Sterling Place Co-Op, To Buy or Not?

doctorj · April 2007

Is this the place?
http://newyork.craigslist.org/brk/rfs/301909084.html

alafairnadia wrote: it should be pretty easy to get financing even if it's only 21% owner occupied - my building is less than 50% owner occupied and less than 50% owned by ppl other than the sponsor and I still managed to get in with 5% down.

That was then, this is now. The mortgage market is in panic at the moment, and not just the subprime sector. Expect more hassles, more stringent scrutiny, and higher rates or fees for some people. A good broker should help though.

http://www.nytimes.com/2007/04/01/realestate/01cov.html?_r=1&oref=slogin

For instance, with the two beds they are asking about $750, which just seems crazy. But I figure that part of it might be the part time door man and the live in super, but I've seen a number of places with those types of amenities for less in monthly maintenance. Could it be due to the low owner occupancy?

No level of maintenance is necessarily crazy, depending on what you're getting for it and as long as you're not overpaying for the property. If it's high due to underlying mortgage, the price for the property should go way down, and your tax break on the maintenance should go up. Especially if it's due to a high interest rate on that mortgage due to low owner occupancy (may go down in future if renegotiated with co-op's bank.) If it's high due to management or engineering problems, that's something else, so talk to your lawyer. A rule of thumb is that total cost of ownership, minus your tax deduction and what you put into principal, should equal what it costs to rent the same space. E.g. if it would cost $1500 to rent, you want less than ca. $2000-2100 total to buy, your monthlys are $750, your mortgage after tax breaks and principal should be $750-$850, you shouldn't be taking a mortgage more than about e.g. $200K once you run the numbers. How many apartments in the building? Cost per doorman and super goes way up if there are fewer apartments to share the cost.

alafairnadia · April 2007

youch. I'm glad I dealt with this already. stress is not my forte.

anonymous · April 2007

Thanks, Doc! Extremely helpful. Yes, that is the place. Not the particular unit that I am looking at, but that is the building. There are 79 units in the place, so the price per employee should be less.

ben · April 2007

The maint as a percentage of the purchase price may seem high but when you look at $/sq ft it really isn't. The unit in the link posted above is listed as 1100 sq ft with a maint of approx $750 or about $.68/ft. Considering there is a part time doorman this is pretty low. Anything less than $1 per foot is usually considered good and that goes up when you add amenities like the doorman.

anonymous · April 2007

Totally understand your point, Ben. But, in considering whether future investors would be able to actually afford purchasing in the co-op, shouldn't one also consider the absolute value of the maintenance? In that regard, how much weight should be placed on the absolute number?

ben · April 2007

Sure, it's important to look at the total number being paid each month, both out of pocket and after tax deductions and principal paydown. It's also important to look at the value of one property relative to what else is on the market.

These co-ops look like they are going for about $275/ft which is near impossible to find anywhere in Brooklyn unless you go much farther out. There are similar sized units being sold on Eastern Parkway by Bedford and Franklin in the $500s per foot. So if this property was priced the same way the cost of the unit would be $500k plus and the maint would not seem so steep. It doesn't matter where you are in Brooklyn, the cost of heat, water/sewer, insurance, doormen, etc. is all the same.

So when considering future investors I think this property has some great upside as the current price per square foot is substantially below what co-ops and condos in the area are going for.

Please keep in mind that all of my comments are made without any knowledge of the particulars of this specific property, i.e. condition, management, financials, etc. and these factors can have a significant impact on whether the property is a good deal or not.

anonymous · April 2007

Subject: Sterling co-op

Anonymous wrote: Sounds like the next step is get in contact with some of the owners. If there any owners of 960 Sterling, please contact me.[/url]

Who is your broker?

doctorj · April 2007

Ben wrote: Sure, it's important to look at the total number being paid each month, both out of pocket and after tax deductions and principal paydown. It's also important to look at the value of one property relative to what else is on the market.

I think it's prudent to look at what happens under the assumption that the market may be temporarily overpriced with respect to median wages and the cost of renting. Particularly with co-ops that are harder to offload, and where the monthly's are a much greater percentage of the TCO. $/sqft is misleading for a co-op without considering that you're also taking on a certain share in the building including the underlying mortgage. If you find that, in the absence of capital gain on your investment, your net worth would decrease each month over the next 3-5 years by owning instead of renting (a reasonable timeframe for a starter apartment), it may be time to either make a lower offer for the property in question, or stick around for a bit and see what happens to prices and affordability after this spring's season. Interest rates are going to hardly move this year, and if they're converting such a large building (not to mention other buildings coming online faster than they're selling), then there could easily be some more of these on offer at a further discount come this fall.

On the other hand, if you find it's not much different from renting at the current price, and you like the place and expect to hold it a few years, I'd say go for it. And get on the board asap to make sure they're managing their finances as well as possible; if the monthly's can get reduced in a year or two by refinancing the building with better credit at a lower rate, the nominal sale price will go up, and you're on a winner.

alafairnadia · April 2007

doctorj wrote: in the absence of capital gain on your investment, your net worth would decrease each month over the next 3-5 years by owning instead of renting (a reasonable timeframe for a starter apartment), it may be time to either make a lower offer for the property in question, or stick around for a bit and see what happens to prices and affordability after this spring's season. Interest rates are going to hardly move this year, and if they're converting such a large building (not to mention other buildings coming online faster than they're selling), then there could easily be some more of these on offer at a further discount come this fall.

what are your thoughts on refinancing a 5 year ARM from, say, oh, 2 years ago? I keep thinking it's a good idea, but not really doing anything b/c who knows what'll happen in the next few years, plus the whole mortgage industry being jacked.

whyfi · April 2007

I've always been a fan of 5yr ARMs, if there's a meaningful difference between that and a 30yr F (which is not always the case) and if it's a home that you're probably not going to stay in for long... which usually is the case, between changing jobs, a growing family, running from the law, etc.

Anywho, if you have a 5yr ARM from 2 years ago, you're probably in decent shape, unless you think that you're going to stay in your apt for a lot longer. First step - check with your current lender. They're likely to get you the best rate, lowest fees ('specially if you're in a condo) and the least amount of hassle.

alafairnadia · April 2007

ah, ok. I'm in a co-op, and I'm pretty sure I'm not giving it up, even if I move out. I've got a bit too much 'new homeowner' syndrome. and... I'm single and, unless something changes in the next few years, this joint is the right size for one human and two cats.

doctorj · April 2007

alafairnadia wrote:
what are your thoughts on refinancing a 5 year ARM from, say, oh, 2 years ago? I keep thinking it's a good idea, but not really doing anything b/c who knows what'll happen in the next few years, plus the whole mortgage industry being jacked.

I suggest: don't even think about refinancing the 5-year ARM until year 4, and then start looking at what it costs vs. what the rates are vs. how sure you are that you're staying put. Refinancing is expensive so it takes time to break even on it, even if you can get a lower fixed rate or new ARM. If you look at the yield curve, swaps, etc., the overall direction of the economy and what the fed is saying, there's a better chance that in 2009 rates will be about the same or lower than they are now, than that they will rise.

Only reason I didn't take an ARM was because the yield curve was inverting at the time and the demand for long mortgage-backed securities so high that month that there was barely any difference between ARM and the 30-year fixed. A quarter of a percent is nothing, especially when you're getting a tax break on the difference.

In an ideal world, you've been putting the difference between the 30-year fixed rate you would have gotten a couple of years back, and 5-year ARM you actually got, into an investment account each month, such that it could pay for the increase in the rate if you end up keeping the ARM past year 5 for quite some time.

If something drastic happens in global politics or economics that leads to high inflation and rates, e.g. major trade war with China or invading Iran and collapsing $USD, all bets are off. In times of rising inflation, fixed debt with fixed rate is the way to go; that's how my parents accidentally came to own their houses outright in the 80s. But chances are it'll be business as usual for the rest of this decade.

bojolais · April 2007

This Times article addresses this topic and talks about those loans resetting in 2009 and 2010 towards the end of page 2...
http://www.nytimes.com/2007/03/31/business/31money.html?pagewanted=1&_r=1

anonymous · June 2008

Subject: 960 Sterling Place

Hello,

I realize this string is about a year old, but I am seriously considering an apartment in 960 Sterling Place, and I'm wondering if the originator of this topic bought in the building and if so, how is it?

I'm especially concerned about apartment noise--I was kind of happy to see that there are a lot of older women as residents, because they tend to be quiet!

Anything anyone can tell me about the building and the neighborhood would be great.

I really like the neighborhood. How is it coming home late at night though? I haven't tested that. I suppose I should.

Thanks,
Elizabeth

anonymous · June 2008

Elizabeth,

I was actually one of the posters on this board who ultimately purchased in 960 Sterling Place. I love it, love it, love it.

To answer your question, in the year since I closed I have never experienced a problem with noise. Actually, that is not true. There is some car in the neighborhood which seems to have a faulty car alarm. It would go off every now and again at random times of the night for prolonged periods of time. One of my friends in the building (who also loves it, loves it, loves it) called 311 a couple of times on the car and since then I do not think it has been a problem.

Also, on Saturday mornings during the summer there is church service of some sort at the Seventh Day Aventist School across the street. So for about an hour or you may hear singing and praise and worship. To me, it is definitely more entertaining than annoying. Not sure about what other folks think.

Bottomline -- I would say most of the noise comes from outside the building, rather than inside. As you noticed, there is a large number of senior citizens who live in the building so its a pretty calm place to live. There was one big party maybe 9 months ago for one of the resident's 30th birthday. I was home, but didn't hear any commotion except when I was going up the steps and passed the floor that the party was on, I could hear the music playing. I would say that parties here are a very rare occurence (that is the only one that I can remember). But then again I live on one floor of six, in one wing of two. So perhaps others have complaints that I can't speak to. But I am pretty "in the know" and I have never heard any noise complaints voiced.

If you have any other questions, feel free to post again. Best of luck in your house hunt!

anonymous · June 2008

Subject: 960 Sterling Place

Dear 960SterlingPlaceOwner,

Thanks so much for responding. I'm really happy to hear that you love it, love it, love it!

Actually, street noise doesn't bother me too much, and the singing, praise & worship is kind of a plus. No, the noise I'm talking about is the noise that comes from other residents playing music & TVs really, really loudly. It's the inconsideration that gets me.

So, I have no problem with Sr. Citizens. Calm is fine with me.

I have more questions for you--how is the neighborhood at night? Would a woman feel safe coming home late at night?

Also, is there a board? I'm actually in the pre-contract stage, so I passed management approval, but my broker isn't sure if there's a board or not.

And, do you foresee laundry & storage in the basement sometime soon? The seller's broker said they'll have laundry in the basement by the end of the summer.

And finally, what makes you "love it, love it, love it"? I'm relieved that you do, because there's all kinds of risks associated with this purchase, but the management company did such a nice job with the apartment's renovation, and I get a good feeling from the neighborhood, plus the price is really reasonable, so I'm hoping it's worth it.

Anything you can tell me is great. Thanks so much!

Elizabeth

960sterlingplaceowner · July 2008

I feel safe walking around at night by myself (I am a young woman) but I always remain cognizant of my surroundings. I just think it is prudent. Others in the neighborhood can chime in on this point. I also read this board a lot just to get a sense of what is going on in the neighborhood.

There is very much a board, of which I was recently elected president. But I am assuming that you are going to be purchasing a sponsor unit, so there is no board approval required in that case.

Laundry services will indeed be in the building. It is expected to be done by the end of the summer. In terms of storage -- the idea has been kicked around a lot lately and we have a big basement so it is definitely possible.

What makes me love it, love it, love it? One, my apartment is -- to me -- simply beautiful. I love the arches, love the floors, love my views of Manhattan, love the space, love the sunlight that I get, love being across from the school, love my six big closets, and love the neighborhood.

If you have any other questions, feel free to PM me.

hannafullofgrace · August 2009

Hi 960sterlingPlaceOwner; i am purchasing one of the apartments in the building. It seems like a nice building and I come from a very quiet neighborhood so I like it quiet. I will probably close in a month so it would really be nice to know someone in the building (even if it is by email). . Like yourself I read the boards alot to get insight on the neighborhood or the building. Any infor would be appreciated
Best Regards,
Ap 2D

lo kee · August 2009

King without a crown wrote: That block is pretty quiet, but if you go 1 one block in either direction it gets pretty eventful. You have Nostrand-Sterling Pl for 24 hr drugs and on the corner of Brooklyn ave-Sterling Pl you have the infamous LaGrande family to provide you with never ending entertainment.

Amenities!

(jk)

khholt · April 2013

I've missed the boat a bit in entering this conversation, but any help would be MUCH appreciated!

My husband and I just missed out on buying our dream home at 960 Sterling Place in Crown Heights. We fell in love with the neighborhood and building in particular and are hoping someone who currently owns in this building (or better yet, a contact on the co-op board) might offer us some insight on whether any other sponsored units are slighted to go on the market this year? We are aware that the building is a rental/co-op conversion, so we're also interested in hearing how that process is developing and especially since new rentals in the building seem to pop up on a regular basis.

Thanks again for your help!

Sterling Place Co-Op, To Buy or Not?

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