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HDFC Coops Affordable Housing in Manhattan

By Mitchell J Hall

Real Estate Agent

October 19, 2011 05:31 AM

HDFC Coops -Affordable Home Ownership in Manhattan The Monterey, HDFC Coop

Q: What is an HDFC coop?

A: HDFC (Housing Development & Finance Corporation) Coops are a liittle known niche market in New York City Real Estate that are city sponsored 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 as well as the maintenance being kept low because the city reduces real estate tax on HDFC coops upon selling a portion of the profit is shared with the coop 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. The City 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/ squatters) to 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 high prices for the owners. While they still sell below market many sellers are now able to get the highest possible price and profit 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.

Because HDFC coops were originally set up as "affordable" housing they must still 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 most HDFC coops 120% or 165% of the area median income applies.

Therefore individual HDFC coops can have different income requirements. It also varies depending on the size of the family. A family of five can have a much higher income than one person. Those below 120% of ADI are "low income" rather than "moderate" or middle class.

The cost of owning shares in a cooperative includes the apartment 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 monthly gross income in housing costs. HDFC boards have the same discretion to approve or reject a buyer as any regular coop.

If qualified, 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.

Please contact me if you would like more information about buying or selling an HDFC coop.

courtesy of: Mitchell Hall, NY Lic Assoc RE Broker