Intro To My Flip

Rusty - November 15, 2007

I know, I already have an apartment on this site, but as a result of my interest in home renovation and real estate investment I’m currently in the process of buying a co-op here in Park Slope, Brooklyn and will be renovating it and re-selling it. I thought I’d document the process here for you to see and give feedback.

New York real estate investment for small-time investors like me is tricky. There are three basic types of residential properties: houses, condos and co-ops. The problem when you’re a cash-lite investor like me is that houses are too expensive to even get into and condos generally don’t need major renovations (condos are a new phenomenon here in NYC). Therefore, most of the properties that need fixin’ are co-ops*.

Therefore, it’s tricky.

So I haven’t yet closed on this deal. But things are looking good, the co-op board is okay with me renovating and re-selling it, they aren’t requiring a co-op board meeting (as most of the information they would need isn’t relevant for someone who won’t be living there), my mortgage broker has found a loan product that will work for me and the project is well within my scope and budget.

Next post: before pictures

*If you’re not familiar with the term, a co-op (cooperative) is a corporation in which you buy shares. That means you don’t own actual property (the corporation does), you own shares in that corporation with the exclusive right to your unit. Your life is basically the same as a condo owner except for two major things: co-op boards and co-op red tape. To be able to buy a co-op you have to be accepted by the co-op board (who set their own rules and can reject you for whatever reason they want). This means complete transparency of your income/assets to any number of your future neighbors. Plus, most co-ops don’t allow investors in, they want permanent residents. And then there’s the red tape. Banks don’t like shares, they like property as collateral, therefore their terms for loans and HELOC’s are often worse or more inconvenient than it is for property. From the amount of money required to put down to their loan-to-value allowance to the amount of paperwork required is all different with a co-op.

3 Comments »

  1. Good luck!

    (And welcome back from California!)

    Comment by Silus Grok — November 15, 2007 @ 10:37 pm

  2. hey rusty,
    good luck! i’ll look forward to seeing the end result. tell your other half hi from me!
    di

    Comment by Diane — December 1, 2007 @ 10:03 am

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