New-York tribune., 1920-06-13
By Arthur w. Warner
Real Estate Agent, Interborough
Rapid Transit Company


Rapid Transit COMPANY
The purchase of apartments in CO.
operasively owned buildings is becom.
ing SO common that it is desirable that
the essentials to be sought in buying
them should be better understood
!here are decided advantages in own
ing the apartment you occupy, not the
least of which is that you can afford to
furolsh, rearrange and improve it to
an extent not customary when living
in somebody else's house under the
usual short tenancy.
To begin with, it is not possible to
buy. strictly speaking, an apartment
within building. What is bought is
a portion of the shares of corpora
tion which owns the whole building,
the corporation giving to each share
purchaser written lease of an apart
ment.
There are two general plans of CO.
operative ownership, namely % where
number of the apartments are sold
and the rest rented, and (2) where
every apartment is sold. Both plan,
have their advantages. Where only a
part of the apartments are sold it is
intended that the remaining apart
ments, and usually the stores as we'll.
VIII yield a profit enough to paw ali
the expenses of the property and give
Tree rent, more or less, to the tenant
owners. Under this plan the inves,-
ment is necessarily substantially as the
price Of the property over and above
the mortgage, if any, must be contrib
uted by the few tenant buyers, usually
about one-third or less of the total
tenants Some speculation is involved
rs TO what the rented apartments will
BRING m the future, and the chance of
vacancies.
\ Under the plan of selling all the
apartments in a building, the two big
items OF loss in apartment house oper-
atlon, l. C., vacancies and wasteful dec
erahons, are completely eliminated.
these two items amount, in ordinary
times to as high as 25 per cent or more
OF the total rent each year, and this
sum is saved. When the apartments are
al sold the cost of the property per
fanant Is, of course, substantially less
than when only third are sold. 1t is
also possible for one tenant to pur-
chase several apartments and sublet
them at profit which will pay the rent
OF ms own apartment, in that way ac-
complishing the same result as is con-
templated by the former plan.
Regarding the Promoter
In purchasing Cooperative apart
ments, however. nothing compares in
Importance, so far as the ordinary pur-
chaser is concerned, with the reputa-
ton. reliability and responsibility of
the agents or other persons promoting
the sale, upon whose statements, facts
and figures, since they are not readily
to be checked, the tenants decision to
purchase must largely be based. The
prospective purchaser having satisfied
himself on this score, the next query
should be:
I'm how many years will the savings
In rent between what, if anything, will
70 the cooperative rent and the rent
the tenant would have been ordinarily
willing to pay for the apartment, re-
paw the cooperative investment"
How long this should take depends
upon such a variety of elements, diff
1erent with every building, that no
general rule can be laid down for it,
would be no annual. saving in rental
cost, but where the cooperative rental
paid would be applied in large part to
reduce the mortgage Indebtedness
against the property. in that way con-
atantly increasing the tenants equity
In the property, and finally, when the
mortgage is fully paid, result in
large cut in the cooperative rent. The
purchasers income tax is a large item
of consideration to many
Differences in Two Ownership Plans
Some of the more important of the
differences between the cooperative
plans in use are the following:
First-The purchase price of apart
pro-rated by the room or by the apart
ment, and making no difference be-
tween the price and cost of operation
of a large top floor front room and a
small first floor back room.
Second-Where the cooperative an
nuaT rent goes in part to reduce the
mortgage debt. if any; and cases where
the mortgage is fixed and by it's terms
stands for number of years without
reduction; the former plan may be
2ikened to an endowment insurance
policy and the latter to straight" life
insurance, without the savings feature
Third-Leases running with the
stock under what is called "proprie-
tary' lease whereby only proprietor
or cooperative owner, may occupy the
apartment. Leases separate from the
without the lease. Leases for one year.
with perpetual renewal privileges at
rentals to be adjusted each year to
equal the expenses. Leases fer ninety
nine years at nominal rentals, the ex-
penses being paid through assessments
on the stock. Leases at full market
rentals, with dividends on the stock to
refund whatever is left after expenses
are met.
Fourth-Stock sold for cash, or cash
and installments until paid.
Good Management Is Essential
The management of comparatively
r~ned apartment buildings deserves at
septive consideration. Some are man
..ged by committees of tenants through
= paid superintendent, others by real
er-2.s Se>os, and a few by the promot-
- s--ssa2a>sies, who undertake to con-
sinue 70 manage the property for
term OF years, usually until the mort
gage they hold has been paid. Except
with large properties, where a con-
siderable salary can be paid to obt1ir
the service of an experienced buildss.a
manager with a corps of assistants. p