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Hmmm quick RE math
25% down would be about 140K/yr for the mortgage at 5%
45K in taxes a year
I have no idea what maintenance on a bldg like this would be... I imagine fuel costs to be maybe 30K/yr
Total rent is 304K/yr based on what they say
So from what I see annual before tax income would be about 90K. After taxes thats about 60K. Thats not counting maintenance though. So this could be like a 5-8% after tax return. Thats not too fucking shabby, considering people are charging damn near $50/sf in "updated" units near by.
In this case, I don't feel like doing an analysis about whether it is a good deal, but am just consistently putting out the message that properties are changing hands very quickly.
"I have no idea what maintenance on a bldg like this would be..."
Some very important details are missing. Biggest of which is operating costs.Water and sewer should be 15k-20k per year. Then you have insurance/repairs/maintenance among other unforeseen expenses (legal, accounting, fines...etc). Just from the picture of the building on google map I can tell that the fire escape needs to be scraped and painted (about 4k). If a simple fire escape is not maintained, its most likely the mechanical's in the building are not properly maintained...which can cost a small fortune to replace.You also have to consider the amount of time you will have to invest. You can't just site home and collect rent! You will have to get involved and you will be at the building very often making sure things run smoothly. Especially the first 2 years.It would interest me at 1.5 million ....its definitely not an investment for someone with no experience managing property.
I would be interested in knowing how long the market rate units have been "market rate", because this would give me some insight as to when this building's cash flow might have improved.
My assumption is that when a building doesn't have a good cash flow, it is maintained accordingly.
$1.5m is apparently in the ballpark for a two-fam a few blocks north. But this is a pig in a poke, so to speak. I'd want it delivered vacant.
$1.5m is apparently in the ballpark for a two-fam a few blocks north.
The 2 family is not an investment property. You can't compare the two. There is a 1 family in prime slope that is worth much more then my mixed use building in prime slope. Additionally, if you buy this building ...your most likely not going to live in it.
because this would give me some insight as to when this building's cash flow might have improved.
- That would be speculative and is a dangerous gamble. I only buy based on current income production...not what it might generate in the future.
I'd want it delivered vacant.
It must be rent stabilized...or even worse, some apartments might be rent controlled. It would be incredibly hard to remove those tenants. You will have to pay them off to leave.
I wonder if the below market tenants have already been offered a payout, but declined it.
Clearly, it is in the sellers interest to be able to deliver the building with the least number of such units. But, if I had made such attempts and failed, I would want to hide that fact.
In terms of cash flow, the only thing worse than below market tenants is probably healthy, Resilient below market tenants.
Some tenants, of course, perceive the payouts as huge windfalls. A lot of Urgently Due credit card debt is probably paid off with them.
whynot_31 said:I wonder if the below market tenants have already been offered a payout, but declined it. Clearly, it is in the sellers interest to be able to deliver the building with the least number of such units. But, if I had made such attempts and failed, I would want to hide that fact.In terms of cash flow, the only thing worse than below market tenants is probably healthy, Resilient below market tenants.Some tenants, of course, perceive the payouts as huge windfalls. A lot of Urgently Due credit card debt is probably paid off with them.
whynot_31 said:I wonder if the below market tenants have already been offered a payout, but declined it.
Not sure I like the implications here, esp given your overall attitude in the clearing out of "old" buildings and tenants.
Those folks have the right to live there just like anyone else, and aren't necessarily irresponsible or undesirable because their rents are lower than the average newcomer.
It's all a matter of perspective. They're quite reasonably undesirable to landlords because their rents are lower than the average newcomer.
CTK-My assumption is that those who take the payouts are pretty desperate.
This assumption is not the same as being undesirable or not responsible.
It simply is that they are willing to take fast cash to deal with immediate needs, despite this decision not -perhaps- not being beneficial for them in the long term.
Legally, the tenant gets to decide whether to take the offer, negotiate more, or stay put.
I suspect a lot of them pay off urgently due credit card debt because I think that would be one of the few circumstances in which I would take such a payout if I was a below market tenant, because I like living in Western Brooklyn.
August 8: This building is still for sale.
Dec 23Now reportedly in contract
In March 2013, 9 units were free market. In July 2015, we are now up to 12 free market units, and the building is once again for sale. It also sounds like they are moving some walls around. What was a building consisting of 1 BR units is rapidly becoming composed of 2 BRs and studios (ahem, Jr 1 BRs). quote:Dear (whynot_31),TerraCRG has been retained to exclusively represent ownership in the sale of the 16-unit multifamily building located at 851 Franklin Avenue, between Union Street and President Street, in the Crown Heights neighborhood of Brooklyn.This 16-unit building in prime Crown Heights has 12 free market units that have been gut renovated with high end rental finishes. The remaining four stabilized units have far below market rents. The 8,440 SF building consists of 6 large two-bedroom units, 6 studios and 4 one-bedroom apartments. The asset presents a rare opportunity to acquire one of the nicest walk-up buildings in Crown Heights one block from the subway with a 4.6% CAP rate. Current ownership has added new amenities to the building to maximize rents including furnished roof deck available to all tenants as well as private roof decks for apartments 4B and 4C. The cellar space has been fully renovated and includes bike storage, laundry and storage lockers for tenants.
Two young professionals (each employed and occupying one of the bedrooms), will likely be able to outbid most young families (parents occupy 1 BR, baby occupies the other).Not only do the two young, childless professionals likely have more income available for housing, they also have strong preference for this neighborhood because it has better bars than schools.
A bar is presently being constructed at the SE corner of Union and Franklin.Additional bars will open by 2018, as the Sea Crest site and the BBG site near completion.Until then, those who choose to get really drunk on the northside of EP, yet live on the southside, would be wise to cross the street using the subway station underpass . ....being a drunk pedestrian causes one to misjudge the distance and speed of approaching car headlights.