With single-family house prices on the rise, more home buyers find co-ops and condos are worthy options

BYLINE: By Laura Koss-Feder. Laura Koss-Feder is a frequent contributor to Newsday. She may be reached via e-mail at kosfeder@optonline.net
SECTION: REAL ESTATE, Pg. C06
January 31, 2003 Friday ALL EDITIONS

Steven Klar of East Meadow have all seen increased demand for condos and co-ops. (Newsday Photo/Thomas A. Ferrara)

This is the first of two articles focusing on the co-operative and condominium market on Long Island and in Queens.

Gary and Elizabeth Yuen were determined to buy a home in an area that had good schools for their daughter, Emily, 4, who will be starting kindergarten next year.

The Yuens were living in a one-bedroom apartment in Elmhurst, renting for $895 a month. Gary Yuen, 45, a chemist with the U.S. Department of Agriculture, and Elizabeth, 39, a supervisor with a doctor's office, had spent three years looking at both single-family houses and condominiums.

Finally last March, they put a binder down on a town-house condominium in East Setauket. It was still in the preconstruction phase, but they didn't want to take a chance - the market was competitive.

To get the school district they wanted at a price they felt comfortable with, the Yuens ended up purchasing a $326,000 two-bedroom, 2 1/2-bath town house with den and fireplace at the 44-home Willow Wood development. They moved into their new home in November.

"It's always better to own your own home than to rent, and buying a condo offered us lower property taxes than a single-family house would have," said Gary Yuen, who works in Jamaica. "Also, there was no maintenance on the home, since you don't have to shovel snow or do gardening."

For the Yuens and thousands of other families on Long Island and in Queens, the high prices of single-family homes have made condominiums and co-operative housing an attractive alternative.

There were 2,276 condos and co-ops sold in both Nassau and Suffolk counties in 2002, compared to 1,185 in 2001 - a 92 percent increase, according to the Multiple Listing Service of Long Island. In Queens, 1,573 co-ops and condos were sold in 2002 - a stunning 137 percent rise from the 665 apartments sold a year earlier.

"The co-op and condo market will pretty much track the sales of single-family houses, which will all stay pretty consistent - especially with today's low interest rates," said Joseph Mottola, chief executive of the Long Island Board of Realtors Inc.

While many newly constructed condos and co-op developments can command healthy prices - from $300,000 to $400,000-plus - they are still often less than single-family houses in the same communities.

Prices for existing condos and co-ops, too, are substantially less than for existing single-family housing in the region.

In Nassau County, the median sales price for co-ops and condos last year was $195,000, compared to $350,000 for single-family houses, according to MLS figures. In Suffolk, median co-op/condo prices were $180,000 last year, compared to $282,750 for single-family houses. And in Queens, the median co-op/condo price was $117,500 last year, compared to $294,500 for single-family residences.

At the same time, price appreciation for co-ops and condos have closely tracked single-family homes. In Nassau, median co-op/condo prices last year increased 21.1 percent over 2001 (12.9 percent for single-family houses); 21.2 percent in Suffolk (21.8 percent for single-family houses); and 17.5 percent in Queens (20.2 percent for single- family houses).

Buyers and real estate experts also note that while "handyman special" houses can easily start in the $300,000s, condo complexes tend to be newer construction and require minimal, if any, renovations.

"Other than painting, there are no renovations that I need for my co-op," said Anthony Piro Jr., 38, an information services manager who moved from a one-bedroom rental in Midwood to a $100,000 co-op in West Babylon in December. "I looked at single-family houses priced from $200,000 to $290,000 that were real fixer-uppers. I would have preferred a small house, but the prices were too high."

Piro was in the market for six months before finding his co-op. Along the way, he discovered that some condo town-house complexes, with an array of amenities, could be as expensive as single-family houses.

"I just kept looking," Piro said. "I was determined to own something."

Co-ops and condos also are in great demand because of their limited supply, especially on Long Island. Zoning restrictions have made it difficult to build high-rise buildings in many areas, resulting in a dearth of supply, noted Robert Campbell, professor of real estate and finance at Hofstra University.

At the same time, there is increasing demand, he said, from empty-nesters who want to move into smaller homes and the "echo boom" generation in their 20s and early 30s - the children of the baby boomers.

"The empty-nesters don't want their houses anymore," Campbell said, "and the young folks without kids don't yet need the space of a house and don't have that much saved up yet to be able to afford one."

Earlier this month, The Beechwood Organization, a Jericho-based developer, found that it had a waiting list of 800 families for a condo development of 137 townhouses in Kings Park - and it hadn't even begun to market it, said Beechwood partner Michael Dubb.

"The market is as strong as ever for condos," Dubb said. Although sales prices for condos have gone up by 20 percent in the past year, that doesn't seem to have deterred demand, he added.

Real estate agents also say that while low interest rates have helped boost the entire housing sector, continuing worries about the stagnant economy have helped co-op and condo sales in particular.

"Some of those who have jobs may be working harder than ever - doing the work of several people because of those who were laid off - and they don't want the burden and extra work that goes along with maintaining a single-family house," said Frank DellAccio, president of Century 21 AA Realty in Lindenhurst.

In DellAccio's area, condo sales were up by 15 percent last year and co-ops sold about 10 percent more than 2001. One- and two-bedroom co-ops sold between $80,000 and $120,000, he said. Two-bedroom, two-bath condos had price tags between $240,000 and $320,000. Three-bedroom, two-bath condos started at $350,000.

Condo town-home communities, which feature amenities like pools and tennis courts, were in the $400,000 range and higher.

"Young couples like the social aspect of a planned condo community, and they'll forgo the big back yard of a single-family house that requires so much time and effort to maintain," said Hal Knopf, president of Hal Knopf Realty in Oceanside.

Sales are so strong now that one-bedroom co-ops which went for $30,000 just three years ago are now being grabbed up at nearly $150,000, noted Marie Costello, president of Marie Costello Real Estate in Glen Head.

"Instead of renting, people are figuring that if they have to pay $2,000 a month, they're better off buying a co-op," Costello said.

Wanting to get more for his money and the desire to have a tax write-off were important factors in Dennis Shawah's decision to buy a Belle Harbor co-op.

"We had no choice; we were just paying too much in taxes," said Shawah, 53, a senior court officer in Manhattan who got married last year and plans to move from a Bay Ridge rental into his new home next month.

The newlyweds bought the two-bedroom, two-bath oceanfront co-op after seeing the apartment at an open house. Shawah said the market was competitive and the two wound up paying $30,000 more than they had originally planned. The couple had seen three other apartments, but felt they were too overpriced, given their overall condition.

Sales in the Rockaways, where the Shawahs bought their co-op, doubled in 2002 from 2001, said Annie Graves, president of Annie Graves Realty in Belle Harbor. Oceanfront two-bedroom co-ops have been selling from the mid-$200,000s to nearly $300,000. These apartments have monthly maintenance fees of about $1,000, with an additional monthly parking charge of $100. But this is still less pricey than the single-family homes in the close-knit community, which have been selling for up to $1 million, Graves said.

"People from Manhattan and Brooklyn want to be in this area on the water, and a co-op is a more affordable way to make that move," Graves said. "They're grabbing whatever such units are available."

In other parts of Queens, less expensive co-ops have sold well and continue bringing in buyers, said Walter Messina, owner-broker of Glenjay Realty in Forest Hills.

Co-ops selling between $90,000 and $110,000 have been particularly popular, while those in the $400,000 to $800,000 range have seen somewhat of a slowdown in the past two months, Messina added. Buyers in Queens also were looking for renovated apartments, and parking spaces.

"You have to put 20 percent down and some people may not have that kind of money these days for the more expensive co-ops on the market," Messina said.

But whatever the price tag - moderate or steep - the co-op and condo market seems poised to remain strong for the near term, experts say.

Says Steven Klar, president of The Klar Organization in East Meadow, which developed Willow Wood in East Setauket, "There is no reason to believe that it won't stay this way."

Laura Koss-Feder is a frequent contributor to Newsday. She may be reached via e-mail at kosfeder@optonline.net

NEXT WEEK: Handling conflicts at your co-op or condo

Prices on the Rise

Here is a coparison of median sale prices of existing co-ops and condominiums versus single-family houses.

2001 2002 Percent Increas

Queens

Co-ops/condos $100,000 $117,500 17.5

Houses $245,000 $294,500 20.2

Nassau

Co-ops/condos $174,000 $195,000 12.1

Houses $310,000 $335,000 12.9

Suffolk

Co-ops/condos $148,500 $180,000 21.2

Houses $232,000 $282,750 21.8

 

Copyright 2003 Newsday, Inc. Reprinted with permission.

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COVER STORY: PAYING CASH

BYLINE: By Lew Sickelman and Joe Catalano; Lew Sickelman and Joe Catalano are freelance writers
SECTION: REAL ESTATE, Pg. C06
June 1, 2001 Friday ALL EDITIONS

LAST SEPTEMBER, Edward and Margaret Zingone sold their home of 43 years in Wantagh and bought a condo at The Waterways at Moriches, a community for those 55 and over.

Edward Zingone said he thought about investing the proceeds from his previous residence and financing the $189,000 condo, but he decided to pay cash instead.

"I didn't want a mortgage payment every month at the age of 87," he said.

While interest rates are low and most home buyers are stretching their incomes to qualify for a mortgage, a healthy minority are still paying cash for their new residences these days.

About 12 percent of the 5 million-plus buyers of existing homes in 1999 paid for their new digs in cash, including an impressive 7 percent of all first-timers, according to the National Association of Realtors, a Washington-based trade group. And a far greater percentage of new-home buyers-nearly one out of every four-did the same, according to the Census Bureau.

Who are these all-cash big-ticket buyers?

Experts say many of them are senior citizens, like the Zingones, as well as immigrants accustomed to cash transactions and wealthy second-home buyers who don't want to disclose their assets to lenders.

Although there are no hard statistics, observers believe the number of all-cash purchasers has been increasing, spurred, at least until recently, by the long economic expansion and the stock market boom. The extent of the all-cash trend has so intrigued economists that the Federal Reserve Board and the National Association of Realtors are now collaborating to come up with more accurate figures, according to Richard Mendenhall, president of the Realtors association.

The stock market's downturn has certainly changed some cash buyers' plans, said Marilyn Larsen, owner of Lane Realty in Jericho, which acts as the selling agent for several new-home communities on Long Island and in Queens. For example, many of the contracts at the Smithtown golf course community known as Stonebridge Estates started as cash, Larsen said, but purchasers have been closing with financing, due to the stock market collapse.

The staple of the all-cash housing market continues to be senior citizens who are using the proceeds from the sale of a previous residence to acquire their next-and perhaps last-one.

Some, like the Zingones, are remaining in the area. Others are using their home-sale proceeds to buy retirement units elsewhere.

Margaret Corbalini, for instance, sold her house in Stony Brook three years ago, using all the proceeds to buy a new place in Sun City Grande, an active adult community just outside Phoenix.

"It just seemed like the easiest thing to do," she recently said of her all-cash purchase. "I was so relieved when I paid off the mortgage on my old house on Long Island, I said, 'Let's not bother with another one.'"

According to the Realtors' association, the average age of all-cash home buyers is 57, vs. 38 for those who borrow money.

At the senior-citizens housing projects developed by the Klar Organization, "Seventy-five percent are buying all cash," said Steven A. Klar, president of the East Meadow firm that built The Waterways.

The final 150 condo units at The Waterways, which will be in three-story buildings with underground parking, go on sale in early summer, he said. "We already have a waiting list of people with cash in hand," he said.

At a second condo project, The Hunt Club in Coram, where only four of the 286 units are left, there are no age restrictions. Even here, though, 75 percent of the senior citizens who purchased paid cash, spurred by a $2,000 discount for doing so, Klar said.

Senior citizens are also buying existing homes in all-cash deals, real estate agents say. For example, Bethany D. Marten, owner of the Home Buyers' Resource Center Inc. in Baldwin and Riverhead, a buyer broker, said she is working with a couple purchasing a resale in Long Beach for cash.

One reason senior citizens pay in full is because they think they are too old to obtain financing, industry experts say. But under the federal Equal Credit Opportunity Act, it is illegal for a lender to turn down a buyer solely because of age.

Senior citizens don't have to be working, as long as they have the resources to cover monthly mortgage payments, said Ingrid Beckles, vice president of credit policy at PNC Mortgage, a national lender based in Vernon Hills, Ill.

"We look at the same factors for seniors as we do for everyone else: income stream, assets, credit and liabilities," Beckles said. "But if the assets generate the income, that's OK as long as it's enough to afford the payments."

Many senior citizens, in fact, don't pay cash for their retirement homes, especially in higher-priced developments.

At Harbor View in Port Washington, where the villa and estate units start at $600,000, buyers generally take out mortgages on the advice of their accountants, Larsen said. These purchasers usually are also buying another retirement home in a warmer climate, and even though they are selling a large primary residence whose proceeds would cover the two new homes, their accountants recommend financing because mortgage rates are so low, she said.

Still, some senior citizens may not want or need a typical mortgage, financial experts say. If homeowners are at least 62 and have enough equity in their old place, they can use a reverse mortgage to buy a new home, keep some cash for themselves and still eliminate their monthly mortgage payments.

A reverse mortgage is one in which the lender pays the borrower, either in one lump sum or monthly, based on the borrower's age, estimated longevity and the value of the property. No payments are required as long as the borrowers occupy the house; once they move out, the loan will be due and payable.

With a version of reverse mortgage known as "Home Keeper for Home Purchase," senior citizens can use the equity they have in one house to buy another. (They can get more information or find a reverse mortgage lender in their area by calling Fannie Mae's Consumer Resource Center at 800-732-6643).

While the economic gains of recent years have helped younger families buy homes, the high prices on Long Island and in Queens have prompted most buyers, particularly first-timers, to finance as much as they can, Marten said.

Developer Klar has noted a few instances where parents have paid cash to buy a first home for their children, but usually parental assistance comes as a gift of the down payment, he said.

Meanwhile, some of the new wave of immigrants in the New York area are paying cash because that's the way homes are bought in their native countries, said Tayseer Razik, owner of Re/Max Universal Real Estate in Bayside.

For example, Holly Park, an associate broker with Re/Max Universal sees about one out of every 50 of her Chinese buyers paying cash. The numbers would be higher, she said, if not for the relatively steep prices; homes in Bayside start at about $380,000. Many that take financing put down $150,000 or more, which would buy a house outright in some communities, Park said.

In addition, some pay cash for religious reasons, Razik said. For example, it is against the Muslim religion to pay or charge interest, said Razik, a Muslim himself.

One sizable group of cash buyers on Long Island, in particular, is the second-home buyer in the Hamptons, experts say.

"The more expensive the home, the more frequently they pay all cash," said Frank Newbold, vice president of Sotheby's International Realty with three East End offices including Bridgehampton. He estimated 50 percent of the firm's home sales are finance-free. Money comes from the sale of another property, investment profits or cash on hand.

These buyers pay cash sometimes to try to get a discount on the asking price, Newbold said.

Paying cash, they can close the deal immediately, which is "very appealing to a seller," he said. In homes with multiple bids, a cash offer "is a way of making yourself first in line."

Furthermore, many wealthy buyers pay cash because they don't want to disclose their finances to the seller or a lender. Some of the homes are bought in corporate names. Once the deal closes, the buyer may take out a mortgage later on, he said.

While an all-cash offer may give a buyer greater bargaining power, that's not always the case, unless you are dealing with an extremely motivated seller who wants out fast, real estate agents say.

If you are buying a new place, though, your builder may be willing to knock something off the price. The Del Webb Corp., a big Phoenix-based builder of active adult communities in several states, including the one where former Stony Brook resident Corbalini moved, offers a 6.4 percent break for buyers who pay in full a year before closing.

In order to get the full markdown, buyers would have to let Del Webb have use of their money for seven months before the company started building their homes, since Del Webb works on a five-month construction schedule.

About four out of every 10 of the company's customers pay for their homes in advance, according to Bob Hawks, manager of sales administration at the company's 6,000-home Sun City project in Huntley, Ill. Two more eventually close with cash.

Experts say paying cash up-front is generally not a big risk when the builder is of the size of Del Webb, which recently was acquired by Michigan-based Pulte Homes. With a smaller builder, they caution, buyers had better check out the company thoroughly before handing over their nest eggs.

"It's a good deal-unless he can't finish the house," Hawks said. "If he goes into bankruptcy, you're just another unsecured creditor."

Copyright 2001 Newsday, Inc. Reprinted with permission.

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An Architectural Drawing;
Lottery opens door to affordable homes

BYLINE: By Samuel Bruchey; STAFF WRITER
SECTION: NEWS, Pg. A06
April 8, 2001 Sunday NASSAU AND SUFFOLK EDITION

Just minutes before the lottery began Friday night, Frances Granahan squeezed into a packed Huntington Town Hall and joined hundreds of people hoping to trump an oppressive real estate market by getting their name called.

The Dix Hills mother stood in place of her son, Matthew, one of 700 people who applied to buy a home at the Highview at Huntington, a new development in Huntington Station with 100 units of affordable housing.

When his name was called just after 6 p.m., the 24-year-old police academy recruit was patrolling a street in Brooklyn and had no idea he was the first winner.

But like a thoroughbred, his mother bolted toward the podium to claim her son's prize.

"That's my son!" she shrieked. "He's about to get married. He's graduating from the academy in May. Now he's got a house of his own!"

Delirious with excitement, she forked over a $250 retainer check and set a date for Matthew to apply for a mortgage. Then she took an offering book describing the complex and rushed home to wait for her son.

If only buying a home in Huntington were always so effortless.

Low- and modest-income families have historically struggled to find housing in the area, in part because several recent housing proposals have been designed mostly for one-bedroom units instead of family-friendly two- and three-bedroom units.

Other low-income housing proposals, such as Matinecock Court in Northport, have met with stiff resistance from civic groups fearful that surrounding property values will suffer. Twenty years after it was first introduced, construction on the site has yet to begin.

"Huntington does not have the best record in the past with housing," said Jim Morgo, president of the Long Island Housing Partnership, which assisted with Friday's lottery. "This is a big step in the right direction."

Compared to most homes in Huntington, which average $400,000 on the open market (homes in Huntington Station average $200,000),the Highview is a considerable bargain.

Its two-bedroom range-style units, built by the Klar Organization of East Meadow, will be sold for $126,100. Its three-bedroom duplexes will be sold at $143,800. All of the units, which are gray and have dark green doors and window shutters, come with a single-car garage, and the owner's choice of rugs, bathroom and kitchen tile.

"You're not buying something that's 40 or 50 years old, someone else's mess," said Amanda Ewiss of Northport who sat with her 17-month-old daughter, Trudy, but did not win a home.

Fifty-one of the units come with a $25,000 subsidy from the New York State Affordable Housing Cooperation for first-time home owners, such as Matthew Granahan, who earn 80 percent of the county's median income.

"I never thought I would get so lucky so soon," Granahan said yesterday. Granahan, like all those named Friday, must still qualify for a mortgage.  Should he be approved, he will have a week to sign a contract, then move into his new home when construction is complete this summer.

"These are people who would never be able to buy a home," said Morgo, adding that over a period of six years, home owners accrue a net worth that is nine times greater than people of the same economic strata who rent.

But for every winner Friday there were six losers. Bernard Gilbert and his wife, Loreen, of Amityville, said they felt lucky going into the lottery. But as the hours wore on and their names weren't called, they slumped against a wall and finally put on their jackets to leave, no better off than when they came.

"Finding a home here is never easy," Bernard Gilbert said, "that's just the bottom line."

Copyright 2001 Newsday, Inc. Reprinted with permission.

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   LONG ISLAND'S home-building industry does more than provide new housing. It's one of the engines that drive the Island's economy, said Pearl Kamer, chief economist for the Long Island Association, a business trade group. While the industry's impact is less than it was in the '50s and '60s, when vacant land was plentiful and suburbia was growing rapidly, it is still significant, Kamer said.

 New-home building was a $ 1.5 billion industry last year, said Robert A. Wieboldt, executive vice president of the Long Island Builders Institute, the trade group that represents major builders. The industry employs about 11,000 people on the Island. When lawyers, lenders, title companies and others connected with purchasing a home are added in, the number swells to 90,000, he noted.

 In addition, new housing has "a tremendous ripple effect on the economy," Kamer said. Once a home is bought, owners buy furniture, appliances and other items while utilizing landscapers, pool cleaners and additional services. While she said she has never done a formal study on the economic impact of the ripple effect, she estimated the dollar amount to be significant.

 How significant can be seen when home building slows, as it did in the early 1990s, Kamer said. It affects many economic sectors, especially retailing, another vital sector of the Long Island economy, she added.

 But the industry also helps pull Long Island out of recessions, as was witnessed in the mid-'90s, said Rick Frey, president of the Long Island Builders Institute and vice president of Progressive Homes in Patchogue, which builds about 20 units a year. Once home building picked up, the overall economy improved, he said.

 Home building "is one of the most challenging professions," said David A. Scro, president of Scro & Scro in Melville, which builds 50 to 80 units a year. It requires numerous skills from accounting to marketing. It's like conducting an orchestra, added Donald Eversoll, president of Klein & Eversoll in Commack, founded in 1976 and averaging 80 to 90 houses a year. "There are so many components," Eversoll said.

 Long Island has 300 to 400 active home builders, 80 percent of which are smaller firms constructing fewer than 25 units a year, Wieboldt said. And unlike other areas of the country, there are no large builders who put up several hundred houses a year in large developments.

 There are two types of home builders: spot and subdivision, Eversoll said. The former builds on single lots scattered throughout an area. The latter requires many acres, where developments of anywhere from a few units to a 100 or 200 are built. Because of the costs involved, larger developers tend to do subdivisions while smaller builders do spot building. However, there is crossover.

 For the past few years, home building has been in high gear. In 1998, building permits issued totaled 942 in Nassau County and 4,454 in Suffolk County. Last year saw even more construction, though December's figures are still unavailable. From January to November, 1,097 permits were issued in Nassau and 4,727 in Suffolk.

 One thing the current building boom has seen less of than in the hot market of the mid-1980s are "nonbuilder builders," Wieboldt said. These are people from other professions who, in good times, buy land, secure financing and put up mostly speculative housing-homes built before having a buyer. These "developers" are bad for the industry because they don't have a long-term commitment to it, Scro said. Once the local market weakens, they flee.

 There's less of this currently on Long Island, partly because lenders aren't making money as readily available to them as in the 1980s, Scro said. Many lenders had to foreclose on speculative developments and ended up with unfinished projects from these builders after the market soured in 1990. There are also fewer of these developers today because of a shortage of tradespeople such as plumbers and carpenters.

 "Try to hire help," Eversoll said. "Employment is stretched to the limit." This has affected all builders, often causing delays in completing houses.

 While larger builders often employ in-house architects and marketers, they rarely have on-staff construction crews due to the industry's cyclical nature, Frey said. Most of this work is subcontracted out.

 Another result of the present building boom is increased material costs. Wallboard, for example, has doubled in price during the past year, Frey said. The high cost of today's housing is not because builders have a 100 percent markup, he said. Profits are typically 10 percent to 15 percent of the selling price.

 By far the biggest problem facing today's developers is finding buildable land.  "We're an island, and land is a limited commodity that becomes scarcer each year," Wieboldt said. The lack of buildable land explains the smaller number of new building permits in Nassau County, where almost no "new" land is available to build on.

 Not only are builders competing among themselves, but they're also vying with the government, which is buying land for preservation, he said. Scro recalled how last year he was outbid on one parcel by Suffolk County. The land, which he wouldn't identify, was fronted on three sides by roads and had all infrastructure and utilities in place. "This raises the value for land," he said.

 During the past year, land prices have increased about 25 percent, Frey said. This makes much-needed affordable housing projects harder to pull off.

 Progressive Homes of Patchogue does both spot building and subdivisions, Frey added. The firm, however, is doing more of the former because of the difficulty in finding land. But doing four houses in four different municipalities means working with four different government bodies, which can be time-consuming. When larger parcels are found for a subdivision, it can take two to three years to get the necessary government approvals, he said. By then, the housing market could have changed.

 Most developers, like Eversoll, expect the strong housing market to continue through 2000. But for the industry to thrive in future years, "we have to look at the way we use land," Scro said.

 "We can't continue to build one house on a 1-acre parcel because it's eating all the land," Frey said. One solution is to take unused excess industrial property and turn it into housing with more units per acre. If higher density were allowed on sites like that, other land could be left open for preservation elsewhere, he said.

 "We have to look at current zoning and see how we can modify it and still maintain the suburban ambience everyone wants," Kamer said. Existing downtowns could be renovated to include affordable housing suitable for seniors and singles, she said.

 Another solution is mixed-use developments that combine commercial sites with housing for seniors, first-time buyers and trade-up purchasers, Eversoll said.  His firm will soon be starting such a project called Timber Ridge At Mount Sinai.

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 Five People to Watch

 RAFAEL VASQUEZ, 54, is president of JJR Associates Inc. in Setauket, which he started 17 years ago. Vasquez, who was born in Colombia, South America, became interested in building affordable housing because he could recognize the difficulty minorities have in purchasing new homes. His first affordable units were for the Long Island Housing Partnership during the recesiion of the late 1980s. This kept his firm working when many homebuilders were idle. Today, JJR has diversified into housing at all prices,

 including homes costing $ 1 million and up. It closed on 12 units in 1999. Four years ago, JRR opened an office in Wilmington, N.C. Vasquez hopes to expand there and throughout Long Island's East End.

 RICHARD GHERARDI, 44, president of J&R Development Corp. in East Hampton, believes modular or manufactured housing is the future for Long Island developers. His 10-year-old firm built its first modular home seven years ago.  That was followed by five homes for East Hampton Town's affordable housing program. Today, along with wood-framed structures, Gherardi is building modular houses as big as 3,000 square feet selling for up to $ 300,000 plus land costs throughout the Hamptons. Modulars are built better

 today and are ideal for the current tight labor market, he said. Fewer craftsmen are needed to complete them. J&R Development delivered 20 units in 1999.

 STEVEN A. KLAR, 52, is president of the Klar Organization, the East Meadow firm started by his father 50 years ago. Klar joined the company in 1970, taking over the reins in 1975. The firm does everything in-house, from designing to marketing the homes it builds, which range from affordable to luxury. Future plans include senior housing in Coram and several lifestyle condominium communities. Klar is one of Long Island's largest builders. When asked how many homes his firm has built, Klar would only quote

 the company's slogan: "Over 50,000 satisfied homebuyers." That slogan, however, was coined 10 years ago and won't be changed, Klar said, until the firm hits 100,000.

 CLIFF FETNER, 39, is president of Jaco Custom Builders in Hauppauge, which closed on nine units last year. He's the third generation of builders in his family, his father having built developments throughout Staten Island. Fetner left the family business 10 years ago and started Jaco in 1994. His goal is to grow slowly, doing 15 units this year. He remembers the last market downturn and how builders were left holding high-priced inventory and land. As treasurer of the Long Island Builders Institute, he

 wants fellow builders to explore how existing developed land can be successfully redeveloped like it is being done in New York City.

 SUSAN BARBASH, 45, has been president of Barbash Associates Inc. in Babylon since 1985. She never intended to join the family business started by her father 30 years ago. But in 1977, a year after graduating from Radcliffe, she became one of only a handful of female builders on Long Island. Barbash is now completing the sold-out, 248-unit project called The Villages At Huntington. She is exploring with local civic associations what type of housing to build next on the adjoining 65-acre plot her firm also owns. Between late 1998 and the end of 1999, Barbash closed on 120 units. The firm also manages two garden apartment complexes.

 

Copyright 2000 Newsday, Inc. Reprinted with permission.

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BUYER AND CELLARS/
BUILDER CLEANING
HOMES OF FURNITURE

BYLINE: By Randi Feigenbaum. STAFF WRITER
SECTION: REAL ESTATE; Page C03
February 12, 1999, Friday, ALL EDITIONS

NEED SOME furniture? Builder Steven Klar may have what you're looking for.

For the first time, Klar is selling the furniture - everything from beds to tables to sofas - that has graced his company's model homes. During an event this weekend, The Klar Organization, one of the top builders on Long Island, will play retailer.

Klar said that the boom in new-home sales in 1998 led the model homes on several of his projects to sell out faster than he expected. As a result, he found himself with 26 furnished model homes at the start of 1998, but only 14 at the end of the year. After putting aside furniture for future models, Klar decided to sell the rest at discount.

He purchased a building on the east side of Route 110, where Jennifer Convertibles is now, in part to store the extra items. But he will use 10,000 square feet of that space for a furniture sale, hoping to sell out completely so he can then rent to an additional tenant.

Klar was quick to point out that it would be a "furniture row" of sorts on the stretch of Route 110 in Farmingdale.

"It's just like Seamans, but cheaper," he said. "There's something for everybody."

How much cheaper? Klar said an Ethan Allen $ 3,500 set of sofa and two chairs will sell for $ 1,500. He pointed out that the model homes were never lived in, so the furniture was similar to floor samples in a furniture store.

The sale will start today from 10 a.m. to 9 p.m. and continue tomorrow, Sunday and Monday from 10 a.m. to 6 p.m.

Klar noted that he has made arrangements with a moving company to be available for customer deliveries. -- -- --

The technological boom continues for Fannie Mae, with the introduction of a product that includes the secondary mortgage provider's desktop underwriting program, hardware components and loan origination software. Called the Technology Pak, the bundle combines Fannie Mae's existing software with that offered by Calyx Software, a technology company that specializes in the financial services industry.

Targeted to smaller lenders, who might not have the hardware to support Fannie Mae's already-developed computer software, the Technology Pak offers a less complex package than what larger mortgage bankers might require.

"Not every town in America is served by a really big bank," said David Brashear, Fannie Mae's vice president of technology marketing. "This is a great way to extend some of the benefits to small lenders."

Brashear said he hoped the Pak would also extend Fannie Mae's reach to lenders it has not worked with before.

"The banking environment is dominated by small lenders," he added. "This meets a certain niche in the marketplace." -- -- --

Temporary repairs and adjustments have shut down - temporarily - the local Multiple Listing Service's Web site (www.mlsli.com), automatically sending buyers to Microsoft's HomeAdvisor home page.

The local site has always been the source of all the service's listings, while also connecting to individual real estate agents home pages. Until it returns to full operations, home buyers will have to search through a national site for Long Island listings.

A Multiple Listing Service spokeswoman said the company's decision to join HomeAdvisor late last year provided an opportunity for technical adjustments and a temporary closure of the local site. HomeAdvisor, she said, includes all the listings www.mlsli.com would. "No time's ever a great time to do it," she said. "But we knew at least we had all the information up on the Microsoft site."

The spokeswoman said she expected the site to return to operation this week.

The competition has used the temporary shut-down as an opportunity to jump into the fray. New York Homes Net (www.nyhomesnet.com) and its Multiple Listing Site of New York (www.mlsny.com) sent a mass electronic mail to Long Island real estate agents asking them to consider joining their service.

The mlsny.com site only has a few hundred listings in Nassau, Suffolk and Queens Counties. Long Island's Multiple Listing Service, however, includes several thousand.

Copyright 1999 Newsday, Inc. Reprinted with permission.

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A CLOSER LOOK / LAST BARGAIN-COUNTER HOMES ARE SELLING FAST

BYLINE: By Joe Catalano. Joe Catalano is a freelance writer.
SECTION: REAL ESTATE; Page C07
January 30, 1998, Friday, ALL EDITIONS

WHEN SALES BEGAN last week on the remaining 274 units of a Moriches complex for seniors 55 and over, it marked the end of an era, according to the project's developer.

 The villas and coach homes along with the units in a trio of three-story mid-rise buildings that will be constructed are all part of the last large workout that remains on Long Island.

 Workouts are the real estate term used when financially sound developers take over a project started by another builder that has gone into foreclosure or bankruptcy. When the real estate downturn hit Long Island at the end of the '80's, dozens of new projects were never completed or barely started as sales of new homes ground to a halt everywhere. Lenders who foreclosed on the properties, hoping to salvage some of their investment, began selling the projects to established builders. These builders took what was already there, often updating the models, and selling the few newly constructed unsold units for less than what owners living in the project had paid before sales ground to a halt. Although their property values dropped, owners finally saw their partially completed communities finished.

 Units in workouts can be sold for less because the developer obtains the land at a bargain price. In addition, costly infrastructure items, such as roads and sewer connections, are often in place.

 Since the decade began, Steven Klar, president of the Klar Organization in East Meadow, has done 20 workouts throughout Long Island. He said this homeowners association for active seniors in Moriches, where sales began last Friday, is the last large workout have missed a stray small subdivision or two with just a handful of units.

 Now that new home sales are doing well, and this being the last large workout, "the tough times are behind us," Klar said. He warned that units in his next project will cost buyers more because of current land costs and building a project from the ground up at full price.

 Klar purchased the 30.5-acre unbuilt portion of the 100-acre purchased it two years earlier from the Federal Deposit Insurance Corporation after the original developer, Bregman Construction Corp., CORRECTION: Bregman Construction Corp., a 44-year-old company that has developed and managed projects valued at more than $100 million, has not filed for bankruptcy and is still operating. A story in Friday's Real Estate section incorrectly said Bregman filed for bankruptcy in 1992 in connection with a housing complex originally called Waterways At Bay Pointe. The entity that filed for bankruptcy in January, 1993, was Bay Pointe Associates. Pg. A02 ALL 1/31/98 went bankrupt in 1992. Bregman had built, completed and sold 228 units.

 The project has been renamed by Klar The Waterways At Moriches. It ponds on the property and Klar has added two more.

 "Bregman spent an awful lot of money" on the project, Klar said. Already in place were the roadways, a manned gatehouse, a clubhouse, a swimming pool, a marina with 22 boatslips and two tennis courts. Klar is adding two more tennis courts. The development also has its own sewage treatment plant. prices range from $157,000 to $235,000.

 Of the first 124 homes to be built, 60 will be coach homes. These consist of four two-bedroom units per building with the two downstairs units priced at $157,000 and the two upstairs at $175,000.

 There are also 64 villas in buildings of two each. The side-by-side, single-level two-bedroom units are priced from $195,000 to $235,000.

 The project's second phase will be a trio of three-story buildings with elevators, each having 50 units. Prices for those have not been set.

 Those currently living in the community are paying $310 a month for maintenance. That is expected to drop to $275 a month as the cost of operating the recreational facilities and complex is shared by the new households, Klar said.

 Gas heat is also being brought in and will be less expensive than the electric heat now available. Current residents will have the option of converting, Klar said.

 The exteriors of the new buildings are being covered with wood-simulated vinyl, whereas existing units have real wood siding, more costly to maintain, Klar said.

 For information about The Waterways call 516-874-2222.

Copyright 1998 Newsday, Inc. Reprinted with permission.

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Developers, taking notice of the graying of Long Island, are building housing for seniors that emphasizes security and active lifestyle.

BYLINE: By Joe Catalano. Joe Catalano is a free-lance writer.
SECTION: REAL ESTATE; SENIOR CLASS; Pg. 35
August 31, 1991, Saturday, NASSAU AND SUFFOLK EDITION 

SOME DAYS, IT TAKES Janice Rubenstein a half hour to walk to the mailbox down the street from her home because people keep stopping her to talk.

And Jerry Cappellani has more than enough friends to play golf and go out to dinner with.

But it wasn't like this for Rubenstein and Cappellani until both moved to Windmill Gate, a new-home development for seniors in Oakdale.

Both had raised families in their former homes; Cappellani had lived in Mineola for 30 years, Rubenstein in Wantagh for 20 years. Both had suffered the loss of a spouse. Their old neighborhoods changed, as a new generation of younger couples with toddlers began moving in, replacing their friends. Cappellani and Rubenstein found little in common with these residents and became increasingly bored with their lives.

Now Cappellani, his new wife Rose, and Rubenstein are anything but bored at Windmill Gate. Besides afternoons spent at the complex's pool, they can enjoy weekly movies, daily aerobic classes, Friday night socials and special events like Halloween and Labor Day parties.  "It's a warm, loving community," Rubenstein said.

Windmill Gate is one of a growing number of condominium developments and homeowner associations on Long Island targeted at seniors. At these complexes, one occupant of each unit must meet a minimum age requirement, which ranges from 55 to 62, depending on the complex. It's 55 at Windmill Gate, which has been open for 2 1/2 years and has sold 80 of its 110 ranch homes for $ 174,990 to $ 210,000.

In the past three months, at least three new senior developments have opened sales offices - two in Suffolk County and one in Nassau. They have joined about a dozen existing developments, mostly in Suffolk.

These developments are designed to attract Long Island's large, and growing, senior population. There are an estimated 260,000 Nassau residents and 200,000 Suffolk residents age 60 and older. The Suffolk County Planning Department estimates that 12.6 percent of the county's population will be 65 or older in the year 2000, and 14.5 percent will be in that age group in 2010.

There's a strong, increasing demand and need for housing designed for seniors, said Joseph A. Clemente, commissioner of the Suffolk County Department for the Aging.

Despite this, 1990 sales were sluggish because seniors, like other Long Island homeowners, were having a hard time selling existing residences so they could move. One project, Leisure Glen in Middle Island, filed for bankruptcy early this year (sales have since resumed). Another, The Waterways at Bay Pointe in Moriches, suspended sales after auctioning homes in July.

But in the past six months, as the general home market has picked up, so have sales at the senior developments, experts say.

Here are some of the reasons buyers are attracted to these developments:

Most offer numerous amenities and activities, such as a clubhouse, pool, shuffleboard, tennis courts - even a jitney bus to take residents shopping. (However, a few projects limit or eliminate amenities to keep down property taxes and monthly common charges for buyers who are budget-minded or prefer to socialize away from home.)

Security is emphasized. Communities are usually fenced in and have a guard at the entrance. And since many residents are retired and are home during the day, there is a sense that homes are being watched.

There's an opportunity to make new friends and, perhaps, develop even closer relationships. Many buyers are widows and widowers, and some who are not later become so. Because women generally live longer than men, it's not uncommon to have three or more unattached women for every unattached man in a community. Single males can find themselves very much in demand, said Steven A. Klar, president of the Klar Organization in East Meadow, developer of Windmill Gate.

Residents don't have to worry about exterior maintenance.

Seniors can remain on Long Island near their friends, children and grandchildren. Lee Koppelman, executive director of the Long Island Regional Planning Board, said some people have left for Florida, only to return and buy a unit at a senior development because they missed their family and friends.

Elderly homeowners who no longer need a large house can trade down to something smaller and less costly. And the tax liability on the profit derived from the trade-down may be reduced or eliminated if the homeowner uses the one-time, $ 125,000 exclusion for sellers 55 and over. With the cash windfall from the trade-down, pension income and Social Security payments, buyers at seniors developments can live comfortably - or even luxuriously. The majority of buyers pay cash, using proceeds from the sale of their present home.

Julia and Louis Rubino of Middle Village, who retired earlier this year, are looking for a development with a lot of amenities.  "We're still healthy enough and young enough to do things," Julia Rubino said. They hope to find something near their daughter, who lives in Hicksville.

Most buyers, however, end up in Suffolk, where the first senior development, Leisure Village, was built in eastern Brookhaven more than 20 years ago. Koppelman said Suffolk attracts developers because larger parcels of land are available at cheaper prices than in heavily developed Nassau. And many seniors favor Suffolk because their children have moved there, Koppelman said.

Koppelman said communities see advantages in senior developments over other types of housing: less demand for services, with fewer children to swell the school population.

While the market has shown signs of life, buyers are more cautious than they were in the mid-1980s. Joseph M. Simeone, one of the developers of Country Village in Coram, said prospective buyers there are making several return trips with their children, seeking their approval before committing to purchase. In fact, one of the buyers who brought the kids in for an inspection was Simeone's mother.

Simeone is a veteran of senior developments, having built the 220-unit Sunrise Village in Sayville between 1984 and 1986. He and Lawrence T. Gresser Jr. are building Country Village in partnership with Greater New York Savings Bank.

Since sales began at Country Village in mid-June, 14 homes have been sold and six binders taken, Simeone said. Sunrise Village sold 40 homes in the same amount of time, he said.

THE 196 ATTACHED ranch houses with garages at Country Village are priced from $ 149,990 to $ 169,990, with monthly common charges of $ 178. Basements cost an additional $ 10,000 to $ 12,000, but are being given free to the first 26 purchasers. One of the purchasers must be at least 55.

While Country Village will have tennis courts, shuffleboard, a 5,000-square-foot clubhouse and a wide range of other activities, The Hedges, 20 attached townhouses and ranches in Bohemia, will have no amenities. The Hedges is aimed at buyers 55 and over who want to live with people in their age group but have an active social life away from home, said Andriene Manzo, sales director. Prices are $ 129,900 to $ 142,900 with common charges of $ 142.

Manzo said buyers at The Hedges are mainly from Bohemia and nearby communities. In contrast, many other seniors developments attract buyers from New York City and distant points on Long Island.

At a new development in Westbury, The Courtyards, many buyers are coming from Queens, said Micki Grant, sales director. The Courtyards is being built by another senior-development veteran, The Holiday Organization of Westbury, which constructed Cambridge Square, a 200-unit project in Copiague.

The Courtyards will have 80 units in twoand three-story buildings. Prices for the oneand two-bedroom units, which will have medical alert systems, are $ 125,000 to $ 165,000, with maintenance of $ 140 to $ 192 a month. At least one buyer must be 62 or older. The Courtyards will have a heated pool and clubhouse.

Occupancy is expected to begin next June, giving buyers ample time to sell their present homes, Grant said.

Most developers, in fact, are giving buyers long lead times between contract signing and closing because of the difficulty some people have had selling their homes. That gridlock, which has shown signs of dissipating, contributed to problems at two seniors developments that began sales before last year.

At Leisure Glen in Middle Island, sales have resumed after being suspended earlier this year when the project filed for bankruptcy. The filing has helped the developer pay creditors and has had no effect on homeowners, said Raul Fernandez, president of the New York division of Leisure Technology, which is building the 650-unit complex. Monthly common charges from residents of the 383 units sold are sufficient to operate existing amenities such as the pool and clubhouse, he said.

Sales were also halted at The Waterways at Bay Pointe in Moriches, which has closed on 176 units since opening in 1987. The suspension followed a July auction at which 32 completed residences were sold for $ 108,000 to $ 250,000, said Paul Bregman of Bay Pointe Associates, the Plainview-based developer. The auctioned units had been priced from $ 175,000 to $ 325,000.

With all completed units sold, Bregman is considering redesigning some models before reopening sales and beginning construction on the 250 remaining units. One possible change: smaller units. Bregman said recent buyers have preferred units with 1,300 to 1,400 square feet, compared with the 1,800-square-feet-and-up dwellings that accounted for a lot of earlier sales.

The next area ripe for expansion in senior housing is congregate-care facilities, which are becoming increasingly popular nationwide. They are for relatively active seniors, who have their own apartments or rooms but are provided some of their meals. The North Shore complex, built by the Kapson group in South Setauket is one such place. Their 99-unit studio apartment building opened early last year.

Another congregate-care facility may be on the way. Klar is seeking approval to build 218 units of congregate housing in a four-story building on 10 acres in Yaphank.

Though the amount of senior housing is growing it still falls short of the mark.

"There's a need for more of all types of housing for our seniors," Koppelman said. "The market is far from saturated."

Copyright 1991 Newsday, Inc. Reprinted with permission.

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Buyers Want Financial Aid,
Not Flashy Gimmicks.

BYLINE: By Joe Catalano. Joe Catalano is a free-lance writer.
SECTION: REAL ESTATE; THE BOTTOM LINE; Pg. 38
December 22, 1990, Saturday, ALL EDITIONS

PURCHASE a condominium at The Lakebridge Club in Smithtown and you get a 30-year, fixed-rate mortgage with an interest rate of 7.5 percent, no points and no closing costs.

Buy an apartment at the Dunolly Gardens co-op complex in Jackson Heights, Queens, and the developer will throw in a government-backed bond that in 30 years will be worth the unit's purchase price.

Move into a condo at Birchwood at Spring Lake in Middle Island, and if selling prices drop during the next two years, the builder will refund the difference.

Faced with a slow market, developers are beginning to offer incentives that address the issues that have made consumers hesitant to purchase. Forget the mink coats and cars that were commonly used as lures a few months ago. "People are not interested in gimmicks anymore, but want bottom-line deals," said Errol A. Brett, a partner in the Manhattan law firm Schwarzfeld, Ganfer & Shore, which handles many real estate closings.

Most buyers want to be wooed with deals that make purchasing more affordable or that allay their fears that units bought today will be worth less tomorrow. Consequently, developers are marking down units, offering below-market financing or guaranteeing that if selling prices drop, the difference will be refunded or, in some cases, the apartment can be sold back to the developer for the original purchase price.

There are about 30 percent fewer serious home buyers than three years ago, and the dropouts are primarily trade-up buyers, said William P. Lovett, president of Blare Realty in Great Neck, which markets condo and co-ops. Potential trade-up buyers are scared to act because they're worried about declining home prices, the economy, their jobs, and whether they can sell their current homes, he said.

"To sell [a home], builders have to come up with creative incentives," said Michael Giglio, president of Shirley-based Structural Technology Inc., which builds homes in the $ 80,000-to-$ 130,000 range throughout Suffolk. Giglio said his sales are holding up because his product is aimed at first-time buyers, the most active area of the market. But at nearby projects, he said, builders have lowered prices, then offered reduced-rate financing or other incentives.

One of the most aggressive, incentive-oriented developers is Steven A. Klar, president of the Klar Organization in East Meadow. In an arrangement with his lender, European American Bank, Klar is offering 30-year, fixed-rate mortgages with no closing costs or points at an interest rate of 7.5 percent. The financing is available at four projects, including the Fisherman's Wharf co-ops in Babylon and The Lakebridge Club in Smithtown. A 20-percent down payment is required.

A purchaser of a $ 210,000 unit would make a monthly principal-and-interest payment of $ 1,174.69, compared with $ 1,474.33 on a 10-percent mortgage - a savings of almost $ 300 a month.

At Lakebridge, taken over by Klar from a developer who couldn't make loan payments, prices had ranged from $ 210,000 to $ 290,000. Now they're $ 179,990 to $ 219,990. Nearly 70 percent of the 108 units in the first phase of the development have been sold, Klar said.

Klar is also offering 7.5-percent financing at Windmill Gate, single-family units that are part of a homeowners association in Oakdale, where one household member must be 55 or older. Prices were also reduced $ 25,000 to $ 154,990. A similar price reduction and financing package is being offered at The Hunt Club in Coram, where condos start at $ 159,990, he said.

When deciding which incentive to use for a project, a builder looks at the targeted buyer, then offers something that helps a person purchase, Klar said. Price reductions and below-market financing in his projects are the result of his willingness to take less profit on the homes, and the lender's commitment to get the units sold, Klar said.

A builder has to give a buyer a reason to shop in this market, said Joe McQuillan, a broker with Century 21 AA Realty of Seaford. As exclusive sales agent for Country Court Estates, 28 single-family homes under construction in Plainedge, McQuillan said he persuaded the builder to work with the lender backing the project to offer 30-year, fixed-rate financing at 9 percent with no points. Although prices for the homes still start at $ 249,000, they are now negotiable, he said.

The combination of below-market financing and the ability to negotiate a lower price gives people more purchasing power. Buyers who had been thinking they were limited to resale homes discover they can afford a new one, McQuillan said.

But even when they can afford a home, some people are afraid it will depreciate in value after they buy, said Hal Knopf, owner of Hal Knopf Realty in Oceanside. To address this concern, Lion Estates, 30 single-family homes in Rockville Centre, is offering buyers a zero-coupon, AAA-rated bond that will be worth $ 100,000 in 18 years, said Knopf, the exclusive sales agent.

The builder is paying $ 20,000 for the bond, which doesn't pay interest but gradually increases in value as the maturity date nears. Homeowners must pay taxes each year on the increase in the bond's value. At the end of 18 years, the homeowner receives $ 100,000. Jeff Chinman, who is developing Lion Estates with his father, said the bond can be sold before maturity for a smaller amount.

Chinman said young families who buy his homes, which are priced from $ 389,750, can use the bond for their children's education.

Zero-coupon bonds are also given to purchasers at Dunolly Gardens, a 360-unit co-op complex in Queens. The government-backed bonds will be worth the unit's purchase price in 30 years, said sales manager Joanna Walsh. One-bedroom units that were priced at $ 94,000 last year are now $ 69,900, while two-bedroom units with dens have been marked down from $ 151,000 to $ 114,900. According to William Lovett of Blare Realty, the firm marketing the project, only state and city taxes have to be paid on the bond's increase in value.

Lovett is also offering the promotion at Briarwood Gardens, a co-op complex in Queens where apartment prices, including one-bedrooms that start at $ 59,900, have been reduced 20 percent in the last year.

"We perceived the fear people had that prices might go down," said Ron Horowitz, a principal of Birchwood Park in Mineola, which is marketing Birchwood at Spring Lake in Middle Island. The firm felt its prices, which start at $ 120,000 for one-bedroom units, were on target for the area. So it introduced a buyer protection plan: If the developer lowers selling prices at any time during the two years after closing, the difference will be refunded. Backing the guarantee is an escrow account posted with an attorney, Horowitz said.

Sensing a similar fear among buyers, KiSKA Construction Corp. of Manhattan took Birchwood's price guarantee one step further with its condominium tower, The Huntington, at 301 E. 94th St. in Manhattan. KiSKA will buy back any unit at the full purchase price, for any reason, up to two years after closing, said Eric Anderson, project manager.

"If you don't like the way the concierge greets you at the door, sell the unit back to us," Anderson said. Apartments range from studios starting at $ 119,200 to three-bedroom units priced from $ 518,600. A dozen sales have been made to buyers attracted by this program, Anderson said.

For people who don't have the down payment to buy at The Huntington, or are unsure if they want to purchase, KiSKA offers a rent-with-option-to-buy incentive. A one-bedroom apartment, for example, can be rented for $ 1,310 a month on a two-year lease. If the renter decides to buy when the lease expires, 15 months of rent is applied toward the down payment. On a one-bedroom unit, priced at $ 192,600, that equals $ 19,650, enough for a 10-percent down payment, Anderson said.

Buyers should realize that some incentives will affect their income taxes. As previously mentioned, the increase in value of a zero-coupon bond is taxable.

If a buyer receives a premium such as a mink coat or car, "neither of these would be counted as income," said Alan E. Winer, a partner in the Melville accounting firm Holtz Rubenstein & Co. But when the home is sold, the fair market value of the coat or car must be included when figuring the amount of profit to be taxed, Winer said. If the home originally cost $ 200,000 and the coat was worth $ 20,000, the purchase price of the home for tax purposes was $ 180,000. The $ 180,000 figure would be subtracted from the eventual selling price to determine the taxable gain.

 Make Sure the Bargain Is a Bargain

 ALTHOUGH INCENTIVES galore are available from home builders now, many "are more form than substance," a Manhattan attorney warned.

Since a developer has only so much profit margin to work with, some are simply packaging former discounts in a new form, leaving the buyer no better off financially, said Errol A. Brett, a partner in the Manhattan firm Schwarzfeld, Ganfer & Shore.

Experts offered these tips for making sure the deal is a bargain:

Compare a home's present selling price with past ones for identical units at the development. To verify figures, look at past advertisements or, in the case of condos and co-ops, look at the selling prices in the offering plan.

If short-term reduced-rate financing, commonly called a buydown, is being offered, compare the terms and closing costs the developer is offering with loans being made by area lenders. Although the initial interest rate on the builder's loan is low, after a few years it may be higher than fixed-rate mortgages offered by other lenders. In such cases, the one advantage of a lower starting rate is that buyers can qualify with less income.

In rent-with-option-to-buy programs, look at how much of the rent is going toward the down payment. Also, compare the rent with those of similar units in the area. If the rent on the home you want is higher, you may not be saving as much as it appears.

Check the reputation of the developer. An incentive promised on a home not yet built is of little value if the builder won't be around to finish it. And after the unit is completed, you want to be certain the builder will be there to address problems.

Get all incentives and promises in writing.

Copyright 1990 Newsday, Inc. Reprinted with permission.

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Some lenders would rather work out a troubled project's woes than foreclose.

BYLINE: By Joe Catalano. Joe Catalano is a free-lance writer
SECTION: REAL ESTATE; RESCUE MISSION; Pg. 3
August 11, 1990, Saturday, ALL EDITIONS

WHEN DOLORES and Philip Podd open a window in their condominium weekday mornings, they hear a delightful sound:

Construction noise.

The hammering and sawing is welcome because for nearly four years, the Podds and owners of 35 other condos have lived with unfinished roadways, deteriorating model units and mounds of dirt in the Bay Shore development known as Windemere (formally Awixa Creek Estates). Construction, which had been erratic, stopped more than a year ago when the developer, W. Frank Wilkinson Inc., ran into financial problems, said Philip Podd, a member of the condo association's board of directors.

But last winter, Riverhead Savings Bank, lender to the developer and part owner of Windemere, brought in another builder, The Strathmore Organization, to finish the project.

Today, 24 units that were left by the former developer in various stages of construction are being finished. The remaining 97 condos have been redesigned - primarily to reduce the number of units in each building - and more than $ 1 million in improvements are being made to the development, according to Neil Eisner, vice president of real estate operations for Strathmore.

The turnaround was the result of what is called a builder's workout, in which a project experiencing financial difficulty is re-evaluated by the lender backing the development. A variety of scenarios can unfold. Among the morecommon:

The lender brings in a new developer - such as Strathmore in the Windemere case - and pays the firm a construction fee to finish the project and a marketing fee to sell the units. If there's a profit, the new developer may get a percentage. The original developer loses its stake in the property.

The lender sells the property to another developer. The original developer loses its stake.

The lender decides to stick with the original developer, restructuring the construction loan and working with the firm until the market improves.

The developer, with the lender's approval, sells the project to another builder.

Such workouts are increasing on Long Island and throughout the New York metropolitan area, according to attorneys, developers and lenders. Reasons include the slowdown in the real estate market, poorly planned and designed projects, and the savings and loan crisis, which has made lenders more cautious.

 

"Most of the losses [workouts] are in condos and townhouses," said Charles Mancini, vice president of the Park Ridge Organization, a Ronkonkoma-based builder. Mancini pointed out that condo and co-op developers, in addition to paying back construction loans, also face maintenance costs on unsold units. But single-family home developments and apartments also have been affected.

An almost-inevitable result of any workout - no matter what form it takes - is a lower price for the remaining units in a development. At Windemere, for example, units that originally were priced as high as $ 365,000 will be available for $ 175,000 to $ 250,000 when sales resume in September.

Caught in the middle are the residents who purchased at the higher price; they can only hope that the workout will result in a finished community and that prices will rebound.

But that's a positive development compared with the alternative, Philip Podd said. When construction stopped at Windemere, the occupied units became almost impossible to sell at any price as uncertainty surrounded the project. Once the remaining homes are built and sold, everyone will be better off even if some of their original investment is lost, Podd said. The Podds, who bought during preconstruction, paid $ 229,000 for their unit.

Far luckier are persons who have signed a purchase contract, but haven't closed when a workout occurs. They can either get their deposits back or purchase the units - often at a lower price - when a new developer enters the picture.

Purchasers at condo, co-op or homeowner-association developments face one other potential problem - having to make up the monthly maintenance fees a bankrupt developer was supposed to pay on unsold units.

Previous buyers have no legal ground on which to challenge a price reduction, because it's the nature of real estate values to change, said Donald H. Elliot, a partner with the Manhattan law firm of Webster & Sheffield, which represents both lenders and developers in workouts.

The other issue often brought up by condo and co-op purchasers is whether they can go after the lender for not completing amenities, such as a pool or clubhouse, Elliot said.  But the fine print in the offering plan usually exempts the lender from any liability should the original developer exit.

It is difficult to determine how many workouts are occurring, or have already taken place.  Workouts "are not the kind of thing where you get up on the mountain, beat your breast and yell, 'I'm an owner or lender whose project is in trouble,' " said Daniel Z. Nelson, president of Nelson Equities Inc., a Manhattan developer that has been stepping into troubled projects. Most workouts occur behind closed doors, with parties trying to iron out difficulties before formal foreclosure takes place, he said.

The New York attorney general's office has reported that 350 condo and co-op buildings are experiencing financial problems. However, it isn't known how frequently workouts are occurring in those buildings.

Manhattan condo and co-op developers have an option that may help keep lenders at bay. If units sell slowly, the developer often rents them out to bring in money to satisfy bank loans, said Steven Rockmore, president of Gilbert Charles Beylon, a Manhattan marketing company that helps lenders determine what route to take on troubled projects.

But in the typical Long Island complex, Rockmore said, initial construction money is spent on roads and sewers, and homes are built in phases. If financial trouble occurs, there are usually few units built, leaving the developer little to rent, he said.

With workouts increasing, lenders are turning to established builders, who have expertise in all phases of developing and marketing, to bail projects out. These builders are sometimes labeled "white knights."

Steven A. Klar, president of the Klar Organization in East Meadow, has done several workouts and is currently negotiating on several distressed properties. His latest workout is a 28-townhouse project called Georgetown Commons (formally Manhasset Mews) that he bought from European American Bank in January.

Before Klar took over, only three units had been sold, for about $ 400,000 each. In the four months since he began selling, 22 of the last 25 units have been purchased at prices averaging $ 325,000 to $ 350,000, he said. Besides reducing prices, Klar put in different kitchen cabinets and made design changes to create more open space within the units.

At Windemere, the fees from Riverhead Savings Bank for constructing and marketing Windemere won't make Strathmore rich, Eisner said. However, he added, they keep money coming in and the staff working at a time when planned Strathmore developments are on hold because of the slow market.

To figure out what to do with a financially ailing project, some lenders bring in a consulting firm such as Affirmative Development, based in Manhattan. Lenders aren't necessarily experts on construction contracts and marketing, explained Andrew Jubelt, the firm's president. Michael Luskin, a partner in the Manhattan law firm of Luskin & Stern, which represents commercial banks in workouts, said some banks with large real estate portfolios now have staff architects and engineers to analyze projects.

Riverhead Savings could have sold Windemere to the first developer waving cash, Robert Reilly, an assistant vice president, said. But because it was part owner, the lender felt that what happened to the homeowners "now fell on the institution's shoulders," he said. The bank decided to bring in Strathmore and pump more money into the project to salvage it.

Sometimes, however, lenders sell a property rather than put more money into it because of closer scrutiny of the bottom line by state and federal regulators reacting to the savings and loan crisis.

Workouts can get complicated because there can be a number of lenders and developers connected with one project. Often there are mechanic's liens placed on the property by contractors who haven't been paid. The least expensive, and quickest, way to get results is to settle everything out of court before commencing a foreclosure, which can drive the property's price way down.

Many of the developers and lenders getting into trouble are people who didn't belong in the business, Park Ridge's Mancini said, because they viewed real estate as a quick way to make a buck during the booming 1980s.

Other builders, Klar said, were victims of poor timing.  They bought when land prices were high and then, after waiting three years to get approvals to build, entered the market after it soured.

 

Ways to Test a Project's Financial Foundation

 

HERE ARE some tips from experts - including homeowners who have suffered through construction shutdowns at their developments - on how to avoid close encounters with financially troubled projects:

Check the reputation of the developer, and the firm's track record. Ask persons already living in the community if they've noticed a decrease in construction activity and if the developer is delivering all that was promised.

If no one is living in the development, check construction activity by visiting the site on a weekday - not on weekends, when workers are usually off.  Check the financial statements of a condo or co-op building or complex to see if monthly maintenance payments are up to date on the units still owned by the sponsor, or developer. Also, see if the offering plan includes an amendment detailing a change in the sponsor's financial status; under state law, the developer is required to disclose significant changes. If there is no amendment attached, but a problem is suspected, contact the record room of the attorney general's office, (212) 341-2106, to see if an updated financial amendment exists. If there is one, an appointment must be made at the attorney general's office to read it.

 

Copyright 1990 Newsday, Inc. Reprinted with permission.