How Much Profit Can a Co-op Board Expect to Earn? | Harlem Building Management - Article Banner

Harlem co-ops don’t necessarily exist to make a profit. Rather, they serve a need for housing in the community. This does not mean they’re nonprofit organizations. Contrary to popular belief, a co-op can earn a profit, and any of those earnings will benefit the building itself and the owners/members within the co-op.

What a board is able to earn on behalf of the co-op will depend on how much money is coming in and what needs to be spent. When a profit is earned, members of the co-op know that their building is healthy, that member owners are engaged, and that the co-op is serving the needs of its community. 

In general, co-ops will distribute any profits back to owners, which is why making a profit is in everyone’s best interest. 

Here are some of the factors that impact what is earned by the co-op and its board members. 

Costs to Operate the Harlem Residential Building

A co-op that earns less than it spends is not going to have any profit at all. In fact, there will be a deficit, which will require debt and difficult decisions unless there’s a lot of equity in the building or growing reserve funds. 

To generate profit and keep those savings intact, a building will benefit from hiring a property management company to keep costs to a minimum. Professional property managers have vendor relationships in place and can negotiate excellent deals when work is needed. They can also reduce waste when it comes to accounting and management. 

Profit Depends on Supply and Demand

The more shares your co-op can sell, the more profitable you’ll be. 

When you’re able to attract good buyers with solid credentials and good financials into your co-op, you’ll have the peace of mind that profits are going up and business is going well. When you cannot seem to compete with other properties on the market, you’re going to see a dip in what your building is able to earn. 

Fewer liabilities will increase profit. If there’s a lot of debt that needs to be paid off and you don’t have the income from member/owners to cover it, there’s not going to be as much left over for board members to share with owners. 

Profit Depends on Business Investments and Community Investment

Co-op BoardThe co-op board will regularly need to decide how much and when to invest in things like expansion, capital improvements, new equipment, new amenities or services, and cosmetic upgrades that will attract future buyers. 

Money may be spent on giving back to the community where the co-op resides. This can be great for attracting new buyers and it can also lead to higher property values. While the individual members may see less profit in their own pockets, they’ll have the benefit of an improved community that’s welcoming, safe, and attractive. 

Profits do not have to be contrary to running a co-op. For some help in balancing your purpose with your profits, contact us at Harlem Property Management and we’ll talk about how we can help.

Harlem Property Management is the authority on co-op and condo building management in Upper Manhattan and a member of the Real Estate Board of New York. We specialize in managing condos, co-ops, and multi-family buildings up to 99 units.