What Things Are Selling for Around Mt. Morris Park

Posted on February 18, 2011 by BeatingUpwind

Yesterday and today have been busy days… Yesterday the bank’s surveyor came by and we had to get him into the back yard (easier said than done). Today we had two appointments – one with the bank’s appraiser who is tasked with figuring out the future value of the house after renovations. And the second appointment was with a DOB building inspector to get our stop work order lifted.

In preparation for the appraiser I shelled out $70 for a Property Shark membership and stayed up late last night looking at the numbers. Banks have reputations for getting the least expensive appraiser – often ones who have no experience with Manhattan real estate. Even people who understand Manhattan real estate can get tripped up with Harlem townhouses – you have ones selling for $300,000 and others for $2 million and the official square footage is sometimes right and sometimes completely wrong. I figured I’d give the appraiser my own list of comps to reduce their chance of getting it wrong and messing up our mortgage. So here’s what I found…

			Square Feet		$/Sq. Ft.
Address	Date	Price	Official	Actual	Official	Actual	Class
168 W 123	03-Mar-10	$530,000	3,600	4,500	$147	$118	C4

136 W 123	19-Nov-10	$595,000	2,652	3,640	$224	$163	C0
139 W 123	30-Nov-10	$540,000	3,120	4,160	$173	$130	S5
124 W 123	19-Jan-11	$309,000	2,115	3,264	$146	$95	C3
124 W 123	1-Mar-11	$535,730	2,115	3,264	$253	$164	C3
239 W 123	15-Sep-10	$495,000	2,499	3,400	$198	$146	C5
115 W 120	13-Aug-10	$1,975,000	3,000	4,480	$658	$441	B9
148 W 120	05-Nov-10	$1,525,000	3,380	3,468	$451	$440	B9
246 Lenox	09-Dec-10	$1,150,000	5,368	7,040	$214	$163	C5
260 W 121	20-Sep-10	$1,100,000	2,808	3,600	$392	$306	C5
22 W 123	16-Dec-10	$395,000	2,484	3,200	$159	$123	C5
18 W 123	28-Oct-10	$600,000	2,484	3,200	$242	$188	C5
208 Lenox	08-Dec-10	$825,000	3,882	4,482	$213	$184	C5
183 Lenox	19-Aug-10	$795,049	4,162	6,555	$191	$121	C5
108 W 119	27-Aug-10	$960,234	3,969	4,392	$242	$219	C0
120 W 127	08-Oct-10	$300,000	2,697	4,284	$111	$70	C5
118 W 127	08-Oct-10	$300,000	2,697	4,352	$111	$69	C5
19 W 120	30-Jul-10	$1,800,000	4,680	4,400	$385	$409	B9
140 W 118	23-Nov-10	$1,180,000	3,808	3,808	$310	$310	B9
57 W 119	14-Sep-10	$1,750,000	3,536	3,536	$495	$495	B3
64 W 119	06-Jan-11	$1,500,000	2,700	3,536	$556	$424	C0
146 W 130	28-Sep-10	$889,500	3,861	4,680	$230	$190	C0
140 W 130	17-Nov-10	$490,000	3,332	3,910	$147	$25	C5
99 Morningside	28-Dec-10	$975,000	4,226	5,850	$231	$167	C2
11 E 127	23-Dec-10	$1,175,000	4,380	3,201	$268	$367	C0
152 W 132	24-Jan-11	$510,000	2,199	2,880	$232	$177	C3
2087 5th	23-Dec-10	$ 2,075,000	4,960	6,600	$418	$314	C2
233 W 113	19-Jan-11	$1,350,000	2,464	3,200	$548	$422	B3

There were more columns on my spreadsheet, but they didn’t all fit. The places are ordered by distance from our place. There are a few things to note…

First, the ones that are struck through are foreclosures – their amounts aren’t real sales amounts, they’re the amounts that were due on the mortgages. There may be foreclosures that aren’t struck through – I didn’t check extensively.

The next thing to note is the ‘building class’ column. Class B buildings are 1 and 2 family. “C0” buildings are 3 family. C2 is 5 or 6 family. C4s (like ours) are old law tenements. And C5s are rooming houses. (C4 and C5 are collectively SROs). The one S5 was an old union lodge.

You would think that 3 family homes would sell well since there’s lots of rental income to offset expenses, but taxes on them are still low, but that’s not the case. As you can see Class B buildings (2 family) consistently have much higher prices (I’ve colored them dark red). A while back Harlem Bespoke made a big of a deal that the $2 million ceiling had been broken with the sale of 2087 5th Avenue, but it’s a 5 or 6 family building. That’s more of a rental building than a typical townhouse, so I wouldn’t say the ceiling has been broken at all – it’s still very much in tact.

The other thing to note is that shells can still be picked up for under $150/sq. ft. and after rehab they’re worth about $450/sq. ft. If you do a nice, but not extravagant job rehab will cost about $200/sq. ft., so you’ll net $100/sq. ft. in profit (on paper at least). If you can put up with 2 years of chaos, shells are still an excellent investment.

As it turns out I didn’t really need to do the cheat sheet for the appraiser. When I showed him what I had done he pointed to the Class B prices and said he had seen those and that was the ballpark he was considering going into our meeting. So it looks like we’re safe on our appraisal. The bank needs us to appraise at or above $1.35M and it looks like he’ll put our future value somewhere between $1.5M and $2.0M.

“Disco House” Sells for $700K

Posted on February 14, 2011 by BeatingUpwind

In our hunt for a townhouse we looked at 30 different places. A few of them were far more memorable than the others. One of the memorable ones was 642 West 158th Street, which we saw in August of 2009. If you’ve ever driven up the West Side Highway and gotten off in the 150s, you drove past it – it’s on the block just as you get off the highway.

Well, it sold January 21st for $700,000. It had been on the market since June of 2009. It’s original asking price was $1.1M, which had been dropped to $895K – so the buyer negotiated $200K off the asking.

It’s a nice wide townhouse – 18 2/3rd feet wide. Including the solarium extension and the room under it, the house has roughly 3,800 square feet, so it sold for about $185/sq. ft.

The house was memorable because it had been completely rehabbed at one point – probably in the late 70s or early 80s and made into the dream house for a playboy. There was a dance floor, red satin curtains, an overly opulent swan faucet in the parlor bathroom, cedar lined closets, and so on. In it’s time it was an over the top “party house” renovation. As we walked through it you could almost envision the parties, the lines of coke, and the sex in the bedrooms upstairs. The house definitely left an impression…

Dance floor in party townhouse

On the upside, while it needed a major renovation, what it needed was largely just cosmetic – but we’re talking major cosmetic work. There was also some cracks in the front façade which might indicate structural issues, and the rear solarium was leaking and there was a pretty serious mold problem because of it. But all in all, the house was solid and probably had newish electrical and plumbing.

Besides the taste issue, on the downside was location… The only subway close to it is the 1 train. There’s lots of traffic passing in front of the house off the Westside Highway – so it’s not a cute tree-lined brownstone block. The neighborhood isn’t as good as some others, etc.

BUT – with just a little work the house was completely livable if you can deal with the decor. So this is another (just north of Harlem) Washington Heights townhouse that’s selling at a pretty economical price. I’d guess it would cost about $150/sq. ft. ($570K) to renovate the place properly, so the total cost is under $1.3M and under $350/sq. ft. But you could spend less and have a perfectly nice townhouse for under $1M. So there are still good deals available if you need space and can only afford to spend under a million.

Act Now To Get Historic Preservation Tax Credit

Posted on February 9, 2011 by BeatingUpwind

If you’re currently eligible for historic preservation tax credits that reimburse you 20 to 40% of your renovation costs, it’s important that you act now – you may not be eligible for the tax credit once the 2010 Census data come out and it looks like that will happen in May of this year (though it may be as late as August). New York State will begin using the data shortly after it comes out. The application process can be rather complicated (depending on what you’re doing) – so you should get started now. And my understanding is that you only have to have your initial application in before the new data are implemented. That application doesn’t have to be perfect – you can work out the details shortly thereafter.

The reason why this is important is because I’m convinced most of Harlem will not be eligible for the tax credits once the 2010 Census data are implemented. The tax credit only applies to census tracts that are below the median income for the state. Take our census tract for example (tract 222): In 2000 the median household income for New York was $43,393, for our tract it was $38,293 – so really close. [I think they’re using median household income, if they’re using family income the numbers were $51,691 / $41,994, and if they’re using per capita income the numbers were $23,389 / $22,402.]

So Harlem neighborhoods were just under the cut off in 2000 and Harlem has improved drastically in the past 10 years. Even with the recession it’s improved much faster in the past 10 years than the state as a whole. I just can’t imagine that we’ll be eligible based on 2010 numbers – now is the moment to get the tax credit…

One Step Forward, One Step Back

Posted on February 8, 2011 by BeatingUpwind

Well, we had two pieces of news tonight…

First, Wells-Fargo approved our renovation loan and gave us a commitment letter. It’s scary how big the loan is, but the numbers work when it’s all said and done. So getting the mortgage firmed up is a great step forward.

Second, our expediter sat down with the Boro Commissioner at DOB today. She said he almost lifted our stop work order, but ultimately refused saying he wants to see both sets of approved plans. UGH! A step backwards (or at least not a step forward).

There are a number of issues at play. The first is that last year someone at DOB emphatically told our architect’s expediter that the old plans could not be renewed – that two years had elapsed and they were under the 1968 building code, so that was that. Well, apparently that was wrong – they can and should have been renewed. So new plans were submitted and approved without closing out the first ones. The stop work order is because the original plans weren’t closed out before the new ones were approved and permitted. The close out process involves an inspection so they know what was accomplished under each job. Only the boro commissioner can waive the inspection. If we have to wait for the inspection it’ll be another month delay. Luckily we’re not paying mortgage right now…

Still, it all started because someone at DOB gave the wrong info to the first expediter… This whole this is just a bureaucratic mistake…

At least the mortgage is good news…

Townhouse or Condo/Coop?

Posted on February 8, 2011 by BeatingUpwind

The other day someone contacted me and said they were thinking of getting either a townhouse (in Harlem) or a coop or condo. Of course my suggestion was to get a townhouse. Here’s a bit of what of I said to him…

The differences between townhouses and coops/condos is night and day. We were in a pretty easy going coop and over time things just got worse and worse. After 12 years we got incredibly tired of all the politics and silly decisions by the super, the president, and the board in general. For example we had a major fight with our super over why we hadn’t filed an alteration agreement when we had a workman in to fix a broken hinge on our kitchen cabinets. It was more complicated to fix than you might imagine, but it was a hinge – and the super thought we needed a $500 deposit and proof of $2 million in insurance. That’s what it means to live in a condo or coop. We never have to worry that sort of thing ever again.

On the other hand, if something breaks, in the townhouse it’ll be our responsibility to fix it. We’re basically going to have new construction, so it’s not a big deal, but if we had a townhouse that was “livable” things would be older and there would be a fair amount of maintenance required. We also have to keep the sidewalk clean, shovel the snow, etc. or get a constant barrage of $100 ECB tickets. In fact, on our first day of ownership we already had a ticket from earlier that morning. But 3 different people approached us willing to be the super/porter for our building and keep things clean – so those particular tasks are easy to offload with a little money.

The other big advantage of townhouses is the rental income. Currently, every $1,000/month of rental income covers roughly $200,000 in mortgage. If you time things so your mortgage is paid off when you hit retirement you’ll live rent free and have thousands in rental income that will more than cover any building maintenance and taxes. It’s the affordable way to stay in Manhattan when you retire. Now compare that to a coop/condo where you never stop paying maintenance fees – and the maintenance fees just keep going up and up…

Clearly, I’d go for a townhouse, but I’m biased. The trick is finding one with the right location and price. There are many more choices when it comes to condos and coops.