Our House’s Sordid History

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Last night I started looking through ACRIS at our house’s history. I had looked at some of it before, but not really tried to fully understand it. It’s had a pretty rough life, though the records only go back to the mid-70s (when NYC was going bankrupt)…

1884 -Our house was built along with 6 others that are adjacent to it. We really don’t know anything about it’s early history.

1884 was also the year The Dakota was built at 72nd and CPW and about the same time that Thomas Crapper popularized the indoor flush toilet (we’re not sure whether our place had an indoor toilet initially or not). 1884 was also a mere 19 years after the end of the Civil War.

March 1966 – The building was given a vacate order because it had been vacant for over 6 months…

adm code above premises has been vacant and untenanted except for caretaker for 60 days or more, and cannot be reoccupied until a new certificate of occupancy has been obtained. premises has been vacant since aug 26 1965.

That vacate order still has not been cleared. What this means is that our building has been a troubled building for longer than I’ve been alive – pretty amazing, when you think about it…

April 1968 – Following the death of Martin Luther King, Jr., a race riot raged around our place with major disturbances along 125th Street in the vicinity of 8th Avenue (FDB), 7th Avenue (ACP) and Lenox Avenue. Mayor Lindsay was almost overtaken by an angry mob just a few blocks north of our place at 127th Street and 7th Avenue. Many stores were looted on 125th Street and Lenox Avenue. This riot was the last straw for many shop keepers who closed their stores permanently – deciding it wasn’t worth the risk to do business in Harlem. The next 10 to 20 years was the darkest time in Harlem’s history.

October 1975 – The City of New York went bankrupt. The fiscal problems that followed hit Harlem very hard.

November 1976 – Joseph Monroe (who lived in the apartment building next door) put a mechanic’s lien on the building.

July 1977 – Harlem was in chaos for two days during a city-wide blackout. While police protected most white neighborhoods, in Harlem there was widespread looting. Following the blackout Harlem looked like a bomb-out, war-torn city. More and more residents moved out of Harlem and landlords found it difficult to get enough rental income to maintain the buildings, which only made things worse. Ed Koch leveraged the blackout to get elected mayor a few months later. He put severe austerity measures into place that brought the City back to life fiscally, but those austerity measures cut vital programs in Harlem and made Harlem’s situation even worse.

July 1978 – Joesph Monroe wins his mechanic’s lien case and is given title to the building to settle the case. What’s most interesting is that it wasn’t clear at the time of the court order who owned the building. 4 owners were named (Kilroy Jones, Catherine Quillinan, Peter Quillinan, Percival E. Vasquez), but then there were a whole bunch of John and Jane Does listed. The fact that they didn’t quite know who owned the building says it was already a troubled building.

The tax photo from 1980 shows that the ground floor was in use as “The Happy Game Room” and the storefront had not been added yet. So apparently Joseph Monroe fixed up the building somewhat and had it operating reasonably well. It was a good thing the building had a caretaker during this time – considering how Harlem was hitting rock bottom during these years.

March 1988 – Joseph Monroe died and the building was sold by his estate to Zion Temple Church, Inc. for $40,000. What’s odd is the deed said $125,000 but someone crossed out $125K and wrote in $40K. How can you make an $85,000 adjustment to the price after you type up the paperwork for the sale? Something was off or shady about that transaction… [It’s also worth noting that Zion Temple Church, Inc. was just incorporated a few months before – in December of ’87. What legitimate church buys townhouses 3 months after coming into existence?]

This is when things start getting really interesting… In the mid to late 1990s, when the building was owned by Zion Temple Church, our building was a drug house. So clearly Zion Temple Church was at best neglectful, and at worse they were slumlords who were OK with the drug activity in the building.

March 1994 – The second vacate order was issued.

December 1997 – The third vacate order was issued. We guess it was around this time that a neglected child was found in one of the closets in our house. That alone would be grounds to get everyone out of the building.

July 1998 – The fourth vacate order was issued. We know there was a fire in the building around ’97/’98. We suspect this is when the fire happened and it was at this point that people stopped “living” (doing drugs) in the building.

What’s really sorta disgusting is that all of that happened while a church owned our building. Talk about “missions start at home” – if they were real Christians they should have started practicing their religion at the buildings they owned.

Curiously, one guy from down the block stopped by just after we bought the building and said he used to live in the building. Then he hesitated and said “well, I sorta lived there”. Given what “living” in our building meant back then – I’m just glad he’s alive and appears to be doing OK…

February 1999 – After owning the building for 11 years Zion Temple Church sells the property to “168 West 123rd St. Realty Corp” but the address is “c/o Maywood Capital” in Paramus, NJ. The sale was for $0. Maywood Capital was convicted for fraud in 2005… Quoting the Attorney General of NJ…

The defendants placed newspaper ads offering interests in “safe” mortgages. Joseph Greenblatt solicited investors in the states of California, Florida, Massachusetts, New Jersey and New York, among others, to invest in residential properties in New York City that were in need of repair. The ads claimed the investments were ideal for IRAs, Keoghs, pensions and personal portfolios.

Corporations formed by the individual defendants would allegedly purchase properties for renovation and/or resale through Maywood Capital. Investor funds were purportedly invested in the entity owning the property and secured by mortgage interests in the property. In reality, many of the properties controlled by the defendants were over-mortgaged and did not produce the unrealistic profits promised to investors. In many cases, investors’ mortgage interests were never recorded or were extinguished without their knowledge so that new investments could be secured by mortgages on the buildings in question. In certain cases, the defendants did not even own the properties that they mortgaged to investors.

There was $42M in fraud and our place was in the center of it all since it was one of the buildings Maywood was telling it’s investors it was fixing up.

The fact that Zion Temple Church owned a crack house and sold the property for $0 to someone who was engaged in fraud makes Zion Temple Church appear to be party to the fraud. But honestly I don’t know what their role was – I’d like to learn more…

August 2002 – While the Attorney General of NJ hadn’t won his case yet, other things were happening with the building legally. I don’t know the particulars, but there was a court order and somehow Beulah Church of God In Christ Jesus, Inc. got our building along with 12 others in similar condition. If I had to guess I’d say they must have invested in Maywood and they got some of the collateral in return for their lost investment in the fraudulent scheme. But again, I don’t know what happened. I do know that one of the lawyers going after Maywood (James E. Hurley) was their lawyer and he helped them sell the buildings a couple years later…

November 2004 – Clearly Beulah didn’t want to actually own the buildings, so they sold them pretty quickly. The buyer of our building was “148 West 121st Street Associates LLC” which was c/o Tahl Properties (a big Harlem landlord). As you might guess from the name of the buyer Beulah sold both our building and 148 W 121 at the same time. The purchase price for both buildings was $1,130,434. That means the value of our building at that time was roughly half that.

July 2005 – Tahl Propp actually bought all of Beulah Church of God in Christ Jesus’ townhouses – they just bought them in several small transactions. Once all the legal issues were resolved Tahl Propp transferred ownership of all of the buildings under one LLC – TPE Townhouses Harlem.

Tahl Propp took out big rehab mortgages, but as a big developer the money just went into their operating budget. They started getting plans done on some of the buildings (including ours). They even pulled permits in 2007 to convert our building to two family and add a floor to the building. They did demolition, then stopped.

Then the market crashed in 2008 and Tahl Propp put all but two of the townhouses on the market.

March 2010 – We bought the place.

Apparently 168 (our house number) is supposed to be a lucky number in Chinese, but so far our building hasn’t had much luck. Since Dan’s Chinese maybe it takes a Chinese person buying a place to make 168 give you good luck… Then again maybe not – in talking to an expediter yesterday she said it sounded like we had been “particularly unlucky” in our dealings with the DOB. I’m hoping the building’s luck will change in the near future…

Construction is starting today! Later this afternoon I’ll go down to see the new construction fence… 🙂

FINALLY, We Get To Start Construction

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After over two and half months trying to get a stop work order lifted, it’s finally gone and we can start. The construction fence will go up tomorrow. Things are already in progress with ConEd, etc.

It’s all falling into place at the right time. All the paperwork is done for the rehab loan and it’s fully approved. We should close that Thursday or Friday (or maybe Monday).

If we can keep DOB happy and out of our hair things should go well. I’m sure the process will be a crazy one, but other than DOB, it should be good kind of crazy.

Mortgage Decisions – Points? Fixed/ARM?

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It’s that time… We have to sign our life away and start a mortgage that’s bigger than I ever thought I’d have. It’s scary how much money the banks will give us – but at the end of the day once we’ve got our C of O and have rental income coming in, the numbers really do work (quite nicely, actually).

We were pretty set on a fixed rate mortgage, but weren’t sure whether whether we wanted to pay points to get a lower rate. Then after talking to our accountant I started wondering whether we should go with an adjustable rate mortgage.

Our options are:

  • 5.5%, 30 year fixed, 1.25 points
  • 5.25%, 30 year fixed, 2.5 points
  • 4.5%, 7/1 ARM (5/2/5), 30 year term, 2.5 points

The trick with the 5.25% fixed and 4.5% ARM is that we have to come up with the money for the extra points at closing (1 point = 1% of your loan value). That will make our cash flow problem next year worse, but after about 7 years we’ll start saving money (compared to the 5.5% loan) because the lower mortgage payments would finally save more than the points would cost us.

Here’s how things work out (I’m using the mortgage calculator at HSH.com – it’s the best I found)…

March 2041 – regular pay off date for a 30 year mortgage

March 2036 – date we’d pay it off just by making biweekly rather than monthly mortgage payments (that’s a no brainer!)

February 2035 – date we’d pay it off if we went with the 5.25% fixed but paid the amount that would be due with the 5.5% loan and paid biweekly.

July 2032 – date we’d pay it off if we went with the 4.5% ARM but paid the amount that would be due with the 5.5% fixed, paid biweekly, and the rate never adjusted (unlikely).

I’m couching the discussion in terms of when we pay off the loan. Our goal is to pay the mortgage off as quickly as possible so we have the equity in our place to use to make another real estate purchase during the next real estate downturn (or the one after).

The biggest thing to notice is you can pay off your mortgage 5 years early just by dividing the payments in two and paying it every two weeks. I wish I had known that years ago. That’s a huge difference! That much we’ll definitely do, so the next question is how can we make it even shorter?

Paying extra points, but keeping the amount we pay the same shaves off just over a year. Given that it’s going to take 7 years to see the financial benefit and it makes our cash flow issues worse, I’m not so excited about that any more (it was the option we were planning on).

Going with an adjustable rate mortgage can have the biggest impact. But the problem is you never know how the rates will change. If they go up we could have big problems. The worst case is we couldn’t afford the house and had to sell during a slump. If the rates go down it could be great – we could pay the loan off even more quickly. We just don’t know what will happen and it’s an awfully big gamble. Dan and I have always been really conservative when it came to mortgages. We’re not gamblers. We’re the tortoise that gets there slowly but surely. Yes, it could almost shave another 5 years off the loan, but it just feels like too big of a gamble.

We’ll give the bank the final answer tomorrow morning. But I’m thinking we’re going with the 5.5% fixed rate with low points. It just makes the most sense for us.

One last note: If you’re renovating a townhouse and need a loan – contact Michael Stein at Wells Fargo (212/805-1055). Last I checked Wells is the only lender who are offering “conforming” (Fanny/Freddie) loans to rehab shells. Plus, Michael’s a great guy who’s literally worked with us for two years – telling us whether we could afford the mortgages for different types of properties, and then double and triple checking our numbers to make sure things went through smoothly.

Ready, Set… WAIT

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I did a post a while back about how we got two violations, then they appeared as ‘resolved’ but the stop work order on which they were based was still in effect. Well, clearing that nightmare has been a VERY long, arduous, and inane process.

The short(ish) version was that the architect’s expediter was told by someone at the DOB that we could not renew/extend the previous owner’s approved plans to convert the building to 2 family – that that job had had completely expired and was dead. Well, that was wrong. During the 5 months plan review process no one at DOB told us that getting a second “Alt-1” would cause problems. Even when the plans were approved it didn’t set off any alarm bells. No, DOB waited until we pulled permits and wanted to start work to give a FULL stop work order. We can’t even put up a new construction fence when our current one is deemed a violation and ‘unsafe’.

Then the fun began. If you look on the DOB website the violations literally have no explanation. Here are screenshots of them…

How do you deal with a violation when they won’t tell you what’s wrong? The papers they put on our building simply said “failure to provide information on job ###”. What in in the ?@#$ does that mean? What information?

What the inspector should have put was that we failed to close the first job before starting the second job. The issue is that they need to do an inspection to know what was done under the first job so they know how to properly evaluate the second job. See? Put that way it all makes sense. The inspector could/should have put “failure to have final inspection of job ### before starting job ###.” THAT would have made a total sense. I still think it would have been nice for someone at the DOB to know that the we should work under the first job number or at least warn us to close it before starting the 2nd job number.

Anyway, it took a while to figure out what the problem was (because the inspector didn’t give us adequate information). We actually had to fire one expediter who couldn’t figure it out and hire another one. The new expediter met with the borough commissioner to try to get an exemption but was unsuccessful. However she did get an inspection a few days later (instead of a few weeks later) – that was supposed to speed up the process. The inspector came, and then we had to wait over a week for him to file his report. Then we were told it was up to the borough commissioner to review the report and take care of things. We waited and waited and finally got impatient. Just when we were about to go see the borough commissioner ourselves our expediter went in and as of Tuesday the old job is formally withdrawn.

But, you guessed right… That’s still not the end of it… Now the fact that the job is withdrawn has to be passed over to the construction unit who needs to dismiss the violations and lift the stop work order. That’s supposed to be done by the end of the week. We’ll see.

This is just ridiculous… Two and a half months to clear up something that never should have happened in the first place. Only the DOB is at fault here. They gave us the wrong information and then then never warned us of a problem despite seeing us several times over many months. You shouldn’t be able to apply for a second Alt-1 until you’ve closed the first one. It shouldn’t blow up right when you want to start construction – that’s the absolute worst time for it to happen.

Who knows what else they haven’t told us and how much time and money that will cost…

I gotta say I hate the DOB. If you look around Harlem and wonder why there are so many derelict buildings – they’re part of the reason. They should be helping people like us, not making it so incredibly difficult. We’re trying to do things by the book, but they keep changing the words on the page as we’re reading it.

Hopefully it will get resolved this week and we’ll be able to start construction first thing next week… Hopefully…

No Wonder People Get In Trouble With NYC DOB

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There are a few minor changes that we need to get signed off by DOB. For example, when Peter Holtzman was kind enough to look over our plans he noticed the plan examiner hadn’t caught the fact that we were exhausting things like bathroom vents and dryer vents over the property line (not allowed). So we’re planning to vent everything through the roof or rear wall and need to get that approved. Also, as the plan examiner was stamping our plans he noticed we needed changes to the size of our bulkhead – the walkway next to it didn’t meet “side yard” zoning requirements. He was kind enough to tell us to just come back and fix it when we put in a PAA. And we had changed a bathtub to a shower (two changes – one to delete the tub, another to add the shower), etc. So all in all minor stuff, but it seems little details can trip you up with the DOB, so we wanted to get them approved to avoid problems.

Our architect’s expediter filed the PAA (Post Approval Amendment) on 18 February and we were scheduled for a meeting a little over two weeks later – on 7 march. But that meeting was canceled for some reason and rescheduled for 4 May – that’s right – almost 3 months after we initially filed the PAA.

I was watching Holmes Inspection last night on HGTV and at one point he saw a problem and said “oh, we’ll need to pull a permit for that”. The next day he had his permit and they were on their way. That’s how things should work, but 3 months to get some little changes approved? It’s craziness.

I can sorta understand why the initial plan approval takes a while, but 3 months for a post approval amendment? Please… If you see something during construction that warrants a PAA that means you could have a 3 month delay (or more). And what if we don’t get the PAA approved? That’s a horror I don’t want to think about.

It’s no wonder people get in trouble with the DOB. They have little issues they need approval for, but they can’t get the feedback in a timely manner so they have to choose between a major delay or going ahead and doing something that hasn’t been approved.

Apparently the current system is better than the old one. I think the current system is broken. I can’t imagine what it used to be like. This isn’t just theoretical. It hurts homeowners and makes it more difficult to fix up blighted buildings in our communities.

On top of everything else we can’t even try to get an earlier appointment without first canceling our current appointment. If one isn’t available, then we could be pushed back even further. The expediter risked a later appointment today by calling, canceling, and trying to get an earlier one. Luckily when they said ‘no’ to an earlier one he was able to rebook the original appointment. But it was possible another caller could have gotten his original slot while he was figuring out no earlier ones were available.

Here are a few things I can think of that would make the DOB process better. Admittedly some are easier said than done…

  • Hire more staff and get things processed more quickly.
  • During the approval process allocate sufficient time to completely review the plans the first time. After the full review, anything that was not brought up as an objection shouldn’t be able to result in a rejection unless there are other unresolved issues or it’s a serious safety issue. However, put them in as conditions that must be resolved in the first PAA. That will let work start and issues be dealt with later.
  • Have a check list for the construction process similar to the approval process. Anything that’s not on the list, and not an immediate safety issue, shouldn’t ever result in a stop work order.
  • Have a separate unit in the Manhattan DOB that only deals with buildings under 100,000 sq. ft. (or maybe 50,000 sq. ft.). Do a little more hand holding with these projects so these little projects don’t get mired in bureaucracy.
  • Give inspectors more latitude to be lenient with little things that are not safety issues. Things like changing a bathtub to a shower or adding a second dishwasher shouldn’t require approval by a plan examiner. The inspector should be able to overlook an unlimited number of items like that – or just note that additional fees need to be paid, if they affect filing fees.

But of course, all of that is a pipe dream. In the mean time, dealing with the DOB is the one thing that seriously worries me about our project. I’m scared something little and unintentional will turn out being incredibly costly for no good reason.