibank

Comps (Comparative Market Analysis): Always compare apples to apples. Never compare apples to oranges when purchasing an HDFC coop or for that matter any apartment in Manhattan.

Apt 2E 3BR 2 Bath The Monerey Morningside Heights
There is no restricting an HDFC seller from trying to sell for what ever they want, other than possibly a resale cap in the coop's bylaws. Responsible HDFC coops want to remain affordable. During the board application process and interview the board can use their discretion to ascertain the purchaser's total financial picture and decide if the purchaser "fits in" just like any other coop.

My advice to HDFC sellers: Congratulations prices have risen in HDFC coops over the years. Priced right and marketed properly, listed with an experienced HDFC coop broker it will sell quickly to a qualified buyer providing the HDFC is well managed with good financials.

Like most real estate, the longer you've lived there, the more equity you will have accumulated. Since most HDFC coops are a form of limited equity home ownership a portion of your profits are shared with the coop in the flip-tax. Pricing an HDFC coop is as much of an art as a science, a skill that only comes with experience, knowledge and insight.

The flip tax in HDFC coops, unlike regular coops that converted in the 1980's wasn't to deter anyone looking to make a quick profit as the article states. You couldn't make a quick profit 30 years ago with an HDFC coop. You couldn't give them away. NYC HPD through an affordable housing program helped to rehabilitate the buildings, trained the tenants on home ownership and set the Coop up financially to be self-sustaining.

In my opinion, the reporter totally missed the point. NYC subsidized these apartments by selling them significantly below market prices, keeping the maintenance low with reduced property taxes. Instead she referred to them as "a small and quirky breed of co-op."

I've represented sellers and buyers in The Monterey, a Morningside Heights architecturally significant and sought-after HDFC coop, 45 Central Park North, Harlem's most distinguished and sought after HDFC coop on Central Park as well as HDFC's in Hamilton Heights, Sugar Hill, Manhattan Valley, Hell's Kitchen and the East Village

I've sold HDFC coops at record breaking prices while still maintaining the intent and spirit of affordable home ownership in NYC.
Central Park view from apt 3F 6.5 rooms at 45 Central Park North
I currently have qualified buyers with pent-up demand waiting for my next exclusive HDFC coop listing.

Full Disclosure: The Times reporter interviewed me for the article. It's the second time she interviewed me for an article and didn't quote me. The last time was about buyer's that ride their bikes to work. I can only assume that since my experiences with affordable HDFC coop's have been positive and rewarding for my sellers, buyers, coop boards and lenders, my quotes were not needed since the article's angle was about a a "But and a Catch"


More reading about HDFC Coops:

HDFC Coops | Affordable Home Ownership

HDFC Coops | Facts vs Myths
HDFC Coop Income Standards 
HDC Affordable Condos & Coops
The Flip Tax
Restrictive Covenants 

List your HDFC coop

Disclaimer: The opinions expressed here are those of the author and do not necessarily reflect the opinions or policy of The Corcoran Group.
Disclaimer: I am not a lawyer or accountant. This blog and my answers to questions are my opinions for information purposes only based on my experience as a NY licensed real estate associate broker and not intended as legal or financial advice and should not be used as a substitute for advice of legal counsel.


 
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