Keep in mind, however, that no two co-ops are exactly alike, and that some may have rules about how you finance your purchase. In other words, co-op restrictions may mean that you’re not the only who has to pass muster with the board—your choice of financing does, too, to the point where banks may not want to lend you money for this particular co-op because of its financing restrictions. Or it may mean that, even if you can find financing, the co-op bylaws will stipulate that buyers meet even higher standards than the bank’s.
“For example, conventional financing allows up to 50 DTI [debt-to-income ratio] on conforming primary residence purchases,” Shahwan says. “Many co-ops max their DTI eligibility at 35, or sometimes lower. This means that even though a lender may approve a buyer for financing, they may not fit within the co-op guidelines.”
It can get even hairier.
“Not only that, but many banks do not offer financing programs for co-ops,” Shahwan says. “Layering in the tighter guidelines for the borrower set by the co-op board and fewer banks able to finance the building make it harder for buyers to close on a co-op.”
It’s not all bad news though! Co-op buyers have a leg up when it comes to closing costs, Shahwan notes.
“Co-ops do not incur transfer taxes, so although the overall costs are similar to that of a condo, a buyer can save a substantial amount eliminating the transfer taxes,” he says.
Pros and cons of co-ops
Co-ops are popular for a reason, especially in highly populated markets where living close to your neighbors is the norm.
“Similar to owning stock in a public corporation, ownership rights in a co-op allow residents to participate in decision-making processes to share their perspective and voice their ideas regarding the property,” Shahwan says.
And because of the vetting process, co-ops, at least theoretically, ensure that the people who live there are on common ground when it comes to how to live in and run the place.
“Many believe that having a board interview will allow each buyer to be vetted into the building, providing more security to the overall community and its shareholders,” Shahwan says.
Finally, co-ops are generally less expensive to buy than a similar condominium.
There are downsides, too, of course.
For one, the monthly charges in a co-op tend to be higher than in a condominium, at least partly because co-ops tend to present shareholders with a single monthly bill that includes all the charges at once, like electricity, water and property taxes. If the co-op has had to make a major capital improvement, such as a roof renovation, the co-op board may vote to raise the maintenance to help pay for that, as well.
“Monthly common charges in a co-op are often higher than monthly HOA fees,” Shahwan says.
Secondly, you don’t get a deed, which may or may not be a big deal to you.
“Rather than a deed, owners of a co-op are given a proprietary lease allowing them rights to live in the specified unit,” Shahwan says.
Finally, bringing in new faces, either by subletting your unit or selling it, automatically brings on the scrutiny of the board of directors and may run afoul of co-op bylaws that may restrict sales or take a large percentage of the sale price to replenish the co-op capital funds. Many co-ops forbid renting out units altogether.
The property is located within Parkwyn Village, a Wright-designed neighborhood that was added to the National Register of Historic Places in 2022. In 1946, a group of young families wrote to Wright, asking if he would consider designing a housing community for them. “We have just purchased a 47-acre site,” they explained, expressing hope to offer homes for 40 to 60 families priced between $5,000 and $20,000. The architect agreed to lay out roads and house sites and drafted a plan that included 40 roughly-one-acre lots in addition to gardens, tennis courts, and playgrounds on the remaining seven acres. The visionary also designed four of the homes in the community, though many in the neighborhood today are inspired by Wright’s ideas and style.
The McCartney House, one of the four original homes, was built for Ward McCartney, a dentist, and his wife, Helen, who bought their lot in the early days of Parkwyn Village. “Your house is an experimental geometric form: a triangle, or several of them, almost a star. I hope you will enjoy living in it,” Helen, who wrote a short book about building and living in the home, remembers Wright saying when the couple visited Taliesin to collect the blueprints. The property was designed based on a four-foot parallelogram grid, with each wing shaped like a triangle and made from concrete blocks. The site spans 1,671 square feet and includes four bedrooms and two bathrooms.
One of Wright’s First Prairie-Style Homes
A few weeks later, one of Wright’s first Prairie-style homes hit the market in Kankakee, Illinois. Known as the Warren Hickox House, the home sits next to another Wright design, the Bradley House, which a brother and sister—and their respective spouses—commissioned at the turn of the century. The Bradley House, the larger of the two, was built for B. Harley Bradley and his wife, Anna Hickox Bradley, while the Warren Hickox House was designed for Anna’s brother, Warren, and his wife, Laura. The Bradley House is perhaps the more famous of the pair—and often credited as Wright’s first Prairie home—though the Warren Hickox property shares many similar qualities and is just as monumental.
The Northern Illinois home was one of a few realized iterations of Wright’s American System-Built Homes, a line of precut houses the architect designed throughout the 1910s. According to the Frank Lloyd Wright Foundation, Wright created over 960 drawings for the project and crafted more than 30 variations of the houses, and he was extremely passionate about offering Americans affordable, well-designed homes. Small units went for $2,750 up to $3,500, while larger ones cost between $5,000 and $100,000. The architect worked with Arthur L. Richards, a Milwaukee manufacturer, whose factory would cut and ship construction materials for builders to assemble. However, World War I saw necessary materials diverted abroad, which effectively stopped the business. The prefab homes were only available for about a year, and only 10 exist, according to the foundation.
The one now up for sale, known as the Lewis E. Burleigh House, was produced from the Model C3 design. The original blueprints show a single-story home with a central front porch, a living room, and kitchen at the front of the house, and two bedrooms and a bathroom at the back. There is also a basement. Since buying the property, Eckroth has remodeled some, adding a full bathroom to the primary as well as updating the kitchen. According to Crain’s, the home was also enlarged at some point, but there aren’t exact records noting when it happened or who was the architect.
“This is such a unique offering. Not only is this a Frank Lloyd Wright design, it has been so well maintained,” Fleetwood tells AD. “Every owner has invested in preserving and updating.” She and Eckroth won’t be responding to offers until noon on Sunday, at which point they will call the highest and best bidders. The home is four blocks from Lake Michigan and is priced slightly higher than the average home in the area, which is valued at $764,004, according to Zillow.
The pièce de résistance of the compound, which is currently up for grabs, is a 9-acre estate with three homes and a private yacht basin. If it sells for its asking price, $295 million, it will set a new real estate record in the United States as the most expensive home ever sold in the country. Financier Ken Griffin’s purchase of $240 million penthouse on Billionaire’s Row in Manhattan currently holds the title.
The Donahue home is one of a handful of nine-figure listing that have hit the market over the past few years, each positioned to surpass Griffin’s record. A penthouse in Central Park Tower was listed for $250 million in 2022, but is now asking $195 million. Similarly, financier Gary Winnick and his wife, Karen Winnick, listed their home in Los Angeles, known as Casa Encantada, in June 2023 for $250 million, but have since cut that down to $195 million as well.
The listing agents for the Donahue house, Coldwell Banker Realty’s Dawn McKenna Group, The Leighton Candler Team of Corcoran, and Savills’ Rory McMullen, told WSJ that the price of the Naples compound was justified not only because of the size, location, and yacht basin, but also because it would be difficult to construct such a property again. According to Redfin, the average home price in Naples is $800,000, while, on average, homes sell for $9.1 million in Port Royal, the neighborhood where the Donahue home is located.
The most expensive home for sale in the US offers 930 feet of frontage on Gordon Pass and Naples Bay and another 730 feet on the Gulf side. Bill Donahue, the son of John and Rhodora, spoke with WSJ about the sale of the family estate saying, “We’ve all enjoyed it, but it’s more or less time to move on.”
If there’s one question most homeowners have asked themselves at least once it’s, “How much is my house worth?” Whether you’re aiming to figure out what your asking price might be, looking to refinance your house, or you’re just trying to better understand the real estate market in your area, it’s a good idea to figure out the answer. Below, we break it all down with the help of experienced real estate professionals from across the country.
How it’s calculated
There are a variety of different home valuation types and different calculations for each. The assessed value of your home is determined by a government assessor for your property taxes, though the methodologies vary depending on your location. A professional appraiser’s figure is known as the appraised value and is required by mortgage lenders. The appraised value can relate to the home’s curb appeal, square footage, the condition it’s in, and comparable homes (or “comps”) in your area. The appraised value may or may not align with the market value, depending on the state of the market at the time of listing.
The fair market value of your home is the price a home would sell for on the open market. When figuring out your home’s value for the purposes of listing it for sale, a range of elements are factored in, including its location, finishes, and square footage, along with more nuanced details like trends in your area and the market overall.
First steps online
You can’t be the only one asking yourself, How much is my house worth? So, if you’re simply curious about what the value, but not quite ready to sell, or if you are hoping to sell but not prepared to get in touch with an agent, looking into your home value online can be a great starting point. There have never been more tools available to find an estimate of your home value quickly and at no cost. Zillow and Redfin each have their own online home valuation tools, as does Realtor.com and many major banks.
“When sellers are trying to estimate how much their home could sell for, or how much equity they have in their home, the Redfin estimate is a useful tool,” says Redfin Chief Economist, Daryl Fairweather. Fairweather shares that the website also has tools that show you how much home values in your city or neighborhood have changed and how competitive the market is in in your area. Online tools are not without their drawbacks, though. “The Redfin estimate may not account for specific factors, like how well the home has been maintained,” Fairweather explains.
“[The utility of online tools] depends where you’re looking,” says real estate professional Bill Murray, the managing director of Compass Greater Atlanta. “If you’re looking at establishing values in a subdivision, where pretty much all the houses in the subdivisions are the same, then you can pretty much predict the appreciation in the value. When you’re in older neighborhoods, you can’t take a 3,500-square-foot house and a 3,500-square-foot house a block away and assume they’re the same value.” Given the drawbacks of online tools, it’s best to take their estimations with a grain of salt.
Calling in the professionals
For a valuation of your house that is personalized and takes local market trends into consideration, a real estate agent can help you find a price much more realistic than an online tool. Especially if you live in a fast-changing area—whether it be because of rezoning, new infrastructure, or any other change—this specificity is very important.
Once you decide to sell, you can benefit from the increase in the property value of your investment property. When you cash out, you could theoretically realize a huge return on investment—depending, of course, on the real estate market you bought into and sell in, the improvements you’ve made to the property, how eager your seller is to buy, and, let’s face it, a whole lot of luck.
It’s a way to diversify your wealth too. Many experts see real estate as a less volatile investment than stocks, high-yield bonds, cryptocurrencies, IPOs, and the like. Some homeowners see investment properties as nest eggs that they can count on to provide them a reliable source of capital come time for retirement.
What are the cons of investment properties?
If you don’t fully match an investment property’s purchase price with cash outright, you’re probably going to be making mortgage payments for a while, adding to your monthly expenses. If buying an investment property means your monthly net will become unaffordable, then it’s likely going to drag you down sooner or later.
Until you sell the property, you’re still dealing with all the associated expenses of being a homeowner as well, like taxes, repairs, utilities and maintenance, HOA fees, and so on. If you have to renovate the property to raise its value or make it more attractive to rent or sell, that becomes part of the money you to sink into and adds to the red ink when you finally determine how much of a return on investment you’re getting.
Any investment—no matter how much of a sure thing it’s supposed to be—carries risk. Real estate may be seen as more stable than many other investments, but it’s definitely not risk-free, and many an investor has lost their shirt in real estate investments, especially when a housing bubble goes bust. Even in supposedly bulletproof real estate markets like New York City or San Francisco, you’re not guaranteed that your property value will go up. And if you overpaid, you may never get your investment back and have to accept a loss on resale just to unload the property and stop bleeding money into its associated expenses.
Finally, if you want to turn the property into a source of rental income, you’re going to have to become a landlord, which often isn’t a walk in the park. Your tenants will have expectations (and rights), and you’re going to be spending both time and money to keep them satisfied and to keep the monthly rent coming in. And if you draw the short straw and get nightmare tenants? Add legal fees to your expenses column as you face the worst-case scenario, eviction proceedings, and attempt to get your investment property back on the market quickly so you can find more suitable tenants and get that monthly rent going again.
What’s the 1% rule or 2% rule for investment properties?
The 1% rule states that your investment property should bring in at least 1% of your total investment every month. So if you were thinking of a home with a purchase price of $900,000 and would have to make $100,000 worth of renovations and repairs, the 1% rule would say you should ensure you could bring in $10,000 in monthly rent (1% of $1 million) before buying it.
This time last year, Rent the Runway’s fate seemed uncertain. How could a rental business built on dressing women for parties and their 9-to-5 jobs possibly survive when we were all stuck at home? But even as lockdowns extended past the one-year mark and headlines predicted “sweatpants forever,” RTR’s cofounder Jennifer Hyman believed her company wouldn’t just survive the pandemic—it would emerge stronger than ever.
COVID accelerated the value shifts Hyman has preached since Rent the Runway’s inception: that experiences and access would become more important than ownership; that sustainability would become a core consumer value; and that secondhand would quickly become a mainstream way to consume fashion, whether it’s via rental or resale. We don’t tend to think of RTR as a “resale site” or as a “secondhand fashion” purveyor, perhaps because the clothes are borrowed, not kept for years and years. But most of its garments have likely had second, third, or fourth “lives” (in contrast with the “secondhand” dress I scored on a consignment site with its tags still attached).
Subscribers have always had the option to keep items they’ve rented once they’re in their possession, usually for a fraction of the retail price. But Hyman was surprised to see that behavior double in 2020: Women who’d formerly rented a few outfits a week were now choosing select items they intended to keep forever.
That’s where she saw RTR’s pandemic opportunity. Starting today, everything on its site is available for resale, whether you’re an RTR subscriber or not. “Our goal is to be a fully circular platform where the customer has the flexibility to choose how she wants to consume our products,” Hyman says. “This is another way for customers to engage with us for the first time. There’s a very broad audience of people who want to consume secondhand, but potentially didn’t come to our platform in the past because they weren’t ready to subscribe, or they didn’t have an upcoming party or event. Now, they have the opportunity to experience the quality of our assortment, the diversity of our brands, and the incredible fashion on our platform.”
A recent survey found that 74% of Rent the Runway customers said they will likely buy secondhand in the next 12 months; when asked specifically about buying secondhand from RTR, that number jumped to 90%. The edge Rent the Runway’s resale business will have over consignment sites and vintage stores is that its products are sourced directly from brands, not customers. Rent the Runway functions like a retailer, buying collections every season and introducing new products every month. Most importantly, it offers a full range of sizes, often with hundreds or thousands of units each. (In contrast, a consignment site is more like a treasure hunt, which is appealing in an entirely different way.) “Our customer can really have the same luxury shopping experience [as any other retailer’s site], but now she’s doing it with secondhand.”