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.

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