When the transaction involves an investment property and a foreign national buyer, finding the right financing becomes considerably more specialized. We recently arranged financing for a Canadian buyer purchasing a Manhattan investment co-op for $750,000. With a 25% down payment, we successfully secured a $562,500 loan and brought the transaction to closing.
Transaction Highlights
- Manhattan, New York
- Investment co-op purchase
- $750,000 purchase price
- $562,500 loan amount
- 25% down payment
- Canadian foreign national borrower
- Successfully closed
Specialized Financing for a Nontraditional Co-op Purchase
This transaction combined several factors that many conventional lenders will not consider. The borrower was a foreign national, the unit was being purchased as an investment property, and the collateral was a cooperative apartment rather than a condominium or single-family residence. Many lenders do not offer co-op loans at all. Others limit their programs to primary residences, U.S. citizens, or buildings that meet strict conventional guidelines. That can leave otherwise qualified buyers with very few financing options. Our experience in the New York co-op market allowed us to evaluate the borrower, the proposed use of the apartment, and the building itself before matching the transaction with an appropriate lending program.
Co-op Buildings
Approving the borrower is only one part of a co-op transaction. Lenders must also review the cooperative building. Unlike a condominium purchase, a co-op buyer purchases shares in the cooperative corporation and receives a proprietary lease for the apartment. As a result, lenders evaluate both the individual borrower and the building’s financial and operational condition. A strong borrower does not automatically make every co-op building financeable through a standard program.
- Owner-occupancy and investor ratios
- Financial condition of the cooperative
- Building insurance
- Commercial space within the property
- Sponsor or investor ownership
- Delinquencies and arrears
- Pending litigation
- Underlying building debt
- Reserve funds
- Co-op bylaws and proprietary lease requirements
Our Internal Approved Building List
We maintain an internal list of previously reviewed and approved cooperative buildings. When a buyer approaches us about financing a particular unit, we can cross-reference the building against this list during our initial review. If the building has already been approved, that information may help us identify an appropriate financing path more efficiently. If it has not been reviewed, or if it does not satisfy standard warrantability requirements, we can determine whether the transaction may require an alternative co-op lending program. A building that is considered non-warrantable is not necessarily unfinanceable. It may simply need to be matched with a lender that accepts different building characteristics and applies its own project-review standards.
Foreign National Co-op Financing
Foreign national borrowers frequently encounter additional challenges when purchasing New York real estate. They may have limited U.S. credit, foreign income, overseas assets, or documentation that doesn’t meet a conventional lender’s requirements. Co-op transactions can add another layer of complexity because the building’s board may have its own financial requirements, approval process, and restrictions on investors or foreign purchasers. Our recently closed Manhattan transaction demonstrates that financing may still be available when the buyer, building, down payment, and loan program are properly matched.
Co-op Financing Is Our Specialty
Cooperative apartments represent a significant part of the New York City housing market, yet many mortgage professionals have limited experience financing them. We work with primary-residence buyers, investors, foreign nationals, and borrowers purchasing units in buildings that may require alternative financing. Rather than assuming a difficult co-op transaction cannot be financed, we review the full scenario and look for a program structured for that particular borrower and building.
If you are purchasing or refinancing a co-op in New York City, contact us.
