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Does this happen often?

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Does this happen often?

Postby nycat » Tue Mar 18, 2003 7:47 pm

I just met a family who rents a large 3br apt. in the west 70's. They told me that the building went co-op in the late '70s and that they chose to continue renting instead of buying. The price of the apartment at the time was $30,000. They said that their rent was lower than the mortgage and maintenance together. Obviously they feel like complete idiots now as other apartments the size of theirs in the building are now selling for well over $1 million.

My question is if anybody knows if this is a common situation?
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Re: Does this happen often?

Postby eastsidah » Wed Mar 19, 2003 4:38 pm

It seems there are still quite a few "sponsor" units left in co-op buildings. Of course the buildings that converted earlier are going to have less.

I would imagine that people who lived in buildings that converted when interest rates were sky high (late '70s-early '80s) often chose to keep renting as rents probably were lowere than the mortgage and maintanance. In retrospect it is a sad deal. The family you mentioned could have refinanced and would own their apartment now-making them millionaires. Instead they have cheap rent but no eqity. When they finaly give the apartmrnt up, or the Rent Regs are abolished, they will have nothing for all the rent they paid (which isn't tax deductible). This is an example of how some people miss out on opportunities due to their foolish choices and not because they never had the opportunity to begin with.
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Re: Does this happen often?

Postby Lilly » Wed Mar 19, 2003 6:06 pm

Even if rent regs are "abolished" those tenants in place will be grandfathered in.
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Re: Does this happen often?

Postby eastsidah » Wed Mar 19, 2003 6:19 pm

I agree. It's possible that the apartment in the situation NYCAT describes may remain in the family for many more years. My point was that no matter how long they stay they still have nothing where if they had bought they would have a million dollar asset.
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Re: Does this happen often?

Postby MikeW » Wed Mar 19, 2003 6:47 pm

Lilly,

Are you sure about that? I know the coop conversion laws are somewhat differet. They may not be able to directly evict them, but the sponsor, or other unit owner, could probably raise their rent to market, which would likely have the same effect.
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Re: Does this happen often?

Postby MikeW » Wed Mar 19, 2003 6:49 pm

The other thing they could do is make an offer to buy the apartment now. They wouldn't get nearly as good a deal as they would have back then. However, they would likely be able to get it at substantially under market price
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