851 Franklin For Sale (near President)
  • 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.


    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.


  • Sold for $400k more than asking!

    ---
    A multifamily building at 851 Franklin Avenue in Crown Heights has sold for $3.25 million, or $385 per square foot.

    The four-story, 16-unit building has 15 one-bedroom apartments and one two-bedroom. Nine of the units are free‐market. The average monthly rent in the building was $1,469, according to the TerraCRG listing.

    The 8,400-square-foot property traded for $400,000 over the original asking price.

    The building went on the market in March 2013.

    “Crown Heights has experienced significant growth over the last decade,” TerraCRG’s Michael Hernandez said in a statement. “The sale price per square foot for 851 Franklin Ave is significantly higher than the average for 2013, which was $182 per square foot.”"
    ----
    Source:

    http://news.buzzbuzzhome.com/2014/02/851-franklin-avenue.html
  • Renovations are complete. They would like $2800 a month for 3C, a 2BR, 1 BA unit:

    "Introducing 851 Franklin Avenue- The Brooklyn Home Company has taken their famed design to this rental building in Prime Crown Heights on Franklin Avenue. The building has had a complete overhaul bringing the quality and aesthetic of the building to high end condo finishes. Common elements of the building include: Finished roof deck, Central Laundry and Bike Storage. This gut renovated Two Bedroom apartment features: A White shaker kitchen, dishwasher, counter depth refrigerator, all stainless steel appliances, honed Carrera marble countertop, gas range, breakfast nook. White painted exposed brick, restoration hardware lights, LED dimmable 4 high hats, 3 white oak flooring. Light, bright, and modern. Bathroom finishes include Carrera Marble Floors, Pottery Barn Medicine Cabinet, Parsons Vanity with Vessel Sink, Windowed stand up shower with white subway tile and gray grout. Located one blocked from multiple trains lines and fantastic restaurants such as Chavelas, Barboncino, Mayfield and so many more! Available Now.

    Visit corcoran.com to schedule a viewing
    View full listing information on corcoran.com

    http://ny.curbed.com/marketplace/rentals/735790-851-franklin-avenue-crown-heights20412638_gallery
    20412631_gallery
  • Re: "Renovations are complete. They would like $2800 a month for this 2BR, 1 BA unit: - See more at: http://www.brooklynian.com/discussion/comment/560912#Comment_560912"

    Translation - not stabilized. 
  • A smaller, studio apt in the building seems to still be under the $2500 RS cap. It is "only" asking $1825:

    http://www.corcoran.com/nyc/Listings/Display/3314462
  • Given the reality of inflation, how frequently does that $2500 figure get adjusted? It seems like eventually it should rise a bit, no?
  • Every year, the RGB and the tenant advocates fight over the terms of rent stabilization. The High Rent Vacancy DeRegulation is one of the issues discussed.

    http://www.nyshcr.org/Rent/FactSheets/orafac36.htm

    Fuel and labor costs are factored into the annual rent increases that landlords are allowed.

    Calling it an "annual fight" is somewhat of a misnomer; the forces fight year round.
  • View from 3rd floor unit.     Photo by Brooklyn Home Company




    CEGJ26jXIAAHra5.jpg_large
  • lots of staging used to get this Junior 1 BR leased:

    http://www.corcoran.com/nyc/Listings/Display/3461099
  • 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.

    Crown Heights has seen tremendous transformation over the last decade with many condo developments, strong retail and a robust brownstone sales market. In just a few years, rents have risen from $25/SF to $45/SF, and are poised to excess $55/SF within the next few years. As a result, Franklin Avenue is now seeing a strong retail market with the addition of various new restaurants and boutiques servicing the new demographic.

    The building is located just one block off Eastern Parkway and the 2, 3, 4, 5 and S subway lines at the Botanic Garden/Franklin Avenue subway stations, and just a short distance from the Botanical Gardens, the Brooklyn Museum and Prospect Park. The property is also one stop from the Barclays Center with access to the D, N, R, B, Q trains plus the LIRR, making the commute in and out of Manhattan just 15 minutes.

    We would like to set up a time to speak with you if you have any questions about this transaction or would like a complimentary evaluation of any property you are involved with. I can be reached at 718-310-3296 or by email at ahess@terracrg.com.

    Very truly yours,

    Adam

    Adam Hess | Partner | TerraCRG | New Address: 634 Dean Street | Brooklyn, NY 11238 |
    T: 718-310-3296 | F: 718-768-6288 | ahess@terracrg.com | terracrg.com

  • 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. 


    No poor doors here! :) 

    Here's some data via Gothamist:
    851 FRANKLIN AVENUE
    Change of -8 units, -50% of 16 between 2007 and 2014.
    DRIE in effect 2009 - 2014
    Owned by 851 FRANKLIN AVENUE L.

    -8 = stabilized units.
  • I assume the bike storage, laundry and storage lockers are available only on a pay-per-use basis.

    ...that makes for better spin then actually creating a policy/practice that gives only the new residents access.

    :)
  • What about that roof deck available to "all tenants"? 

    I wish my building had a roof deck like that. The views would be pretty good. :) 
  • You think the long term residents will get as much use from the roof deck as the new tenants?

    Which group enjoys making out and drinking craft beer on the roof the most?

    Your building could have a stadium up there.

  • My building has a barbecue on the patio instead of on the roof though. I don't remember any alcohol -craft beer or regular beer - being available. It's a family event and there are children around. :) 

    I imagine the residents of 852 Franklin will have a good view of the New Year's fireworks at Prospect Park from the roof desk.
  • I suspect the new 2 BR units are going to be split by two young professional types.

    ....as opposed to young couples who would let all those fancy finishes become sticky from the hands of their young children.
  • if a young couple were thinking ahead, maybe they should opt for a 2 BR. Then they wouldn't have to resort to raising babies in a closet or a spare bathroom like this:
    image

    (From the story: 

    New Yorkers Are Raising Their Babies In Bathrooms, Closets)

  • These units are out of rent stabilization, so it's no use to get one early to 'plan ahead'— the price could spike arbitrarily high, or the landlord could non-renew, before baby comes along.
  • Correct. And, in the short term:

    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.

    image
  • whynot_31 said:

    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.

    image



    There aren't that many bars on Franklin south of EP though. Aside from Butter and Scotch, what else is there? :-p Might as well live north of EP.
  • 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.
  • whynot_31 said:

    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.



    But where's the fun in that?  I like living every day like a drunken game of Frogger.
  • That isn't very Vision Zero of you.
  • BTW, I just rec'd another email about this building which reveals the listing price: $5.75M

    http://terracrg.com/setups/851_Franklin_Avenue.pdf
    (to cause a little confusion, they merely updated the pdf I link at the top of this thread)

    As noted above, in Feb 2014, the building sold for $3.25M
  • When I passed this building this evening, I noticed that there are DOB permits up for renovations of several of the apartments. Actually, what had caught my eye first were DOB requests for inspections. Someone from the DOB had left notices that they need to be granted access to inspect the electrical work being done in some of the same apartments. If they don't get it, they may have to come back with a warrant.

    This is the first time I've seen this type of notice from the DOB.
  • DOB is playing catchup after 6 months of internal chaos.

    During that chaos, many small developers concluded DOB was a complete joke and performed work without the necessary permits and/or safety measures.

    DOB seems to be now telling people "we are back" by slapping notices and fines all over town.

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