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The idea that property value decreases when the maintenance fee increases has no basis in economics.
Here's an oversimplification. Your co-op is a corporation. It sells a safe, pleasant place to live. When the corporation charges more to live in one of its apartments, residents may choose to pay it (by continuing to live there) or they may choose not to pay it (by selling and moving away).
Here's where the economics come in. When the apartment goes on the market, will the owners sell it for more or less then they would have they day before the maint increase was made public? How much will it sell for? My guess is the increased maintenance will have little to do with the selling price (I'm assuming the fee isn't, say, doubling.)
Frankly, in New York's co-op market, if your building does not have enough money to a) perform necessary maintenance, b) pay for capitol improvements, and c) cushion a comfortable reserves account, your property value will still increase -- but NOT as much as in those buildings that DO increase their maint regularly (or institute assessments) to cover inflation and to compete with all the other buildings out there that people can choose to buy into.
Skimping on maintenance is like telling your boss, "Hey, I don't need that raise, I'm just going to cut my expenses for the next few years." If you did that you would soon find yourself living a less pleasant lifestyle.
Remember, the co-op is a corporation, and YOU own part of it. If it's not financially healthy, YOU are not financially healthy. And if, like most of us, your home is your biggest financial investment, you want the co-op to be financially healthy!
Agreed! Otherwise the wealthier shareholders could squeeze out the less wealthy ones. Massive selling of apartments is never a good sign in a co-op.
I hope you become the president of your co-op so that you can pass your secret formula to maintain the maintenance that may attract potential shareholders.
Admissions Committees or boards doing screening should know what takes financially to carry a unit in building. Therefore, they should screen with this consideration in mind.
Reality is a board president does not necessarily has to be "the wealthiest" of all the shareholders. The board president does not have to be on an ego trip to make the co-op the most luxurious of all the builidng on the block.
Interesting enough, when a board raises maintenance, they also need to pay maintenance; thus, board members are affected by their own decisions. There are tons of board presidents who know their shareholder population and understand the needs of the building and the financial responsibility they accepted. Consequently, the board decisions they lead are taken with the best business judgement in mind, not to evict other shareholders of their apartment for lack of payment.
Finally, when you share the secret on how to keep maintenance low, do not include ano or all of the following ideas:
1. Convice your fellow shareholders that the boiler must be kept in summer until December 15 or temperatures go down to 30 F; if temperatures rises beyond 42 F, heat will not be provided
3. Convince shareholders that they should fire the superintendent and any helpers and instead, shareholders should do rotational work to clean up, pick up the garbage, etc with their own cleaning products.
4. Convince shareholder to cancel all insurances on your builidng.
5. Convince shareholders that water should not be heated as it is deleterious to your health.
6. Convince shareholders to restrict their showers to 2 minutes a day, never flush the toilet unless extremely soiled, and unplug their gas stoves and only do takeout food with paper plates and plastic utensils.
7. Convince shareholders that they must pay for plumbing insfrastructure that breaks behind their walls and to repair the walls on their own.
8. Obtain the cheapest elevator maintenance contract or do without one. Use the stairways unless you are handicapped.
Good luck!
AdC
These postings are not worthy of you. They are bitter and sarcastic and unhelpful. I agree that maintaience should not be raised unless things are dire as such raises are permanent. Yes, costs rise BUT there are many things a buiding can do to trim costs.
1) Negotiate your insurance policy. Do comparative and full research first.
2) Reduce ulility costs. Get a free audit form NYSERDA.
3) Do not increase fees to management despite their requests for a riae. Just don't do it. Examine all charges such and messenger costs, long distance phone etc. What are monthly costs that are questionable? Even small ones can add up.
etc.
A few more ways to keep maintenance down and cut costs:
I accidentally hit the "send" key too soon, sorry. More ways to keep maintenance down...
FIRST - Find ways to save money:
1) Read monthly reports and question costs for messengers, paper/stationery, postage, supplies and "miscellaneous". A lot of excess gets buried under "miscellaneous".
2) Turn off lights in places that don't need them 24 hrs a day - laundry room, storage rooms. If the lobby's bright enough, you don't need a lot of lamps on during the day.
3) Save on paper/printing by not distributing every memo to every unit. Maybe some can just be posted in the mailroom or lobby, or by the elevator on each floor. Save on postage by putting letters under doors instead of mailing them.
4) Eliminate unneeded phone/fax lines. Most documents can be e-mailed now instead of faxed. Pay only basic charges + a maximum amount on calls for super and maint staff phones. If they frequently call relatives/friends out-of-state or out-of-country, why should the coop pay for all that?
SECOND - Find other ways to raise money:
1) If you have fines/penalties for not adhering to coop rules or policies, bill owners for them! Don't go overboard but a lot of money is lost this way. And be sure to check monthly reports to make sure they've been billed.
2) Consider putting in a candy or laundry product machine as sources for income. A soda machine, especially where moving/delivery men and Fed Ex/UPS men pass through, can bring in a good chunk of change, especially in summertime and in large buildings.
3) If you allow subletting, what's your sublet fee? A lot of buildings let this go for years without increasing it. Standard today in many coops is a fee equal to 2 months maint for a new sublet and 1 month maint for a renewal.
4) Enact what buildings call a "coop administration fee" or "administrative transfer fee" on unit sales. A flip tax requires shareholder vote/approval, but this only requires a board resolution (double check this with your attorney!). Typical fee is equal to 4 months maint (2 paid by seller, 2 paid by buyer) at closing, and the board can decide where it goes - for operating costs or reserves.
5) Re-evaluate if coop money markets or other investments are in the best places earning the most money.
Maint inevitably has to go up, but there are ways to save and/or raise money if you keep alert to them.
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Usually, a co-op applicant submits financials for the board to review. The candidates ability to afford to reside in the building is carefully evaluated.
The board also with foresight factors in reasonable increase over time and at an affordable rate to most shareholders.
My point is that, most applicants/boards approve a move to an site that is affordable.
There is nothing so terrible about living on a budget and curtailing certain luxuries if it cannot be afforded. That is sound economics and common sense. A co-op board should not expect to charge 62 & York Avenue maintenance prices if actually operating within the location and budget of a coop in the heart of the Bronx (no matter how luxurourously you promote it. I'm not berating the Bronx. I love it here. I bought my place because I could afford it. And -- I'd hate to lose my cute and cozy abode because of a luxureous fantasy housed in our board president's head. Location is important, which is why the city provides an annual property (& tax) value appraisal (which is viewable online). Sometimes less is more... if you can manage keep what you have during the hard time and celebrate during the good.
If such an apartment was placed on the market (overpriced maintenance)... it would sit for years UNSOLD! However, using this rational - let's suppose that if the coop maintenance increases to the cost at which numerous shareholders are spiraled into default-- then the increase is counterproductive to the health of the corporation. Maintenance increases must be reasonable and affordable for the majority of coop shareholders.
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