Friday, October 4, 2013

Look Around, Brooklyn!: 1062 Dean Street

Brooklyn gentrification Chicken Littles, consider your panties officially in a bunch.  1062 Dean Street in Crown Heights closes for $1.7M last month.  After listing for $1.395M very visibly with Elliman, and taking real pictures of the property, and having real open houses where you can see most of the units & everything... (you know, a proper listing) they close way above asking price.  Let's keep in mind that "way above asking price" is a relative term when we're talking about a city where condos easily go above $1.5M, and over $1,000/sqft.  To cop a totally turnkey 3-Family townhouse on a slightly extra-deep lot for $425/sqft is still - ahem - a value.  Now the duplex was totally gorgeous (but not out of this world), and the rental units were way generic.  It won't stop them from commanding top dollar from great tenants just steps from Franklin Avenue and the soon-to-gamechange 1000 Dean Street project.  They didn't even bother with pics of the rental units, and they sure didn't need to.  The duplex ALONE is worth $1.5M over most condos in town, and ~$2,000/month floor through rentals (and no condo maintenance) is just icing on the cake.

Some people who want a turnkey investment that pays for itself with 20% down (the banks want at least 25% down now on conventional loans, mind you) will easily tell you this place "works for them" at $1.2M, maybe $1.3M.  Handfuls of offers like those were in the rear view mirror to this $1.7M offer.  And why not?  Which price would you rather sell your house for??

When an extra $300K on the sale price at prevailing rates is roughly an extra $1,500 on the mortgage, AND you don't have $1,500 in condo fees going out the window, AND you've got $4,000K in income coming in, AND you've got a yard... the $1.7M price starts to look downright sensible to many buyers.  Now this house isn't (and never will be) as out-of-control stunning as its $1.7M-$1.8M brethren 593 Jefferson Avenue or 242 Decatur Street, but what it lacks in sick original details, it more than makes up for in turnkey, income, and location.  Almost makes 1234 Dean Street look like a bargain for the end-user that doesn't want tenants.

Pro's:  totally turnkey quintessential 3-Family in prime Crown Heights on a great block, great rental income, just wait until 1000 Dean is humming

Con's:  20% down ain't cutting it, way over asking price, can still hear them complaining about the homeless shelter at the Bedford Atlantic Armory, this ain't your dad's Brooklyn - or even last year's Brooklyn

Ideally:  there's a fixer-upper or two on this block that look like comparative steals given this price action

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