Managing Co-op Maintenance
Monthly maintenance over $2.25 per square foot per month can be a constraint when an owner attempts to find a buyer to pay market value for their co-op.
Considering this, boards must manage and budget cash expertly each year to keep sales values up, and importantly, avoid excess debt and frequent assessments.
Your board must ensure that it’s income stream is large and durable enough to cover expenses, cushion a reserve fund, and anticipate for future cost increases.
On average, 95-97% of cooperative revenue comes from shareholder monthly maintenance, so ensuring you collect and avoid a list of owners in arrears is important.
Implementing cash and debt management strategies can diversify income and stabilize long-term shareholder value.
Each fiscal year, boards are wise to author a realistic budget, and manage maintenance increases and decreases accordingly.
Ensuring commercial tenants, such as in ground-floor retail and medical spaces, pay market rate, on time, is important.
Creativity and foresight go a long way, too. Repurposing common space for storage, fitness, laundry, outdoor space and playrooms can lift shareholder revenue and keep maintenance steady. Transfer fees, otherwise known as “flip taxes”, also can have a positive effect, provided they are in line with market norms.
Regular capital improvement studies also ensure improvements are made to systems and common elements, reducing overdue repairs and future assessments.
Both refinancing an over-market underlying mortgage and successfully contesting a NYC tax assessment can also lower co-op expenses, leading to more predictable maintenance.
Particularly with co-ops under $2.5M in purchase, potential purchasers are honed in on their monthly housing expenses, and overly high maintenance can reflect poorly in your sales price.
Therefore, it is important for a board to follows these guidelines and run a tight ship.