Wednesday, December 5, 2012

"The Lion Sleeps 'Cause It Can": 331 State Street

Buyers e-mail us all the time asking, "I look at Streeteasy everyday, how am I not seeing all the listings?"  Well, that's because Streeteasy is just one (albeit, incredibly useful) piece of the fractured Brooklyn real estate puzzle.  So imagine our surprise when Streeteasy told us that one of Brooklyn's top brokers has an account with them that he never, ever uses.  "I thought people just used Streeteasy for research," the broker told us, "I didn't think buyers went there looking for property for sale."  If you're keeping score at home, that's:

(1) crowds of millionaire buyers who don't know there's anything BUT Streeteasy, and

(2) a top broker (who's sold over a quarter-billion in real estate) that doesn't know that buyers even USE Streeteasy.

Only in Brooklyn, people!  The broker even bragged to us today, "I've never had a problem selling a property."  However, "never having a problem" and "getting top dollar" are two different things.  Which isn't to say he doesn't get top dollar for 90% of his properties, but certain townhomes we think would be better served on Streeteasy (along with the rest of the marketing campaign), because that's one of the major channels where end-users search for these things.  102 Pierrepont Street in prime Brooklyn Heights is a great example.  You're not going to get top dollar for something unless you put it in the place where the top bidders are looking.  And we think this 331 State Street is worth a look for people who don't even know that Massey Knakal exists, or don't go to their site often enough to catch wind of buys like these in time.

331 State Street is a healthy 19' x 49' brownstone in a quiet section of Boerum Hill just north of Atlantic Avenue, sandwiched between downtown Brooklyn and quintessential Boerum Hill.  The building is chopped into 8-units currently, successfully being rented for short term stays.  Listing broker Stephen Palmese almost never bothers with interior pics, even when six-figure commissions are at stake, which is part of why lurkers seek to flip his under-marketed properties like 338 Clinton Avenue, which the Minsk-Man quickly re-listed for $2.6M after doing nothing more than taking shiny pictures and listing it in more typical venues for these properties like the NYTimes and (drum roll...) Streeteasy.

When a 420 sqft 2/1 in 331 State Street can command as much as $3,990/month as a furnished short-term rental, you've really got yourself some cashflow.  It's a rate they're obligated to take pics to achieve...

That's right, folks.  For a $3,900/month rental, you get pictures.  For a $2.5M purchase, you get no pictures.  It's a phenomenon we've seen again and again.

We even put our own fam' up in this place when they came to visit a couple years ago.  The location is so prime, the block is so quaint & quiet, and the nightly rates are way preferable to a hotel.  It wouldn't be bad to step into this owner's shoes and keep their business model going.  It has the potential to gross over $300K a year at these rents, but you've got a hands-on management situation to engage then too.  Although, we think at these levels, an end user may pick it up and make it their own.  Something we had an honest debate with the listing broker about today.  Palmese, who's single-handedly accounted for 8% of deals in Brooklyn in the first half of this year (along with his hard-working team), may have his finger on the pulse of certain submarkets, but there's a whole other 92% of Brooklyn out there too.  We think Streeteasy is one of the many places he should put this property (afterall, it's free!), but also with co-ops on State Street asking $2M and gut jobs on State Street that wanted $3.3M (now $2.9M), an end-user could try to take down 331 State Street over $2M.  That's if it doesn't get taken down closer to $3M first!

Pro's:  location, size, turnkey investment, not on every last buyer's radar, step into owner's shoes

Con's:  already has a ton of attention and showings scheduled, chopped into small units means a hefty job for an end-user

Ideally:  very little surprises us in Brooklyn anymore, so this one could go either way.


  1. Do you own stock in Streeteasy or something?!? It's really not all that great.

    1. Tell that to the dozens of millionaires who not only think it's great, but that it's the only thing.

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