Welcome to Front Porch LLC

Where are you if I have a question about co-ops?

At Book Expo today and tomorrow, wearing a T-shirt that says “Rookie.” Come find me at the Javits center.

My neighbor is having an open house, is it okay for me to go? I’m just curious to see it.

It is 100% human nature to want to see how our neighbors live. You can get decorating ideas (maybe they thought up something cool to do with that little ledge in the kitchen); see how potential buyers react to the idea of being in your area (in case you’re thinking of selling someday) and also just rock your nosiness a little.

It is also expected behavior for an open house. Chances are that the realtor is probably excited to see you, because you are a potential customer for her down the road — and she can point potential buyers to you and get you to say nice things about the building or the neighborhood.

So go ahead, don’t be nervous. Chances are, your neighbors won’t even be there. If they are, it’s fine to use the line “I love it here so much, I thought maybe I’d recommend your place to a friend who is thinking of moving to the area!”

What was The Tenants Committee to End Discrimination in Stuyvesant Town?

The Tenants’ Committee was an organization formed in 1948 after black veterans returning from the war were denied rentals in Stuy-Town. The newly-created “suburb in the city” housed 25,000 families; according to the New York Times, two-thirds of them opposed the segregation of the complex.

Amy Fox is a screenwriter working on a movie about this, and you can find the story of her grandparents’ integration efforts — which led some fellow tenants to lose their jobs and their apartments — here.

The story is also mentioned, briefly, in The Real Pepsi Challenge, the new Stephanie Capparell book that outlines how some 1940s and 1950s-era civil rights battles were fought one house, and especially, one soft drink, at a time. Highly recommended.

What is the 80/20 rule for co-ops? Why do I need to pay attention?

When you own a condominium, you pay your real estate taxes — either directly or through your mortgage lender — and deduct them on your income tax. It’s pretty simple.

But when you own a co-op, you pay “maintenance” — which is an aggregation of charges to the corporation. It covers the salaries that get paid to your super and your doormen, plus roof and boiler maintenance. It also covers things you want to deduct from your taxes — like your share of the building’s real estate taxes, and your share of the interest on the building’s underlying mortgage.

According to the Internal Revenue service, the stuff you would ideally like to deduct from your taxes is completely legitimate if at least 80% of your co-op’s income comes from its shareholders. (This is known as “good” income.)
Twenty percent of the co-op’s income is allowed to be “bad” income – say from the lease of commercial spaces to retail tenants.

But if your co-op breaks the 80-20 rule — say 21% of the corporation’s yearly income comes from leasing a ground-floor site to a dry cleaner — you lose all your tax deductions. Sad!

One way for a co-op to stay within bounds is to increase the money it makes from the shareholders — in other words, to raise the monthly maintenance charges. So if you’re looking at a co-op in a hot commercial area, have your lawyer double-check the building’s financials. You don’t want to be in the position of buying into a building that has to raise its “good” income — because the source of good income is going to be you!

So we want to sell and we’re interviewing different brokers. What are the three things we’d never think of?

1) That you want your broker to pre-screen your buyers. In our dog-and-pony shows, we tell you a lot about how we’ll “attract” a buyer — but you really want a financially qualified buyer with no red flags. The ability to do that sifting is a skill that not every flashy broker has.

2) That you want to be able to show what your apartment would look like renovated. Anything the brokers will do to this end — by redrawing floorplans, using photoshop, getting buyers access to a neighbor’s renovated apartment — will help sell yours. An agent’s architecture and/or design background can be truly relevant here if they can help buyers “see” your home as their home. (Of course, great writers can paint such a picture, too!)
3) That you will want to know who is showing your apartment — on ordinary days, if your agent has two showings at once, if your agent breaks his or her leg. You are looking to connect with the person who is pitching you, but you also want to know about their bench strength. Some agents work with teams; I work for a very small brokerage because I like being able to get to the top guys by just swiveling my chair.
3)

What is Habitat for Humanity?

Habitat for Humanity is an international housing charity, run as a Christian ministry, but so ecumenical and widely appealing — it is associated with former President Jimmy Carter — it has a broad base of support beyond the Christian community. The organization is currently involved in Katrina relief.

The charity believes in the power of sweat. Volunteers build homes which are then given to prospective homeowners — who have completed financial responsibility classes and helped build the homes.Habitat for Humanity has built 200,000 homes since 1976, including 94 in Suffolk County. The average cost of an American Habitat for Humanity house is $60,000.

On March 16, 2006, the New York Daily News profiled a new Central Islip homeowner, a single mother of two who could never have afforded a house on her administrative assistant’s salary of $28,000 a year.

If you want to help, you can donate money or labor. (I donate my speaking honorariums.) I strongly suggest going on a Habitat for Humanity “build” — they are held on Saturdays and are really, really fun. You will be supervised, so even if you show up with just a pair of jeans and no handyman skills, you can build a house!

We’re in contract on a co-op (small building), and the board wants us to pay maintenance upfront. Is this common?

It means the board feels you’re marginal candidates — financially — but wants to let you in because they like you. They could ask for you to put anywhere from three months’ to two years’ worth of maintenance payments into an escrow account.

The board is not trying to be b!tchy, just to protect itself. If you can’t make your maintenance payments, your neighbors have to, and in a small building that can be devastating.

If I were you, I’d certainly go ahead and put the extra maintenance up. The only concern is this: why didn’t your broker see this coming and try to warn you about it?

I want to buy a new apartment this year. How do I move?

New Year’s does weird things to us. It makes us want big changes without necessarily figuring out to go about achieving them.

The first thing you should do is go to five open houses. Just be random: go to different neighborhoods and look at things at different prices. Make sure you look at something that costs twice what your budget is, and something that costs half what your budget is.

Then make notes about your reactions to the apartments. Do you like fancy new kitchen appliances? Lots of closets? Being near a certain subway?

Of course the apartment that is twice your budget will be your favorite, but try to think if it has anything that you might want to get in your eventual apartment — sometimes when you overshoot, you can pick up an idea that you can make work at your budget. (Example: isn’t that clever how they built in the office nook).

The point, if you have no idea where to start, is to go out and see apartments. Once you react, you’ll be able to pick out a path.

I live in a small apartment. How can I be happy during the holidays?

There are lots of ways. Here’s an excerpt from my Christmas column for the New York Blade:

1) Low ceilings enable you to save by buying a budget tree.

2) Constant traffic noise lets you know other people aren’t having completely idealized magical holidays either.

3) In-building holiday parties (hic!).

4) It’s not your job to hang the decorations in the lobby. Which means you don’t have to remember where you stored them last year, which means no fights with the family over who was the last person to put away the box marked “tinsel.”

5) Radiator heat = no chimney cleaning.

6) You may have to tip the super, but you don’t have to tip suburban garbagemen, who can “forget” to take your trash away if they don’t like their envelope.

7) No musical Christmas displays across the street (I grew up with my neighbor’s roof playing “’Twas the Night Before Christmas” for two straight weeks.)

Hooligan kids throwing snowballs usually can’t reach the twelfth floor.

9) Tilty pre-war flooring makes dreidel anybody’s game.

10) In a glamorous urban pied-a-terre, it’s easy to hear It’s a Wonderful Life on the TV in the living room even if you are in the kitchen making cookies.

11) If you live in a doorman building, you get cheerful, helpful doormen for the entire month of December.

12) If you don’t live in a doorman building, you don’t have to tip your doormen. Go take the money you’ve just saved and buy yourself some peppermint bark instead.Happy and Healthy Holidays, and new co-ops to all!

What’s the overlooked real estate story of the month?

The Fannie Mae conforming loan limits* were announced earlier this week, and they didn’t change.
I didn’t see this story picked up in NY — though I chatted with a couple of journo friends so hopefully it will be.
As I posted on wiredny.com, this was the first time in 12 years the limits haven’t risen.

What does this mean? I’m no economist but I think

1) that it’s a sign that housing prices nationwide are losing momentum
2) that it’s a sign that the government is trying to prop up prices nationwide, since the underlying data should have called for a reduction in loan limits, which the government very pointedly avoided.

Like many NYC real estate people I feel like we’re a market unto ourselves, but it’s still good to know what’s going on nationwide.

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*the level at which the government, via Fannie Mae, offers support to the smaller-mortgage market; now set at around $400K for a one-family home. Sorry, Brooklynites, the conforming loan limits didn’t change for multi-family homes either.