Coop Financing for Facade Renovation

raulism

I live in a coop and we need to renovate our brownstone facade. We don't have an underlying mortgage, but we need to take out a loan. Has anyone else had to deal with this? What banks did you use, and what experience did you have?

I love living in a four unit coop, but so far we haven't found a bank that knows how to deal with a small coop. To a bank, we're just a tiny corporation with almost no income.

alafairnadia

Subject: Re: Coop Financing for Facade Renovation

raulism wrote: I live in a coop and we need to renovate our brownstone facade. We don't have an underlying mortgage, but we need to take out a loan. Has anyone else had to deal with this? What banks did you use, and what experience did you have?

I love living in a four unit coop, but so far we haven't found a bank that knows how to deal with a small coop. To a bank, we're just a tiny corporation with almost no income.

hopefully one of the many mortgage brokers on this board has already contacted you. I had trouble finding someone to give me a mortgage to buy my place (a co-op in a 14 unit building which is less than 50% owner occupied) but eventually a mortgage broker helped me out.

whyfi

Hmmm... to be honest, I would have to ask about how to go about making that happen... Doing a coop loan on an individual's share is enough of a pain in the ass ('specially when we're talking about a small coop), but for the company itself? Ugh. Not that I have the licensing to help you out, but I can ask around about the nuts and bolts.

One thing that you'll probably run in to - since this loan would be for renovations and because it's not going to include any mortgage already in place, it'll be a relatively small loan for the amount of work that it'll take. A lot of LOs working strictly off of commission aren't going to touch it for that reason.

realtor guy

Subject: construction loans...

Call my friend Kathia Francis at SunTrust... she has experience dealing with construction loans and could be of help... be sure to mention Mike Figueroa from Corcoran.

Kathia Francis
718.574.7324
[email protected]

ben

since there are just 4 of you is it possible for everyone to just take out a home equity loan? The effect is pretty much the same, everyone will have to pay a little bit more each month, but it may be a lot easier to manage.

sterlingguy

Subject: co-op mortgage

we used Chase for our personal equity line of credit -- few other banks deal with small co-ops at all, as you are probably discovering.

i should also mention that i am in no way advertising for Chase and in no way work for them or anything.

sterlingguy

raulism

Ben wrote: since there are just 4 of you is it possible for everyone to just take out a home equity loan? The effect is pretty much the same, everyone will have to pay a little bit more each month, but it may be a lot easier to manage.

Yeah, but it raises its own complications. What if one person defaults? What if one person moves out? It's really a building problem. I suppose we could find a lawyer to figure a way to make us all equally legally liable, but it seems much cleaner to just do it as a single entity.

Though I guess if we did it individually, we'd might get some tax breaks.

sterlingguy

i know a couple good laywers, if you need referrals. Email me if you do.

ben

raulism wrote: [quote=Ben]since there are just 4 of you is it possible for everyone to just take out a home equity loan? The effect is pretty much the same, everyone will have to pay a little bit more each month, but it may be a lot easier to manage.

Yeah, but it raises its own complications. What if one person defaults? What if one person moves out? It's really a building problem. I suppose we could find a lawyer to figure a way to make us all equally legally liable, but it seems much cleaner to just do it as a single entity.

Though I guess if we did it individually, we'd might get some tax breaks.

If someone defaults it would be the same as if they defaulted on their mortgage. It could lead to a possible forclosure but the risk is really no more than the risk of allowing anyone to have a mortgage to pay for their shares in the first place.

If someone moves out they will have to pay off their share just as they would their mortgage. The difference is that if it is building wide, that mortgage gets passed along to the new owner who takes over the payment in the form of an increased maint. charge.

You're right that it is a building problem but everyone has their share to pay whether they pay cash, borrow individually, or borrow collectively.

bkrindy

I am treasurer of 5-unit browstone. We have borrowed easily over the years. We now have loan with Emigrant. Call them. Documentation is 2 years tax returns, 2 years financial statements, proof of insurance, rent roll; basic stuff anyone can put together. It helps if you have a decent reserve. You may have to beef it up a bit (we have around 8,000-10,000 in reserve at any given time) by coughing up additional assessment from owners but that is much better than having each owner borrow on their own! Do not do that until you've truly exhausted all your options. Many banks are happy to lend to smaller coops.

raulism

Check this out:
http://www.cr.nps.gov/hps/tps/tax/index.htm

Apparently, many properties in Prospect Heights are on the National Register of Buildings, and you can qualify for a tax credit if your building is depreciable. In my understanding, coops would qualify, but homes owned privately would not. I am still trying to figure this all out...

bankerguy

Subject: Underlying Coop Loans (Brooklyn and more)

As another person had previously posted, Emigrant Funding Corp does provide financing of small loans on underlying cooperatives. I actually work for Emigrant Funding and we have helped numerous coops refinance their underlying mortgages. We entertain loans from range of $100,000 up to $5,000,000. We have entertained loans on underlying coops in many areas of Brooklyn that include but not limited to Brooklyn Heights, Cobble Hill, Boerum Hill, Downtown Brooklyn, Fort Greene, Clinton Hill, Park Slope, Carroll Gardens, Kensington, Bay Ridge, Fort Hamilton, Midwood, Ocean Parkway, and various parts of Williamsburg. We will work with you and guide you through the process. If you are interested in learning more about Emigrant Funding Corp which is a subsidiary of Emigrant Savings Bank, you can visit the website at www.emigrantfunding.com. You can also contact me via e-mail at [email protected] or call me at 212-850-4299 and I can go over the financing options with you.

Vincent Dang
212-850-4299
[email protected]