Friday, November 30, 2012

Crown Heights Under $700K: 1148 Sterling Place

Old-school brokers swear by age-old standard notions like "the fall buying season".  But in the 21st Century, things move at a slightly different pace than the dinosaurs of old media can keep up with.  Even the 2nd worst storm in US history that left millions without power couldn't stop a $2.5M Park Slope listing from going in contract in a matter of weeks.  Yet the day before "Frankenstorm" Sandy (and some weeks before it showed up on Streeteasy) we saw this nifty little property at 1148 Sterling Place.  That's right, before it listed for $725K, Platinum Members got the early heads up on it.  Another broker who also has the open listing, Elliot Nicks, showed it to us at the asking price of $679K.  Elliot even insisted today that price still gets a deal done.  Even as tenants were moving out last month, Platinum Members got to explore everything this house has to offer. 

We trust Elliot and his take on the market.  We've seen him navigate tricky deals and come through with happy clients.  So when he told us this house was worth a look, it was a no-brainer.  There's original wainscoting, moldings, built-in's, and a stained-glass skylight.  There's easily-removable carpet covering up (and protecting) the original parquet wood floors with herringbone patterns.  The conversion to gas heat has already been done, which is tens of thousands in deferred maintenance that you don't have to blow upon purchasing like you have to with other properties.  Spend that money on personalizing your kitchens and baths instead.  Sure, there's some asbestos in the basement - as comes with many of these homes - but the owner will remedy that for you prior to closing.  Again, more money to keep in your pocket to spiff-up the cosmetic rough edges.

The rest is a brownstone that's almost 20' wide, a way-healthy 55' deep, on an extra-deep 127' lot - giving you plenty of backyard and FAR to play with.  A 2-Family fixer-upper for under $700K in Crown Heights is a good look that we've seen before.  They don't last long.  It's easy to say, "Too far east."  But it's hard to find much better for this price or less.  And if you really know your Brooklyn, you can stand on this block and see how prime this location just off Eastern Parkway, around the corner from a huge local park & the Children's Museum, is destined to be over time.  Some claim to be your neighbor, but then they can't even spell "Nostrand Avenue" correctly:

Real recognize real.  Considering the speed with which prices are sweeping east across Bed-Stuy, parts of Crown Heights are still undervalued in our opinion.  Brooklyn remains misunderstood, but we'll cover that another time...

Pro's:  price, value, curb appeal, original details, gas conversion already done, available under $700K now

Con's:  quirky shape, too far east for some, lots of updates to do

Ideally:  another great look at a condo alternative.  Buy now, thank us later.

Thursday, November 29, 2012

Listings: 90 Maple Street

New to the Listings section of the blog, it's our first rental.  If you're looking for a furnished single family home with parking in the neighborhood that the New York Times recently dubbed "An Oasis of Brownstones and Rastafarian Gear", then perhaps 90 Maple Street is worth a look for you.  With at least 4 bedrooms and 4 bathrooms, a garden, and a terrace...

This wouldn't be worst place to get a little suburban style housing within urban confines just off the Q train.  The $7,400/month rental market isn't one we're familiar with, though.

Tuesday, November 27, 2012

Colossal Crown Heights Piece: 1329 Pacific Street

This summer, Platinum Members had the early lead on this huge 20' x 90' limestone in Crown Heights at 1329 Pacific Street.  We were psyched to see such a blank canvas in such a choice location.  Especially with sales & rental comps like 1377 Pacific and 1379 Pacific Street just one block away.  Sure, this limestone monster at 1329 is an SRO and basically a total gut, but none of that would be a deal breaker for the right price.  We'd heard they wanted $1.5M, had turned down $1.1M, and we figured $200/sqft would do the trick.  Many developers passed on it or low-balled it, but some locals came with some pretty compelling offers that we think this owner is crazy not to take.

What does the owner want?  Well, it's not too hard to do the math.  He bought it in 2006 for $850K, then he pulls out $550K this summer.  Smells like $1.4M to us.  Which you could almost make a case for, if a performing asset on the same street didn't just list for less than that.  Why buy an SRO shell that you'll need to wait months just for the privilege of putting another $750K+ into just to get it off the ground, when you could buy something already grossing today what this could only hope to gross by next year?  The owner who foolishly let his Certificate of Non-Harassment expire on this place last year is asleep at the wheel again.  Now they're pulling a 308 Clermont and going M.I.A. on the highest & best offers out there instead of knowing a good thing when they've got it.

Interior pics?  Not really necessary when the inside is more "crack den" than anything else.  Besides a few salvageable original built-in cabinets and floors, the best thing it's got going for it is size and windows.  With a little T-cut on the unattached side, you get a ton of windows on 3 sides...

As for the layout?  Well, we had some pretty sweet layouts and plans done for Platinum Members only (for now) by a local architect, but it's not hard to picture fitting lots of bedrooms on this 90' floorplate.  Perhaps Young Jeezy said it best when he bragged, "House stupid, dumb big.  My rooms got rooms."  It's a cornucopia of opportunity, if only the owner had a pulse in the past few months and a dose of realism to get a deal done.

While Platinum Members aptly teased us lastnight, "Keep pumping that Connecticut Muffin," and everyone hates on how painfully generic the place is, it's undeniably a canary in the mineshaft of gentrification on Nostrand Avenue.  To pick up a potential 8-Family just off that avenue and around the corner from the A/C trains and the LIRR is a good look for buy & hold'ers and condo converters alike.  Again, that's if the owner ever wakes up and gets real.  We're hoping this colossal piece isn't a colossal waste of time.

Pro's:  size, curb appeal, vacant, blank canvas, location poised for another leg up, windows and rooms for days

Con's:  SRO with expired C of NH, takes all-cash purchase plus another huge renovation budget, out to lunch owner whose price is too high

Ideally:  when an owner's pulled all his equity out already, doesn't appear motivated, and doesn't even have the decency to counter really compelling offers, forget him and get the superior buy right down the street.

Friday, November 23, 2012

Off-Market Deal In Contract: 613 Washington Avenue

Last month, Platinum Members got the early heads-up on a great off-market estate-type deal on Washington Avenue, just down the hill from our last mixed-use play.  On the east side of Washington Avenue, the boundary of Crown Heights and Prospect Heights by some accounts, this tiny 2-story tire shop with an apartment above was up for grabs with a price to beat of $510K.  Now Halstead has listed the place at 613 Washington Avenue for $600K with "Contract Signed" on their listing.  Well, what's the point of that?   Local broker Mia Bailey, who brought us the deal last month and is direct to the owner and his attorney, tells us she doesn't really think Halstead even has the listing.  Hmm...

Since Mia told us the place is so janky inside, and the rental income isn't much to speak of, we figured someone might pay the $510K anyways, even just as a tear-down, simply for the privilege of being on this budding Washington Avenue.  Which then got us thinking, what about the adjacent vacant lot on the corner?  One need look no further than developments across the street that have sold for upwards of $600/sqft, and ones yet being built, to see the potential for development here.

Now proven developers and their wanna-be's love to drive around town in their SUV's and tell us which corners they'd love to develop.  However, 9 times out of 10, those corners aren't for sale and aren't interested in selling.  So it's just this pipe dream, and we can't figure out why these folks continue to indulge in it.  They show up to a showing for a great off-market renovation project, point at a different house minding its business across the street and say, "Now THAT'S the building I want!"  Which we've always said is like going on a blind date and saying, "You know what?  The waitress is cuter.  I'll have her instead."

Well the waitress may not be on the market, playboy.  Yet in this particular case, as luck would have it, the lot adjacent to 613 Washington Avenue IS interested in selling too.  So we spoke to the owner who said he wants $800K for his vacant lot, which is pretty absurd in our (and everyone else's) opinion - especially since his only near-term plans for it are to rent it out as parking, which won't yield more than a few hundred per month per space.  However, if one owner's price is a bit high and another's is a bit low, there may be a happy compromise in the middle closer to the price per buildable square foot that makes sense for someone with the vision and funds to make it happen.  Anybody can tell you, "That's $150+ pbsf, too high," but it takes a real G to get in there and work the deal properly.  If you've been scoping out waitresses for months, and you finally find one that's down, what else are you waiting for?

Pro's:  location, value, adjacent vacant lot interested in selling, so many things you can do when you pick up even a janky 2-story for the price of a 1BR condo over here

Con's:  in contract already?, odd-sized lot, takes funds and vision to maximize potential

Ideally:  what's the point of listing something in contract for $90K higher than the latest accepted offer?  Get in there and find out.

Monday, November 19, 2012

Price Drop on Prime Mixed-Use: 784 Washington Avenue

Not on your StreetEasy or your NYTimes, this mixed-use property on the unquestionably up & coming Washington Avenue was on Platinum Member radar just before it came out on the market for $1.325M last month.  Now it's asking $1.2M and we think this is another great look at getting a foot in on an area that's poised for another leg up.  784 Washington Avenue is next door to Tom's Restaurant, the lovable local greasy-spoon diner where people still inexplicably stand in long lines on the weekend:

It was almost 6 months ago that we told you to "speak now or forever hold your lease" on this rapidly repositioning stretch down the hill from the Brooklyn Museum, the 2/3 trains, lodged between the hotter-than-hot stretches of Franklin Avenue and Vanderbilt Avenue.  Since then, even more places have opened up including a tattoo parlor and another fawncy cocktail bar. The critical mass has been reached when young-professional & hipster foot traffic on the streets between these avenues has become a regular occurrence.  By the time Milk Bar's 2nd variation opens up across the street at 780 Washington Avenue, trust us, everyone will have gotten the memo that it's okay to be boudgie on Washington Ave now and the value in 784 Washington will be a no-brainer.

Sure, the building is a funky trapezoid that starts out 15' wide in the front and gets wider in the back.  The commercial space wasn't able to rent for $4,500 for a long time, or even the seemingly-high $3,500 they wanted as recently as last year.  But it has high ceilings, an enormous back yard, and is a sweet raw canvas to build out.

The apartments are at least 2BR's renting for a very reasonable average of $2,100/month each.  Readers across the street pay $1,800/month for a decent 1BR, and locals have rented their renovated 2BR's short-term for as much as $1,500/BR.  That's right, people - this "isn't your father's Crown Heights".  Or even last year's Crown Heights, for that matter.  And talk about anchor tenants, that Brooklyn Museum (hasn't and) isn't going anywhere...

So tying your boat to that dock for under $1.3M makes sense for anyone with the funds to do it and even just a pinch of vision.  With a projected 6.3% cap, and some cool space to play with, we don't see this lasting much longer.  6-caps sell in much less desirable locations than this on the regular.  An owner/user is probably the most likely candidate to understand this space and make it work, because half the rent is still just projected at this point.  That's the biggest hold-up on an even more prime Cpex listing too.  Hey, at least they spell out clearly for ya what's pro forma and what isn't.

Pro's:  value price for rapidly improving area, interesting commercial canvas, apartments with upside to explore, not on everyone's radar, buildable square feet

Con's:  commercial tenant may take time to land, narrow at the front, not sure how to make the best use of the buildable square feet, come-lately's fretting about the owner's cost basis

Ideally:  sitting at a really sensible price now, but there's an even better play that's flying under the radar as we speak too.

Saturday, November 17, 2012

10-Cap in Contract in Lefferts Garden: 300 Lincoln Road

If someone told you there was 12-Family 10-cap just 3 blocks from Prospect Park for less than $1.5M, you'd be lining up to get a piece of it.  While it won't win any beauty contests, 300 Lincoln Road has been out forever, aching to be swooped up, and finally just went in contract yesterday.  Yes, while people struggle to find an elusive 8-cap in this town, this straight-up 10-cap at its asking price of $1.3M, with only one rent stabilized unit, was up for the taking for the longest.  Sure, it smelled like pet store inside and had lots of Section 8 and tenants on other assistance programs, but who can deny that rent roll and the trajectory of that location?  An average of $1,138/month per studio and one bedroom?  You see that going down anytime soon?  Throw in the assignable mortgage option and this thing is a no-brainer no matter how you cut it.

Finish the basement, spruce up the backyard, and repositioning in the very near term is a cinch:

As for Prospect Lefferts Garden, as one reader who preferred to remain anonymous wrote us:

"Please, maybe stop mentioning that not everyone is ready for PLG! The proximity to the park and BBG, the zippy express q train (voted best in nyc this year by straphangers campaign), nearness to the ever-growing dining scene in Crown Heights and Prospect Hts, not to mention the gorgeous housing stock, make it BETTER than Bed Stuy. Just look at some recent sales in the area and NYT article from the other day. No, its not Cobble Hill or Park Slope, just 1/3 the price."

We couldn't agree more.  And doesn't the NY Times just legitimize everything for some folks?  Their article speaks volumes for this neighborhood, as if the return on this investment didn't already speak loudly enough.

Pro's:  10 cap, only 1 RS unit, unbeatable investment, location is only coming up

Con's:  no beauty inside, chopped into tiny units, are you still not ready for PLG?

Ideally:  while everyone's still sleeping on emerging neighborhoods, Platinum Members are swooping up another 10-cap in this neighborhood

Thursday, November 15, 2012

Platinum Member Gold: 181 Park Place

Long before it listed for $2M this spring, Platinum Members were in and out of the Prospect Heights previously off-market brownstone gem at 181 Park Place.  Yes, we've been tracking this winner since it listed for ~$1.4M immediately after the crash as a stalled-out conversion of a 3-Family to a 5-Family.  We first scoped it out with Cousin John in September of 2008.  The listing expired and it fell off everyone's radar.  Given the rebound in the market heading into the summer and fall of 2011, we were way bullish on this place as a straggler that the market had caught up to.  Especially with the crowd of cash buyers chasing off-market deals, shells for high-end renovations, condo conversion opportunities, and foreclosures - particularly anything to do with Park Slope.  So last year we revisited the house, and the owners were motivated to sell.  For over 6 months, $1.6M would've gotten the deal done, and even $1.35M was good enough for one owner & would've gotten the wheels turning, but no one could touch $1.3M with a bid.  We were shocked.

Did an SRO at 280 Park Place not close for $1.45M a month prior?  Did a developer not buy 33 St. Marks Avenue four blocks away, (before the rebound!) for $1.6M, chop it into 4 condos that sold for well over $4M total?  Granted, that was a larger floorplate, but you've got 5 stories on 181 Park Place and an extra-deep lot.  Plus you're closer to Prospect Park, further from the stadium, a block away from Park Slope, but in an even better school district than Park Slope north anyways.  And you're steps from the B/Q train that goes over the bridge into the city in less than 4 stops.  The $700K condo game was a well-documented phenomenon in this area already, and everyone runs around with $200/sqft as their rough figure for renovations, so even with extremely conservative estimates, we scribbled out this quick back of the envelope on it last year:

$845K conservative profit didn't sound too shabby to us.  Obviously lots of these numbers could go higher, including the condo sales.  One basic blueprint for this type of conversion is clearly 543 Dean Street, which sold all units for over $680K/each before this newest bull market.  That establishes a pretty nice floor.  181 Park Place was clearly the best shell anywhere close to $1.5M in the area. 

While nearby great fixer-uppers with period details, more for end-users, were falling from the $1.8M's to the $1.5M's last winter like 270 Sterling Place and 27 7th Avenue, 181 Park Place simply could not find its price.  Even when the decked-out example of an end-user 2-Family renovation one block away at 124 Park Place was getting run up from its asking price of $2.7M (a price the NYTimes later misquoted by over $1.5M), 181 Park Place was still getting low-balled.  Granted, it also wasn't getting marketed to hardly anyone, but the hair on the deal was too much for Platinum Members to see that this was fish in a barrel.  By the time Elliman listed it for $2M , there was enough momentum to get a cash offer, with tenants, with a rent controlled apartment, covering all tenant costs for over 6 months until they move out.  Yowza!  The owners were obviously in a hurry to lock in that contract.  After months of no one coming within $300K of their price, the owners got $400K MORE than their expected price.  Even a fellow beneficiary of falling up the stairs in this market like 308 Clermont has to be envious of that!  No wonder Prospect Heights neighbor 213 Prospect Place is rumored in contract well above its asking price of $2.15M!

When the market's moving, you've gotta be the one to adjust...

Because the market won't adjust for you.

Pro's: size, location, 5 stories, extra-deep lot, high ceilings, nice block, conversion potential

Con's:  cash deal, stalled conversion, needs a ton of work, not much original detail worth keeping or restoring, a few "meh" neighbors, one RC apartment, 2 out of 5 units with entrenched tenants who are in no hurry to leave even WITH a 6-figure buyout

Ideally:  can't say we didn't tell ya.  If you roll like Platinum Members do, sometimes you get a great chance at these further upstream.

Wednesday, November 14, 2012

Projects: South Slope SRO Conversion

When we heard architects working on a gut renovation of an illegal SRO conversion in South Slope, it got our attention.  Usually people are trying to convert an SRO into a legal multi-family.  This house was a legal 2-Family illegally used as an SRO.  The owner picked it up with an FHA construction loan, which includes a renovation budget with which to restore the house to its intended 2-Family status.  Architect team Bobby Johnston and Ruth Mandl of Co Adaptive Architecture told us about their project.  The extensive renovation includes new electrical, plumbing, water heater/boiler, windows, roof, staircase, skylight, and replacing joists as necessary.

The property was delivered vacant at closing, and these before pictures give us a glimpse of the condition:

The proposed renderings & floorplan show a sleek, open design for the parlor floor:

With a 2BR and 2 bath upstairs...

The owner's duplex and garden rental each have their own private access to the yard, which is split into two different heights.  Bobby and Ruth designed a bridge to connect to the duplex to the upper level rear half of the yard...

This is an extensive renovation on a very modest budget.  Familiar with Design-Build, Bobby and Ruth say they always analyze a budget before doing a design anyways.  Besides cost considerations, with the FHA construction loan, there's a 6 month timeline from the bank from closing to construction.  Bobby and Ruth say doing their drawings in a 3D modeling program speeds up drawings and renderings.  They're careful about other savings too.  They pay special attention to energy use, picking local materials, and considering the life-cycle of materials.  They'll even calculate for the client the savings over time by going with a certain system or using better insulation and better windows.

With permits coming and construction starting soon, we're eager to see how this one comes along.  It's interesting to see an FHA construction loan in the flesh, especially with such a stylish, practical design and thorough renovation on such a value budget.

Tuesday, November 13, 2012

Closings of Note: Price Drops on Mostly Subpar Product

The skinny, extraordinarily "meh" 725 President Street in Park Slope was another shot across the bow for super-high price points in Park Slope when it listed last year for the odd price $1.783M.  It took a long time for the price to drop in line with market and close for $1.45M last month.

A sweet 3-story 1-Family in Prospect Lefferts Garden like 151 Rutland Road is a great alternative to South Slope at $1.195M.  It closed last month for an even better $997K.

A similar price drop went down for a 3-story gut reno 2-Fam in prime Carroll Gardens at 32 2nd Street.  On Platinum Member radar since day 1, this was less than many were expecting for the price, or too far south for others, but someone looking for over a year pulled the trigger.  It listed for $1.199M, lasted barely a week on the market, and closed last month for $997K.  A great buy, and way better than some neighbors...

49 2nd Place is a 3-story Carroll Gardens fixer-upper that came out for $1.9M.  Corcoran ushered all the ballers through the home and it closed for $1.81M last month.  On just a 65' lot, this is some aggressive pricing.

The estate sale at 1077 Dean Street in Crown Heights was great bones on a great block at a great price.  It took a while, as estate sales do, but closed for $700K last month.

Meanwhile for $710K, this funky semi-attached 4-story 3-Family at 628 Greene Avenue in Bed-Stuy closed in September.

They clamored for the comps in Bed-Stuy, and we said they were on their way (and not to be waited for).  196 Macdonough Street spent about a month on the market at $925K and sold for $950K last month.

453 Decatur Street in Bed-Stuy is only 18' x 35', but a Victorian house with a driveway.  It got its full $599K asking price last month.

8 Garden Place is over 7,000 sqft in Brooklyn Heights, chopped into over a dozen apartments, asking $3.85M in an open listing last winter.  They finally closed for $3.35M last month.

Oh, and don't look now, but a non-brownstone era brick 2-Family in Brownsville at 2427 Dean Street, on an odd block, just closed for $626K.  That's Brownsville, people!  Don't be surprised when it becomes impossible to find that pricing in deep Bed-Stuy if it's already poking into Brownsville.

Friday, November 9, 2012

The Millionaires Are Coming: 254 Gates Avenue

Not to get too Paul Revere about it, but the millionaires are coming to Bed-Stuy.  Most buyers were hesitant as recently as this summer when we lobbed up the next-best buy in all of Bed-Stuy for ~$750K.  They hemmed & hawed.  They clamored for the comps that justified that price, even when we showed them the fixer-uppers around the corner in contract for $900K+ and $1M+, respectively.  We told you comps are a lagging indicator by many, many months.  You can't bet on the Super Bowl 6 months after it happens, or buy a stock that's trading 20% higher for the price it was trading at months ago.  You can't vote for the President the day after the election either.

We told you back in April, "There goes the neighborhood," when the pricepoint of $1.5M poked across Classon at 252 Gates Avenue.  Despite the doubters, that house later sold for $1.45M.  Well, it appears that the neighbor decided "anything you can do, I can do better".  254 Gates Avenue wants, wait for it.... $2.2M now!  That's right.  Cry for the comps if you must, but cash offers well over a million have been getting rejected on a regular basis for nice houses listed with big brokers in Bed-Stuy over the past few months.  That phenomenon is a no-brainer, because ~$1.5M money simply has nowhere else to go in this market.  Now you may claim you simply won't pay over $2M to live in Bed-Stuy, but you also won't be finding housing this decked-out much cheaper anywhere else...

We told you some 9 months ago that $2M wasn't just for Park Slope anymore when it came more regularly to Clinton Hill.  And if you've been following the recent closings (for you comps fiends out there), you'll know that $2M+ has been closing up and down Brooklyn's best neighborhoods.  Now you can get a mansion that'd sell for $4M in Park Slope or $6M in Brooklyn Heights, for the relative value price of $2.2M.  Still need more perspective to digest this pricepoint?  Let's take the Brooklyn phenom out of the equation.  How much do you think a house this tricked-out would cost if you plopped it in the middle of the countryside? 

We're talking restored original everything, modern upgrades, supposedly 22' wide, 5 stories, supposedly 5,000 sqft.  We can already hear 'em griping, "But the owner bought it for just $1.1M in 2003."  Yup, and they probably put another half million at least into it.  Besides, you didn't even have the guts to walk down Bed-Stuy in 2003, let alone put over $200K down on a fixer-upper there back then.  So what are you complaining about?

Pro's:  top notch house, restored and updated completely, west Bed-Stuy location, duplex and a triplex!

Con's:  price ain't cheap, Corcoran listings are no secret, ripple effect this house will have throughout Bed-Stuy

Ideally:  if you ain't bullish on Brooklyn now, what's it gonna take??

Wednesday, November 7, 2012

Closings of Note: Results Tell the Story

It was barely a year ago that developers picked up this squat little 2-Family just off Vanderbilt in Prospect Heights and tried to flip it unrenovated.  678 Dean Street was a canvas asking $999K, then $899K, but couldn't get it...

Once they scrubbed the paint off the brick exterior, revived the interior, and maxed out the garden space, by this spring they wanted $1.575M.  And guess what?  They got that price 2 months ago.  Despite drawbacks in size, residential feel of the block, the bus stop out front, and the quality of renovation, we told ya $1.5M is the pay-to-play price for almost anything in Prospect Heights now.  Sometimes when a flipper can't get their price for the canvas, they take matters into their own hands and renovate for that end-user upside.  We didn't think this was the price for this play, but it's the market that decides.  And this is another telling indicator of where that market's at.

460 Classon Avenue was a nice, narrow, turnkey 2-Family where Clinton Hill meets Bed-Stuy.  Corcoran came out with it for $975K the same time that they dropped 10 St. Charles Place up the hill in Crown Heights on ya for $920K.  Just 15' wide, 460 Classon sold for $1.05M last month.

Speaking of 15' wide 2-Family's, 135 Cambridge Place - in more prime Clinton Hill - listed for $1.2M and we called it a relative value.  It closed for $890K last month.  Compare to the more updated 368 Grand Avenue that listed around the corner for $1.3M and may go higher.

Not to be outdone, the renovated 371 Carlton Avenue in Fort Greene lasted just 2 months on the market after they dropped their asking price to $2.2M and closed for $2.275M last month.

Or were you still thinking Fort Greene, but more in the sub-$1M category?  Well, that's called a "vacant lot" in this market.  Besides closing for its asking price of $750K last month, 67 Greene Avenue will require plenty more funds to build this...

On top of this...

Speaking of vacant lots, (and at the price points people would like to buy actual houses for in the area) this 25' x 131' lot in Prospect Heights (on the Crown Heights end of it too) sells for $1.2M last month at 375 Prospect Place...

Over in "deep" Bed-Stuy, 918A Lafayette Avenue is a renovated 4-Family that flips around this year from $485K to $699K last month.  Unless you're willing to go this far into Bed-Stuy, don't expect to find too much else around these prices in the prime stretches anymore if this is the market.

Monday, November 5, 2012

Solid Crown Heights Buy & Hold: 1243 Dean Street

When we strolled down a popular stretch of Montague Street one time with a developer, she told us, "Welcome to Brooklyn Heights."  When we strolled down the historic blocks of Crown Heights on Dean, Pacific, and Bergen Street with her a few months later, she was in awe of the architecture.

"I mean, this isn't just Italianate," she marveled, "this is Greek Revival and Beaux-Arts!"

Welcome to Crown Heights, home of beautiful architecture for blocks & blocks.  Where this spring a killer 20' x 50' 5-story 2-Family with original details at 1142 Dean Street sold for the relative steal of $930K:

And across the street, a renovated 2-Family at 1139 Dean Street easily fetched over $1M just before that:

Now, just on the other side of Nostrand, another killer 2-Family at 1259 Dean Street is closing higher than that:

On the same block, 1243 Dean Street is a 5-story 8-Family on a tree-lined stretch that wants $1.2M.  This 20' x 50' row house has been chopped into way-decent 1BR and studio apartments, rent stabilized, but pushing $100K gross annual rent.  There's even more upside in it if you know what to look for.  It took us weeks of reaching out to the Elliman listing agent to get a response, but the broker at Space Real Estate (who had the listing even prior to Elliman) got us in the house in no time.

The gameplan on the house is nuanced, but with stunning houses to the left and right of you, it doesn't take much vision to see where a block this nice will sit in a few years:

With 1BR's around the corner already fetching $1,350/month and higher, there will always be a place for affordable studios and 1BR's at the current rents of 1243 Dean Street and above.  (Just ask the buyer of 1379 Pacific Street!)  And that's before you factor in how Brownstoner's "empire" setting up shop at 1000 Dean will reshape the area.  Or do you not think so far ahead?  It was just 4 years ago that something as simple as a bar with nice space and decent burgers like Franklin Park contributed to repositioning Crown Heights as we know it today.  You already saw it happen in Fort Greene and Clinton Hill, once a certain demographic got the green light that it was okay to descend upon great housing stock.  In 2009, a Fort Greene native wrote in the NY Times:

"I’ve been gentrified, and while I’m not as mad as hell, I’m not entirely comfortable as an artsy, graying black man of 51 when I walk the streets of the neighborhood where I’ve lived half my life.

There are plenty of men and women pushing strollers, all of them white. Lots of interracial couples. I walk past a bodega where the 'clockers' used to sell drugs by the pay phones. My friends and I used to joke that the presence of these crack dealers on select corners 'protected' us from real estate speculators and home-hungry Manhattanites.

Once the aura of danger left Fort Greene, its many charms could no longer be hidden. When Corcoran opened a real estate office on Lafayette Avenue several years ago, it was clear to me that my Fort Greene was history."

That's right - while neighborhood newbies worry about protection from the drug dealers, neighborhood natives tease that the drug dealers are protection from the newbies.  Cue the Connecticut Muffin that just opened on Nostrand.

$1.2M may not be the price on 1243 Dean Street, but with an owner sitting on a ton of equity, there may be some price flexibility.  Wouldn't be a bad look to pick up even the grimiest 8-Family's going on any of these soon-to-be even-boudgier blocks, and this one isn't even grimy by any stretch.

Pro's:  great block, relatively turnkey investment, upside potential

Con's:  different category than the luxury 2-Families, deferred maintenance to be done, not for buyers who say they "don't want to be a landlords"

Ideally:  with the cash offers people are throwing around on properties at this price and below in these neighborhoods, 6%+ cap with "just" 30% down is a great way to participate in the long-term trajectory of this area