Lenders Shun Co-Ops
As a resident homeowner and member of the board of directors of a co-op or (more properly a community apartment project) undergoing conversion to condominiums, I wish to respond to Lottie Cohen’s Feb. 25 letter “Let’s Hear It for Co-Ops.”
The most serious disadvantage of co-op as opposed to condominium form of ownership has to do with financing (or refinancing) sales of units. Commercial lenders are typically reluctant to fund co-ops.
When mortgages can be obtained, the buyer is looking at 30% down and 2% to 2.5% above the going interest rate. This results in many all-cash purchases and seller-financed transactions.
As a co-op is less attractive to lenders, it is less attractive to potential buyers, resulting in artificially lowered selling prices.
The major reason we are converting from co-op to condominium is to increase marketability and the value of our investment by facilitating financing.
TOM MARSHALL
Los Angeles
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The writer is president of Brentwood Sunset Management.
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Letters must include the writer’s name, address and daytime telephone number and should be sent to the Real Estate Editor, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012 or faxed to Real Estate Editor at (213) 237-4712 or E-mailed to Real.Estate@LATimes.com. Letters may be edited for reasons of space and clarity.
