Yes, that’s true. There are a few buildings that have zero or very little maintenance charges. Several are mentioned in the NYT Sunday article in the real estate section. How does this come about? Well, thanks to rising retail rents in neighborhoods like Soho and the West Village, the maintenance charges are almost zero
or very little. However, there’s a couple of catches:
1- According to the letter sent to the shareholders at 99 Bank street, the shareholders may have to pay tax on the income used to offset the maintenance charges.
2- The maintenance charges may rise if the retail tenants move out. In the aforementioned 99 Bank street, over the last several years, they have seen tenants come and go so the low or no maintenance charges may or may not last.
3- If you find such a listing with little or no maintenance charge, the pricing will reflect that and in a way you need to be cautious because the value will be higher due to the lack of a monthly charge but when the retail tenant goes out of business then your value will be adjusted downward by the market. It’s kind of similar to when a tax abatement ends.
Read the full article below.