Good Deal or Not? “This is a coop that does not have an underlying mortgage” edition

This home is located at 1731 20th St NW:

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The flier says:

“GREAT LOCATION! Stroll to Connecticut Ave to shops, restaurants and Dupont Metro. This is a coop that does not have an underlying mortgage. Newly renovated Kitchen with granite counter tops, new bath and refinished wood floors and freshly painted. COOP FEE includes Taxes, heat, sewer & water.”

You can find more info here and a virtual tour here.

I’m super curious to hear what you think about this one – Does $289,000 ($508 monthly fee) sound right for this 1 bedroom?

45 Comment

  • It looks really nice, and if the fireplace works that would be a huge bonus. I would certainly pay $209,000 nonexistent dollars for that.

    Also, as an ignorant “probably will never be a homeowner” what do condo fees actually go to? Is it like renting where there’s a super who fixes your stuff when it goes wrong, or is it just an exorbitant fee to paint the shared hallways once a decade?

    • condo fees go into a fund that the condo association decides how to use, per rules in its covenants. In this case it is going to “taxes, heat, sewer & water.” Generally a portion will also be saved up to pay for more significant repairs such as replacing a roof, though sometimes these are paid for by special assessment that the condo association votes to impose.

      people seem to misunderstand this and think that the condo fees are some type of scam perpetrated by sellers on buyers. It’s more like a mandatory savings and bill paying program that you and your neighbors agree to abide by.

      Different buildings are marketed differently, beginning with different amenities, and therefore have higher fees. For example, the Watergate condo fees are ridiculously high, because they pay for doormen, maintenance on a crazy old building (I used to work in it, they were constantly tearing pieces of it apart and fixing them because the construction methods were very complicated).

  • the fee pretty much makes it a 400k condo. is that a good price? maybe…

    coops probably are not the best place to throw 400 grand.

    • Yeah, I am not sure what the who “coop but not a coop” thing is about.

      If it isn’t a coop, then it is a condo. It has a property tax associated with it so I have no idea what they are talking about.

      And the price seems fine, till you look at that condo fee, which in my pretty extensive experience is amazingly high.

      I am assuming all the units in that building are 1 br, which means they are collecting 2K a month, 24K a year in condo fees to operate a the common space of a DC townhouse.

      Considering their are no amenities, no pools etc, that kind of fee for a 1br is extrordinary. It signals to me that there is something prohibitively wrong with the building, or that the management company who is running the condo association is doing something very, very wrong.

      Lastly, the common theme with condo fees is that they always go up. So anyone thinking about buying such a place now, needs to anticipate 3-5% yearly increases in that fee.

      • Wouldn’t a big part of that condo fee be going to property taxes, in this case, per the ad?

      • i respectfully disagree.

        co-op fee is $508/month
        real estate taxes are $1872/year, or $156/month

        after taxes, the actual co-op fee is $352. this covers insurance, heat, trash, water, presumably some maintenance activities, plus provides a reserve for the building for anything that breaks (which in 1907 construction is inevitable). i’m not seeing anything unreasonable here.

      • joker’s post here is exactly what I’m talking about.

        $24,000 a year to operate and maintain a large 4-unit rowhouse on a super-expensive lot is perfectly reasonable, and any buyer can get involved in the coop association and change it if he/she doesn’t like it.

  • Looks like a steal to me. You can’t beat that location, and the recent remodeling is a plus. The listing makes clear that the fee includes taxes and some utilities. The real estate taxes alone would run you $200-300 per month if this were a condo. A comparable condo fee would probably be $350, if not less.

  • It has a couple of negatives: small kitchen (smaller storage space), it’s a walk-up (or a least has no elevator).

    But, the location is amazing, the building is cute, and the price (excluding fee) is fantastic for the location.

    The fee does seem to be a deal breaker (although it’s more or less the going rate for a co-op fee). Wish that fee would actually include something to make it worthwhile.

  • “Wish that fee would actually include something to make it worthwhile.” like taxes. which it does.

    • And it includes heat and water. Better than many condo fees. Surprised that everybody is complain about the fee so much.

      • +1.

        The fee is reasonable.

        I don’t love the apartment though. A little small for me. But I think the agent priced it about right. It’s priced to sell and its cheaper than a comparable CONDO.

  • so few people in this city really understand what a co-op is, and it drives the price down. for all intents and purposes, it’s really not very different from a condo. you (now) pay the same closing costs, you get the same mortgage interest deductions, your building is still managed by a board. as a buyer, the only real difference is that you’ll have fewer options for who to get your financing from, which may push you a quarter point higher (if that).

    as for the $500/month fee being a dealbreaker, i don’t really see how that’s the case. a comparable condo in the area would run you at least that much between condo fees and RE taxes….not to mention, have a higher mortgage payment to go along with it.

    this is a great place for a single person/first time homebuyer. the mix of some renovation with lots of original details is awesome, plus a killer location for under 300k.

  • The fee looks pretty standard for a coop. If I weren’t so afraid of coops, I’d be all over this deal.

    • as a former co-op owner, i’m really curious what you’re scared of?

      • Coops are more difficult to sell because lenders and the coop board scrutinize buyers more than people buying houses or condos. They also tend to be more strict when it comes to subleasing units, which is great for holding overall value for the property, but limits the options of the person who “owns” that unit. I think in all, I’ve been led to believe that coop boards have tighter control over each unit, which I’m just not comfortable with. Because DC has more condos available than coops, and for the reasons I stated above, I chose to go the condo route.

        • Well, yes, if you are just trying to flip a unit and want to sell it quickly, then you should be scared – the board scrutiny is trying to discourage just that.
          But understand that the board scrutiny is what makes co-ops better for people that want to actually live there. They attempt to ensure a stable community in a building, rather than a never-ending churn of flippers and renters. So if you are looking for a nice place to live, by all means, go for a co-op.

        • The assessment that they’re “more difficult to sell” is a sell fulfilling prophecy, in your case. Since you don’t want to buy, yes, it makes it harder for people to sell.

          That said, the “more difficult to sell” comes into effect in the lower price. For 50k less than a comparable condo, a lot more interested buyers will show up.

          Co-op boards in DC are NOT co-op boards in Manhattan. The typical level of scrutiny only goes so far as to determine that you have a steady source of income.

          Your point about the leasing restriction is well taken – this would be my only point of reservation. Co-ops use the general philosophy that owners take better care of their property than investors, and as such, property values are more stable if renting is limited. In my old co-op, you could rent for 2 years at which point you had to return for at least a year.

  • Call me a wuss if you will, but in this city I don’t want a place without central air. This would still be good for a young professional who doesn’t mind stairs (4th floor walk up?), hoofing to laundry room and heat in the summer.

    Check out this comp with fewer stairs, central air and in unit stackable W/D…

    • That place looks nice, but it’s going to be tough to finance. Lots of lenders (including all FHA loans) won’t finance a unit in a building that is 70% investor owned. Anyone that wants to buy that unit is going to need a lot of cash.

    • $60k more doesn’t make for the greatest comp.

      For the fee-obsessed, for that unit, condo fees are a “low” $191/month.

      Real estate taxes (assuming the assessment = sale value, which in most cases these days it does) will run you about $2390/year after the homestead deduction. So that puts you at $199/month for real estate taxes…so we’re up to $390 a month.

      Add in your bill for heat in the winter (electric heat gets expensive on 20-30 degree days, trust me), and you’re right back at the $500 range of the other building. Sure, maybe it’s a little less…but not by a wide margin.

      Plus, the extra $60k is going to run you another $250 or so a month in mortgage payments, not to mention coming up with the extra $6k+ in down payment.

      • It wasn’t really a comp, just an explanation why this particular place seems like a better deal – the walk up, no central air and community laundry keep this place from being over 300.

    • totally agree with Kev29! I don’t see a lot of closet space and the bathroom is HORRIBLE – it may have new tile but if you are sitting on the toilet you face is probably hitting the rim of the sink! and to get to the sink you have to maneuver around the tub and probably get a blue/purple knee at least twice a month from hitting the corner so often.

      I will pass on this one

    • I’ve lived in DC my whole life and it still astounds me that a one bedroom apartment selling for double the national average for houses is a great deal.

      • It must be a very small life. Tiny.

        • A quarter century, so in the grand scheme of things, sure pretty small.

          I’m not saying I don’t understand WHY it happens. Supply and demand, relative income of the area and all that. I’m just saying it amazes me. I understand how rockets work too, but it doesn’t stop me from being amazed that in 70 years we went from horses and buggys to manned space flight.

      • Detroit and Youngstown are still in the nation and count towards the average, right? Well there you go.

  • houseintherear

    Wow, looks like a good deal to me. GREAT location, cute place.

  • How can you tell what floor this is on?
    I tried but failed to determine this.
    Also, I saw no mention of what that door in the living room (to the left of the fireplace) leads to. Is there outdoor space?
    Rather charming unit, but if it’s the basement, I wouldn’t think so. From the light it looks well up in the building.
    Also, the info. page gives real estate taxes ($1872 annually) which is not usual for coops so I am not sure what this means. I would guess that perhaps this is the amount one could use as a tax deduction but still it is wrong, I believe, to list the tax on a unit in a coop as the coop is taxes as a whole.

  • $156 of the monthly Coop fee goes to paying the RE taxes. So the $352 remaining covers gas sewer/water and general building maintenance. So the fee might be somewhere around $300 paying as your share of general building maintenance.

    That seems a little steep for a 650 sqft share a Coop without an underlying mortgage. Definitely window-unit AC is a drawback, but it looks nice otherwise.

    Overall, it’s a no brainer. That’s as cheap of a ticket into that neighborhood as there is.

  • This is an awesome deal. It’s got plenty of light – a fireplace – and a decent (but small) kitchen. Look at the 3 windows. A couple of years ago people would be begging in line to pay 350 – 400k. And in the next few years I’m sure it will be worth that much again. Look at the comps in the neighborhood for 1 bedrooms.

  • I think this is a good deal based on my personal experience as a comp. I own a first floor (non-basement) condo just a couple of blocks east from here. 640 square feet, which is almost identical to this one, although mine is a “1BR plus den.” Central air. Nicer kitchen but not dramatically so. Fureplace. Hardwood floors, open floor plan. Condo fee is 270 a month, which most condo owners would consider reasonable, and which includes water and sewer and trash but does not include (electric) heat or gas or taxes. Taxes are about 200 a month and heat around 100.

    Having followed the market pretty closely since my purchase, I’m satisfied that I didn’t overpay. So, in this case, you’re essentially talking about spending 80 to 90 thousand less than what I paid, and in return having to schlep up a few flights of stairs to a comparably nice-looking place in a similar location that that doesn’t have a den or central air. Sounds like a good deal to me.

  • Please, someone answer me.
    What floor might this be on and where does that door in the living room go?

  • I’ve been in the unit, which is on the 3rd floor.

    The door opens on to nothing. Apparently, that side of the building used to have balconies, but no more. On the other side of that door is a screen and a locked gate, so I imagine that keeping the door open adds significantly to the ventilation in the unit.

  • Super cute and bright! Is it nuts to think that it may go for above asking?

  • There was a coop in this bldg last year. The common areas were gross and smelled like cat but the unit was really cute.

  • I looked online at a few seemingly comparable units for sale in the area. This one seems as good, if not better, as the comps. The Co-op fee wouldn’t bother me. I recently sold a condo where I was paying over $400 in condo fees, and none of those fees went to utilites or taxes. The co-op fee for this place appears to be applied to some utilites and the taxes. That’s a big plus.

  • I don’t think $500 in fees for a 1 bedroom in this neighborhood is bad at all. As people have already pointed out, this includes your real estate taxes. If this was a condo you’d be paying more to buy plus very possibly more in taxes (the RE taxes for a Co-op are calculated collectively and grandfathered in for the life the building, not re-assessed whenever a “share” (apartment) is sold the way it is for condos).

    I would bet that the fees pay for more than just taxes, heat, and water & sewer. You also get trash, janitorial, landscaping, etc. You can probably get a complete breakdown of the Co-op’s costs by asking to see their budget. If you find they are unreasonable then you shouldn’t buy, or adjust what your willingness-to-pay is. In my experience, nothing in life is free. People who complain about fees probably have no idea what things cost and will get a rude wake-up call when they start getting bills.

    FYI, I notice that Joker made some hit and run post claiming that he has extensive experience and these fees are outrageous. Based on his ignorant post I would doubt that he has any experience. He has said some factually-challenged stuff about Co-op’s before. A good clue that someone has no idea what they’re talking about is when they begin by saying that they know everything.

    Another thing about fees: they don’t always tell the whole story. For example, you can have low fees but get walloped with special assessments. Ask if the building has a history of assessments, or if any are planned. Also look into their cash reserves and history of repairs (ask for a reserve report, most buildings have this done every 3-5 years). If cash reserves are low and a reserve report indicates that big capital expenses (new roof, boiler, etc) are needed in the next 5 – 10 years, you’re probably looking at a special assessment to pay for it. Well run Co-op’s and HOA’s try keep a good cash reserves balance to pay for capital expenses.

    The fees for condos and co-op’s generally go to pay for things that any homeowner would have to pay for. For Co-op’s, because you are a corporation you have things like legal, accounting, etc, that condos or other homeowners don’t have, but you also generally get a lower sales price (I’ve heard 10-15%), lower real estate taxes, and more say in how the building is run (people who complain about Boards are usually the people who don’t offer to provide any time or energy to running of the building). If you aren’t happy with how things are being run, then join the Board. Or stop complaining.

    Bottom line: if you want to live in this neighborhood good luck trying to find something cheaper than this. Sounds like a good deal to me.

  • I looked at another 1-bedroom unit in this very building when I was house hunting, in addition to a number of other buildings in the immediate vicinity (I ended up settling on a place not far from here). I’ve been inside this building. I think this is a really good price.

    The $508 condo fee is a TOUCH high for those who have actually seen how this building and the grounds are maintained, but not totally outrageous because it includes taxes and heat. If the fee was over $550 that would raise a red flag for me. But on the other hand, there are literally no amenities … no doorman, no roofdeck, pool, etc, which all drive up traditional condo/co-op fee costs. But of course, there is no way to judge the financial health of the building without taking a look at its budget and finances.

    The price per square foot ($445) is actually very affordable — below market value. It’s extremely rare to find a 1-bedroom unit in Dupont for under $300,000.

    As for the co-op/condo debate, it really depends on the market conditions. Co-ops can be difficult to offload, but if you find the right buyer then it doesn’t matter in the end. The fact that there is no underlying mortgage definitely simplifies things, as a number of co-ops in the area have underlying mortgages. This is a unit that if priced accordingly will have no problem selling quickly, even being a co-op.

    And the unit looks like it’s in good condition. The floors are beautiful, the kitchen has been updated and all the fixtures look relatively new. I think the updates that were made in the renovation are in line with what buyers expect in the area … they don’t need top-of-the line appliances but they’d prefer granite over formica or Corian any day of the week and this unit delivers that balance most buyers are looking for. And the fire place is a nice touch.

  • It would appear the know-it-alls who previously posted how hard it was to sell a cooperative apartment and how ridiculous the fees were have some crow to eat. The unit is under contract after 3 days on the market.

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