Debt-to-Income

One important ratio that coops boards review is the buyer monthly debt-to-income ratio(DTI). I bring this up because I've been on the telephone all day clarifying this topic. A monthly debt-to-income ratio is a persons monthly housing expense (PITI [principle, interest, tax, and insurance], maintenance or common charges, and monthly credit expense [monthly payouts usually found on the buyer's credit report]). The bank may approve a mortgage for a buyer at a 45% debt-to-income. If the buyer were to come to the table of a coop board who requires a lower DTI, then the board will reject.

Example:

Lovely 2 bed coop. Elevator building. 24 hr doorman, gym, laundry. Great city view from floor to ceiling windows. Price 900K with 20% down. Maintenance $2000. Board requires no greater than 25% DTI.

The buyers are 2 recent law school grads with a total household income of 200K and current monthly credit expense of $1500. They have 180K for their down payment.

Bank approves 720K mortgage at 6.25% over 30 years with 180K down.

Let's do the math...
Principle+interest+maintenance=$6,433.16
Added credit monthly expense for a total of $7,933.16.
Divide $7,933.16/$16,667= 39%..But remember the coop board REQUIRES 25% or less.

The buyers will be rejected based on financing!

The solution would be to reduce debt and expenses which would require paying credit accounts and reducing their mortgage amount.

This is how monthly debt-to-income can affect a purchase.

Craigslist...The Agent's Opinion

I was talking with another agent today and discovered a mutual dislike of advertising rental property on the site. In my experience, the majority of people inquiring about rental ads seen on Craigslist are not informed and not financially ready to rent an apartment. One month last year I posted a 2 bedroom short term residence in Harlem for $785. My phone would not stop ringing. I received at least 25 calls a day for 3 weeks. I hired an assistant to handle the calls while I went on vacation to LA. The number of callers was great, however none of the potential renters qualified for the apartment. Yes, not one. I've gone through 50 calls for another unit before I found a renter that qualified for a viewing. An application is a whole other story. I get upset when someone who does an application stating their credit is good and after running credit I find a credit score lower than the Great Barrier reef with several judgement accounts including one from the NY Public Library! The Craigslist audience tend
to be very internet savvy. They sometimes think they know more than the agents. No matter how advanced the internet is, it will never compete with an agent's one-to-one personal relationship with owners, management companies, doorman, and supers. Like the Fox 5 news....we get it first.

Cold Sunday

I just finished looking at a number of rental buildings in Washington Heights. I've worked with the management company for some time. However this was the first time that I taken time to view their Washington Heights acquistions. The new owner are do an amazing job with the buildings. All of the apartments are being renovated as well as the building lobby. But they did not stop there, the building exteriors are also being cleaned up. The are definately bring the UWS style further uptown. The changes are good of the community.

Renter's Needs vs. Agent Needs

Sometimes I'll catch an article about some renter who had a bad experience with a real estate agent. The result is always the renter did not get the apartment that they wanted, and the agent is at fault. An old friend once told me " there are 3 sides to any story, his side, her side, and the truth." These stories never have the agent proint of view. Although I can actually tell the other 3rd, I can explain some things. Firstly, real estate agents get the apartment listings from owners or management companies. The owners or management companies are not charged a fee. However like any client they want the units rented by qualified people. And like any client if that the agent does not bring good customers who are willing and able to rent, then they will pull their business and look for other ways which may include working with another real estate company. Real estate professionals want rental deals to go through. Therefore every viewing apointment needs to be with a willing an
able renter. But remember real estate agents provide a service, not a product.

Pathmark. Going. Going. Almost Gone

Looks like there will be some changes to the lot at 227 Cherry, the current location of Pathmark. For one thing, the area residences have been screaming foul about the rumors of Pathmark closing. There are thousands of people in the 2 block radius of the supermarket who buy every day. And then there are hundreds of people who drive in from Brooklyn to shop. In my opinion, the rumor that Pathmark or any other large scale supermarket will not be part of the changes to the site are wrong. Other rumors include affordable housing. I hope the developers do NOT add affordable housing. Yes, I said it. I believe market rate either rentals or condominiums addition of new family with higher household income would be better for the comminity. New money means better services, like better schools and more active community services. Property taxes help pay for these services. I look forward to no having to pass by the little drug dealers and their customers who regularly hang out by the lower end of East Broadway train station. I look forward to not seeing the police "Have you seen this person" poster on lamp post and trees in the area as I head to work. This is a great community with some good people. So having people who can afford condos at around 1.2M to 3M is a welcomed addition.

Taking the day off

Real Estate professionals don't get to take time off. Here is how it goes. Most of the week is spent developing business for the weekend. Weekdays are spent developers and private sellers as we prep for weekend showings. If working with new buyers, then we meet at the office during the week to qualify. Weekends are hugh showing events. Only to follow up with the "so what did you think?" phone calls. So today, I took the day off and enjoy my time at home working on my 125 gal saltwater fish tank. Tomorrow is another day.

Open House Sunday

Today I decided to view a number of units (actually 12) around my area in the Lower East Side. I did bother to tell every broker/agent that I was an agent. It was amazing. Very few of them knew the board requirements. I even what as far as asking for the price of the Offering Plan and was told "What's that?" The agents of my strong competitors where the most informed of the bunch, however did miss a few details regarding the board requirements. At this point you may be asking what questions I needed answered. Coops normally permit 80% financing. That means you need to come to the table with 20% of the purchase price. A bank may finance the buyer for up to 45% however some Boards want your income-to-debt ratio to be lower, sometimes as low as 25-30%. So (here is the key) if the Board requires a 25-30% debt-to-income ratio then the buy WILL have to bring a larger cash amount to the table. And i don't mean the closing table. The buyer(s) will meet and be reviewed by the board before scheduling a closing.

What is a Lead?

I received a call yesterday from someone who wanted to know more about a recent lead on a Park Avenue unit. I proceeded to tell him that I don't have anymore information (i.e.: size and condition) other than it's about to come on the market. What through me was the caller's arrogance. As if I was lying about the property. This really pissed me off. A LEAD is a property about to come on the market whereby the agent has or has not inspected and moreover complete property details will not be available.

What is this?

I'm tired of the same OLD real estate "I'm selling this property" blogging from other real estate professionals. What is it like in the day of a New York Real Estate salesperson? Have you ever felt like a real estate professional was holding back information? Or have you been nervous to ask about other real estate issues? Then welcome to Straight Up Real Estate. I will be talking about personal and professional issues that either put smiles on my face or really piss me off and you can ask questions as we work our way through Straight Up Real Estate. Moreover by all means, let's have some fun.