People with millions of dollars in cash will tell you they want a fixer upper investment property in Brooklyn that they can make a ton of money on. Afterall, who doesn't wanna make a ton of money? But many of them will also tell you they don't want to deal with tenants, or SRO's, or rent regulated units. 'Cause who doesn't wanna have their cake AND eat it too?? But the real estate market isn't about making up a scenario (whether it exists or not) and trying to locate one, it's about what's out there is what's out there and what are you gonna do about it? So unless you're ready to compete with end-users in the townhouse market, on properties that rarely exceed 4,000 - 5,000 square feet, tenants and rent regulation are usually a fact of life. In terms of regulation, take that up with Albany and the DHCR. Trust us, you won't be the only one. In terms of vacancy, what owner in their right mind has a property with more than 5 units that they're willing to let all the units sit fallow while novice investors slowly digest the asset? They sell to experienced investors who can & will take on tenants, and they move on. Getting a place with 5+ units all vacant is very rare, and usually trades at a premium because of it.
493 Prospect Place was an interesting 8-Family on the Prospect Heights edge of Crown Heights. It had a mix of 5 rent stabilized and 3 vacant units. The RS units were grossing a very modest $45K/year, but it's not everyday you get a building that's 30' x 84' in a location this prime that's not on everyone's radar. The asking price back in April of 2013 was $1.55M. The listing was removed 2 months later. When it came back out for $2M in September, people asked us how the sellers could be asking nearly half a million more if nobody was after the property earlier in the year for cheaper. Reading between the lines, we figured they had plenty of interest and raised their price accordingly. Sure enough, the listing broker told us cash offers quickly ran the price up in a bidding war, but the buyer with the accepted offer stalled out and wasn't signing the contract. So they were game for someone else to take the deal at that price or higher. Based on the activity we're seeing on comparable properties in the same corridor to the east and west of here, the pricing made sense. The smaller 8-Family nearby at 597 Park Place is a great example. The vacant units in 493 Prospect Place were nothing special, but the layout did a lot with a little as railroady apartments go. There's an unattached side in the rear on the west side that gives lots of windows and bedrooms to that column...
And a little shaftway courtyard on the east column gives windows that can be used for a living room, if not true "light and air" for a true bedroom. So you can still manage a bootleg 2BR use out of the east column...
The roof was in terrible shape, but with nice views. The electrical's been redone in this century...
The condo conversion wasn't near on the horizon, but that valuation's in the cards somewhere. A 30' wide building set-up left & right will still command top dollar rents as buy & hold in this location. There are 27' wide 8-Family buildings with offers over $3M a few avenues west of here, rent stabilized tenants and all! So to see 493 Prospect Place wind up in contract shortly after relisting was no surprise. Nor is the closing price last month of $1.81M. Although, it makes 1054 Park Place look like a steal!
Pro's: big boy buy & hold in a great location, nice block, almost 8,000 sqft at under $250/sqft, has 3 vacancies
Con's: took all cash, work to be done, gone already, mostly stabilized units at way below market rates, won't knock your socks off
Ideally: only works for a cash buyer with the time to extract the value. Get the cake now, even if you can't eat it 'til later.
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