HDFC Coops -Affordable Home Ownership in Manhattan
Q: What is an HDFC coop?
A: HDFC (Housing Development & Finance Corporation) Coops are affordable cooperatives in New York City. They are a relatively unknown market niche that are city subsidized and sell below market (40%-50%) below non HDFC comparable coops and condos.
If you qualify an HDFC coop may be right for you. It may be a great deal.
HDFC coops are a form of limited equity home ownership. HDFC coops offer many of the same benefits as regular coops but they have some eligibility (income) restrictions and many have a "flip tax" paid by the seller.
Since they are sold below market and the maintenance remains low because the city reduces real estate tax on HDFC coops upon selling a portion of the profit is shared with the coop and sometimes the city hence "flip tax".
Back in the 60's and 70's many rental buildings were abandoned by landlords and owners that may have owed back taxes or city water charges and the buildings were taken over by the city. NYC HPD (Housing Preservation Department) through an affordable housing program helped to rehabilitate the buildings, trained the tenants on ownership, set the Coop up financially to be self-sustaining, and then sold the apartments to the existing tenants for very low amounts some as low as $250 in exchange the new owners had to maintain the buildings.
Rather than becoming a landlord, the City trained the owners ( existing tenants) who care about their building and their future. It has been a very successful program. Over the years they rarely sold and remained within families.
During the past several years brokers including myself began listing and marketing HDFC coops and have been able to get much higher prices for the owners. While they still sell below market many sellers are now able to get the highest possible price for their coop.
Q: What is an HDFC coop?
A: HDFC (Housing Development & Finance Corporation) Coops are affordable cooperatives in New York City. They are a relatively unknown market niche that are city subsidized and sell below market (40%-50%) below non HDFC comparable coops and condos.
If you qualify an HDFC coop may be right for you. It may be a great deal.
HDFC coops are a form of limited equity home ownership. HDFC coops offer many of the same benefits as regular coops but they have some eligibility (income) restrictions and many have a "flip tax" paid by the seller.
Since they are sold below market and the maintenance remains low because the city reduces real estate tax on HDFC coops upon selling a portion of the profit is shared with the coop and sometimes the city hence "flip tax".
Back in the 60's and 70's many rental buildings were abandoned by landlords and owners that may have owed back taxes or city water charges and the buildings were taken over by the city. NYC HPD (Housing Preservation Department) through an affordable housing program helped to rehabilitate the buildings, trained the tenants on ownership, set the Coop up financially to be self-sustaining, and then sold the apartments to the existing tenants for very low amounts some as low as $250 in exchange the new owners had to maintain the buildings.
Rather than becoming a landlord, the City trained the owners ( existing tenants) who care about their building and their future. It has been a very successful program. Over the years they rarely sold and remained within families.
During the past several years brokers including myself began listing and marketing HDFC coops and have been able to get much higher prices for the owners. While they still sell below market many sellers are now able to get the highest possible price for their coop.
I recently represented a seller and a buyer in two different apartments in the same line in an HDFC coop in Morningside Heights. I sold the seller's apartment for $660,000 and got my buyer an apartment for $550,000. The highest prices in the buildings history. A non HDFC comparable coop would be $900,000 - $1.1M.
Because HDFC coops were originally set up as affordable housing they are stil remain affordable so a buyer must qualify financially. An HDFC coop must be a primary residence and the income restrictions are based on area median income standards. In many cases either less than 120% or 165% area median income. Therefore individual HDFC coops have different income requirements. It also varies depending on the size of family. A family of five can have a much higher income than one person.
The cost of owning shares in a coperative include theapartment maintenance , the monthly payments on any loan used to purchase the shares, utilities, and homeowners insurance. Generally buyers should not pay more than 30% of their gross income in housing costs. HDFC boards have the same discretion to approve or reject a buyer like any regular coop.
We have seen that an HDFC coop represents a great opportunity to own a piece of the "greatest city in the world" at a fraction of the price of other coops and condos but with that comes some restrictions on purchasing and upon selling you often have to give a portion of your profit back to the coop and/or the city.
When buying or selling an HDFC Coop it is important to use a broker that understands the rules, restrictions and nuances of HDFC coops.
If you would like more information about buying or selling an HDFC coop please contact me.
When buying or selling an HDFC Coop it is important to use a broker that understands the rules, restrictions and nuances of HDFC coops.
If you would like more information about buying or selling an HDFC coop please contact me.
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3 Responses to "HDFC Coops"Thanks so much for posting this. We were actually having a discussion about HFDC's today in the office, and I came home to do some research on them. Your post was extremely helpful in explaining the in's and out's.
One question that we did have that isn't really discussed on here is regarding the shares. Specifically, do they increase in value, or when they are sold do they typically sell at the same price as when originally bought. There seems to be some conflicting information out there. Thanks so much.
Most HDFC coops increase in value. The flip tax usually determines how much of the profit is shared with coop and/or city. Many original owners who bought for $250. sold for several hundred thousands. It is in the original offering plan as to how it was set up. The flip tax can be voted away by 2/3 majority.
how much can maintenance go up on hdfc coops? anything they want or is it controlled?
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