With interest rates at historic lows, never rising too far above 4% these days, boards are looking at refinancing their co-op's underlying mortgage to build up their reserves as a viable alternative to raising maintenance fees or levying assessments on shareholders.
Even better, reports Andre Kaplan, chief financial officer for Manhattan-based Orsid Realty, “Most of our buildings that are refinancing have taken a lot of additional cash to fund their future capital reserves and have kept their debt service the same.”
The payoff can be startling.
“We have a building on the Upper East Side that realized a $20,000 windfall in cash flow on a monthly basis,” reports Neil Sonenberg, a senior partner with the accounting firm of Rosen Seymour Shapss Martin and Co. “That’s almost a quarter of $1 million for the year. We are talking sizable savings.”
Should Your Building Refinance?
Not every building is in a position to refinance. Condominiums, which do not have underlying mortgages, obviously don’t have much to gain. But co-op boards owe it to themselves to sit down to evaluate the possibilities. “The first question you need to ask,” advises Kaplan, “is, do we need to refinance our mortgage?”
Leave a Comment