Wednesday, January 26, 2011

A Walk Down Clinton Ave - Part I: 291 Clinton Avenue

291 Clinton Avenue is an interesting historical case. This legal 6-Family came on the scene just over a year ago in December 2009 for $1.3M. Under any normal circumstances, a building this size and this nice could fetch that price easily, even after the crash. But it quickly became clear there were some distressed issues going on, and the agent didn't make any bones about it. The listing openly acknowledges "the rents are extremely low" which is due to rent controlled or rent stabilized tenants that pay way under market. Rent control/stabilization is a great set-up for the tenants, but the diminished rental income potential also suffocates the sale value of the property. At one point we'd heard a deal in the $900K's would do it. And even at that price there were serious limitations. They re-listed in June 2010 for $999K and closed the next month for $800K.

The property history reveals 2 Lis Pendens actions in April 2008 just after a purchase in December 2007 for $700K. A third Lis Pendens shows up later in February 2009.

The interior pictures show some fireplaces and some original detail, and hardwood floors & sunlight by the baywindow on one of the floors:

It looks like the price drop stirred up enough attention to get to a bidder with the right price quickly. Compare this to the action we see in another 6-Family situation like 26 St. James. Compare to small SRO situations around Clinton Hill like 187 St. James Place or 72 Downing Street.

Pro's: curb appeal, size, neighborhood, original details, fireplaces, bay windows, 5 floors, 4,500 sqft

Con's: very low rents & rent controlled tenants, commercial loan needed, "not move in condition", long & expensive conversion needed even w/o tenant issues

Ideally: this is a great pick up in the long-run, but even at this price it will take patience.

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