How to Find a Condo or a Co-Op with Low Carrying Costs in NYC

Apartment prices in New York City have risen exponentially over the last decade. While prices are starting to settle down, there is no denying that buying a co-op or condo now comes with much higher expenses than it used to. For this reason, many buyers in New York City are looking for condos and co-ops with lower carrying costs. 

What Are Carrying Costs in Real Estate? 

Essentially, carrying costs refer to the cost of ownership. This can be a number of things, such as your mortgage, insurance, taxes, utilities, and co-op fees, for example. 

Finding a condo or co-op with low carrying costs  will help ensure that your monthly payments are not too high and do not negatively impact your debt to income ratio, which is taken into consideration by the co-op or condo board. 

In order to help ensure you find the right co-op or condo for the best price, here are some tips regarding carrying costs: 

1. Look for building with tax abatements 

While this may be hard to come by, there are still buildings offering tax abatements in New York City. This perk will typically be found in buildings where the developers were offered incentives to build. For example, in order to encourage development in downtown Brooklyn, developers were given tax abatements to build condos and co-ops. 

However, be aware that these tax abatements expire eventually. This means that if the tax abatement helps you secure a condo or co-op with an affordable monthly cost, it will not last forever. It is recommended that you plan an exit strategy for when your taxes return back to their full amount. 

A tax abatement can help give you a sense of security and help with the initial monthly payments, but they will not be there forever. For this reason, we recommended that you find a co-op or condo that meets your needs under ordinary circumstances. This way, you will not find yourself out of a home, or in court, once the tax abatement expires. 

2. The board management and building size 

One thing to take into consideration before buying a co-op or condo in a building is whether or not the building has a health reserve fund. While there is not a requirement to have these funds in hand, it is expected that buildings have around three months of maintenance in reserve to help deal with any unexpected events, such as flooding. 

If a building has a health reserve fund, this is an indication that the building will likely not drastically increase your carrying costs. While they will inevitably increase over time, you can rest assured that the board will not spring a large increase on you in order to pay for maintenance.

3. Be aware of high tax deductions on maintenance 

A percentage of your maintenance in a co-op is tax deductible, however this amount will vary depending on the building and the apartment. However, if you are getting anything over a 70% tax deductible, you should be weary of the building’s financial status. Typically, if you are getting a high percentage deducted from your taxes, this is a sign that the building likely has a large underlying mortgage with a high interest rate. 

4. Be frugal with amenities 

Most condos or co-ops will charge extra fees depending on which building amenities you would like to have access to. If you have found an apartment with low carrying costs or a tax abatement, it may be tempting to sign up for more amenities than you may need. These costs can easily add up, especially if you are relying on a tax abatement in order to afford the apartment. For this reason, it is important that you think thoroughly about which amenities you will make use of and which ones you are better off skipping out on.

Do Your Research Before Buying

When you’re looking for a co-op or an apartment, it’s easy to think you’ve found the perfect place at a good price. However, if you haven’t taken the full carrying costs into consideration, it may be less affordable than you originally thought. If a condo or co-op seems too good to be true, take a closer look at some of these carrying costs before making a decision—it could save you some heartbreak.