A Broker's Search... Where To Buy (Part I)?
I got in a lot of hot water for my last new development post, which you might have noticed is no longer on UrbanDigs. So from now on when you read one of my new development posts, it's just the facts! If you want my real, unbiased opinion on a building, you will just have to call me because I 'ain't puttin nuthin' in writing that will get me in trouble with my company!
I am looking to purchase a studio or one bedroom for myself since I just sold my co-op and despite the rise in interest rates, I still feel that real estate is the best place for me to put my money. I have been concentrating on the Financial District and in Bedford-Stuyvesant, Brooklyn, which is the last place someone with my budget can buy a two-family brownstone within a 20 minute commute to the city. Quite the contrast in neighborhoods, I know, but I see huge potential for both locations over the next 10 years. I know that I am going to be cash flow negative for at least two years, although when you count the tax benefits and the depreciation of the property, I will come out on top. My budget is about $760K and if I go much higher I am going to sweat profusely if it takes more than a month or two to rent out the apartment.
My focus in the Financial District/BPC is on new condo developments that are at least 6 months from completion. By buying in early, I am most likely to get a "discount" in comparison to those who purchase when the project is completed.
Today I visited 225 Rector Place. Here's the scoop:
Overview
- Condo conversion from a former rental building
- Opened less than 2 weeks ago
- Approx 300 units on 24 floors
- Expected occupancy January 2008
Amenities
- Screening room
- 3,000 sq ft fitness center
- 75' Indoor Pool w/skylight
- Sauna, steam room
- Roofdeck
- Parking garage
Studio pricing:
Alcove Studio (layout suitable for conversion to a one bedroom)
- 11G - $625K for 574 sq ft ($1,088/sq ft, closer to $1,000 a sq ft on lower floors).
CCs - $560/month; RE Taxes $484/month
One Bedrooms:
- 11M - $745K for 687 sq ft ($1,084/sq ft)
CCs - $659/month; RE Taxes $570/month
- 10O - $730K for 654 sq ft ($1,116/sq ft - has partial river views)
CCs - $634/month; RE Taxes $549/month
Pros: Park and/or River views from most units, price per sq ft and CCs are low. The building just opened, so you can get a good deal by buying in early.
Cons: Building is on an 85 year landlease with 62 years to go, so there is no real estate tax abatement. Since the building is a conversion, the windows are smaller than new developments built from the ground up. Ceiling heights are about 8 - 8.5 feet.
Assessment: Due to the lack of a tax abatement, I can make better cash flow elsewhere. Even though I am going to be cash flow negative anywhere I go, I want to be as close to a break even as possible.
Tomorrow I visit 90 William
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Comments (12)
very confusing, do u mean u wanna buy a brownstone or a condo? also, is financial district the most expensive area in nyc???
how about harlem? any opinion?
btw, could u tell how much was your coop?
Posted by reporter | June 20, 2007 10:00 AM
Toes? Your fans have a question!
I do NOT think Fin Dist is anywhere close to most expensive area in NYC. If you are talking about W Harlem, yes there is potential there. Prices for brownstones have come down and it is more developed with Columbia U there. E Harlem is a riskier yet more upside play with 2nd ave subway coming in and plenty of planned development on retail and residential side expected. Both interesting plays in my opinion. E Harlem especially if you can get for good price!
Posted by Noah | June 20, 2007 10:15 AM
Sorry for the confusion! I have about $750K to spend, which leaves me with either a studio/one bedroom in the Financial District OR a two family brownstone in Bed-Stuy. (I picked these locations for a variety of reasons).
I bought my co-op for $218K in March 2004 and it should close in 2 weeks at $375K. My mortgage on it is under $150K, so after broker's fees & closing costs, that leaves me with about $200K for an investment property. The least expensive Harlem brownstone is $925K so I am priced out of Harlem. There is so much new construction in Harlem that even though I can get more space there, it may be difficult to get a decent rent on the apartment and it could sit vacant for a long time until I find a tenant.
Posted by Toes | June 20, 2007 11:14 AM
As a resident of a New Development Brooklyn Condo I am looking for a lawyer to represent the Unit Owners in a potential lawsuit against the Sponsor/Seller. Can anyone recommend a lawyer? Please write to: jalmarjalla@gmail.com.
Thank you in advance.
Posted by Jalmar Jalla | June 20, 2007 12:29 PM
you should look at 132 e 35th......1beds are 550k but mtce is low - under 700....i want to buy there but still waiting for price to go down but they have the lowest mtce around next to 10 w 15th....
Posted by michael | June 20, 2007 1:39 PM
thinking of buying a 800 sqft coop on 112st between 7 & 8 ave about 300k, is it too high?
oh, and it's an hdfc, will it drop a lot and difficult to resale?
Posted by reporter | June 20, 2007 3:10 PM
Whether an hdfc may or may not be difficult to sell would depend on whether any income or other restrictions are in force. I live in an hdfc, and since at least 30 years or so have passed since the coop was founded, there are no income restrictions anymore...just a super low monthly maintenance since the building hasn't had to take out an underlying mortgage.
You should review the proprietary lease to determine how long any such restrictions may be in place. Hdfcs can be an incredible deal. Mine was and has appreciated significantly during the period I've owned it.
Posted by HDFC shareholder | June 20, 2007 5:56 PM
Monthly charges are $1.80+/sqft - why do you consider this low? Isn't this on the high side?
Posted by Dave | June 20, 2007 10:07 PM
132 E 35th Street is a co-op building so I would not be able to rent it out right away. Most co-ops require you to live there for 2 years and then you can only sublet for 2 or 3 years out of every 5. I would need to purchase a condo, a brownstone/townhouse, or a condop with no subletting restrictions (very rare), so 132 E 35th street would not work for me. Thanks for the suggestion, though!
Posted by Toes | June 21, 2007 12:11 AM
Hi Toes,
Regarding your selling the coop, when you say net $200k, does that take your mortgage payment for the past 3 years into consideration?
Thanks.
Posted by Anonymous | June 21, 2007 9:36 AM
What about a studio at 80 park avenue ...39th and park......i was suppose to buy in that beautiful prewar 77park aven in 96 ..1 bed for 175k...now close to 1 million... Also, as a renter myself....i could care less about views if I got a good deal.
Posted by michael | June 21, 2007 12:26 PM
Hi Anonymous - when I say net $200K, I am not counting the mortgage payment. I would have been tossing that $ away on rent if I hadn't bought. My monthly mortgage was only $937 on the apartment, maintenance about $540 and I was renting it out for $2,150 (making about $650/month cash flow). If I were renting, I would have been spending about $20,000 - $26,000 in rent each year. Would much rather have that go towards a mortgage.
Posted by Toes | June 25, 2007 8:00 PM