Q & A with Barbara Corcoran

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Q1 - My wife of 31 years and I recently moved to our vacation home in the Poconos and also purchased a condo in Ft. Myers, Florida, where we will stay for 4 months a year and rent it out the other 8 months. We also want to buy a condo in New York City which we visit for 1 or 2 weeks each year. I'm retired and am by no means wealthy -- although after reading my comments I am very blessed and feel wealthy! Am I crazy to want to maintain three homes?

A - When you go to New York, treat yourselves to a hotel and really enjoy your retirement! You're crazy to want the headache and expense of being an absentee landlord of properties in two places, and you'll be busy enough just taking care of the Florida condo when you're not there. With homes like everything else, three is a crowd.

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Q2 - I am a first time buyer looking to buy a coop apartment and have good credit and a decent salary.  I only have 10% to put down but many places require 20% down.  Is there any way around that?

A - No, there isn't. Coops are a different animal than single-family homes, and they create their own rules that you have to follow as a buyer. These days it's almost impossible to get 90% financing anyway, so think about buying a smaller place.

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Q3 - We are a married couple in our 30's with a one year old son renting in Riverdale.  We want to buy a house outside New York City with a commute of less than 1 hour to Grand Central.  We have no debt, $125k in cash, and a mortgage commitment for $417k plus our credit is in the high 700's.  Where would you go and what would you do? 

A - Get a map of the Tri-State area and draw a circle around the center of Manhattan at a distance of about 30 or 40 miles. The towns inside the radius will be your options and they vary a lot by population size, housing cost, real estate taxes and quality of homes. If your husband has to commute through Grand Central Terminal then don't even consider New Jersey or Long Island suburbs. Get in the car this weekend and start driving around these towns to check out the houses and neighborhoods and have a cup of coffee in the middle of town. You can research the schools' SAT scores on-line and also see what kind of house you can get for how much. When you find a town you like, interview a couple of local brokers that specialize in the area to see exactly what your budget will buy you. It sounds like a lot of work, but you'll quickly realize that you don't have as many options as you think you do, and your leg-work will pay off when you're living in a great house where you were meant to be.

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Q4 - My husband and I are in our early sixties and own a town home in Dutchess County N.Y. We have a 30-year fixed rate mortgage at 6.25% with a principal of $332,000. We want to refinance to lower the interest rate and our monthly payments.  My husband feels that due to our age and the fact that we have already made payments for two years, we should refinance with a 20 year term. Should we refinance?

A - Stay put. Most people never live in their homes for the length of their mortgage term, so don't worry and be grateful for the good rate you have. To keep your monthly payment the same, you'd need a 20-year mortgage with a rate of about 4.2% which you're not going to find. What's important to know is that the shorter the term of the loan, the more principal you pay each month. You might save on interest over the long haul, but your monthly payment would likely go up even with a cheaper interest rate. 

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Q5 - Is there a cap on the flip tax a coop board can require on the sale of a coop?

A - A coop can impose any fees it wants and the so-called flip tax has become common in New York City coops as a way to shore up the building's reserve funds. The fees are structured as a percentage of the sale price or of the seller's profit, or in some cases a per share dollar amount or a fixed amount. But flip taxes can hurt the marketability of the apartments because if it's too high, buyers can avoid the building. So read the fine print and make sure it's not too onerous compared to other buildings.

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Q6 - My husband and I want to buy another home as an investment near us in Bergen County NJ, close to NYC.  We have $250K to put down and we'll take out a mortgage for the rest. Having 2 tenants may bring in more rental income but could be more headaches so I wonder if it's better to buy a single family home or a duplex, and also if a single family home is a easier to sell than a duplex?

A - There's not much difference between having one and two tenants if they're under the same roof, so the key is to choose what makes the most money-sense, choosing the one that gives you the best return. Make sure you know your market and buy in an area that's in demand by renters. If there aren't many two-family homes in that town, then don't buy one there or you'll have a tough time both renting and selling it. Once you've zeroed in on a property you like, go out and shop the places for rent in the neighborhood so you'll know what you'll be competing with once you're a property owner. You'll also know what improvements you'll have to make to attract the best tenants.

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Q7 - I recently became a real estate agent with the ultimate goal of becoming a broker.  Another agent asked me to join him and his business partner in their brokerage as a partner. I do not have to invest and would recruit new agents to build their firm.  The skeptic in me wonders if there's a catch or if this is a good opportunity.

A - They need you more than you need them. A new brokerage is really only as good as its sales agents, so you'll be playing the most important role. If you like the way they operate and trust them, and think you could sell other agents on joining them, then go for it. Get all of the terms in writing, review it with your attorney and make sure it's signed by all partners before you start. Business partnerships get sticky fast when they aren't in writing.

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