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Wanted to know your thoughts on this?
I understand having one or two units and especially to rent them out and if necessary sell but do you think it’s financially good for a co-op to buy 10 units? Different years but it seems to be more and more each year they’re selling one and then buying one. I feel too much money being wasted on closing costs etc when co-op could use some of that money for key repairs.
I think in their heads it’s making money for the co-op but to me with all the added cost especially if you have to repair a unit to sell or buy it doesn’t add up. It’s making everyone rich on each sell right? Lawyer, agent etc.
So you find it odd too?
To me once in a blue mood a co-op has an opportunity to buy a unit but I also find it odd is if you want to raise the maintenance and talk about the economy etc to shareholders but yet we have enough money to buy units? Doesn’t make sense.
Almost sounds like a money-laundering scheme to me. If there's a large difference between a unit's purchase price and its selling price without any obvious reason for the difference, it could be a way of washing money or funneling money to the putative owner of the unit.
It could also be a way of goosing up the unit's price for comparable checks or loan collateral. This happened a lot during the 2008/2009 real estate market meltdown. Units would flip-flop between the same two owners, but each time the price would go up. Then it could be used as collateral for larger mortgages and other real estate-backed loans.
If you can, try to find out more about these transactions or speak to your co-op's attorney
Does your co-op own any units that they rent out and possibly sell at times when funds are needed?
That's an interesting question, Pooh. It it turns out to be true, it exposes the board to a whole new level pain - abrogation of the board's fiduciary responsibility to the shareholders.
Imagine a board needing to tell shareholders that an apartment the co-op bought for $500k is now worth only $400k when it needs to be sold to raise a large amount of cash.
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Have they provided a reason for this behavior or have you or anyone else asked a board member for the reason behind this odd behavior?
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