Tuesday, April 15, 2014

Off-Market Closing Today in Prospect Heights: 533 Bergen Street

Wealthy folks tell us all the time that they want to invest in real estate.  Commercial brokers will ask them, "Have you bought anything before?"

- No.

Well, we don't think you necessarily have to be a proven buyer to ever buy something, because everyone needs a first time.  Instead, we'll ask these buyer hopefuls, "What have you bid on so far?" and "What have you seen close in the past 2 months that you would've and could've bought for the same price & terms?"  If they don't have any educated answers to either of those questions, they're probably too far down the learning curve to make a serious move anytime soon.  Because, while it's easy to say you wanna invest in real estate, actually doing it is a whole 'nother bag.

So when 533 Bergen Street - a huge 8-Family in prime Prospect Heights one block away from Barclays - came available at the end of last summer at an attractive off-market price, it was a no-brainer in our book for proven and the budding buy & hold buyers.  Don't try this on your Streeteasy or your NYTimes or your Brownstoner.com, 'cause this puppy had no intention of ever coming to the broader open market.  Sellers have their own reasons for doing things their way.  And this is, after all, a seller's market.  But Platinum Members were psyched to make offers on a property asking $3M off-market just 3 bricks away from an identical property asking $4.5M with a big commercial broker.  531 Bergen Street had multiple cash offers and later closed for $3.425M, so we couldn't blame the 533 Bergen Street seller for raising his asking price to $3.4M this year by the time he heard the news nextdoor.  531 was pitched as fully occupied with all RS tenants.  Granted, it grossed a healthy sum annual, but all stabilized tenants.  533, however, came with 6 units delivered vacant and free-market, making it even more primed for a condo conversion or a rental repositioning.  Totally rentable as-is (but not entirely optimized) 2BR apartments made it a 6%+ cap at asking price...

Walk around the corner to Nets games or practice your half-court jumper on the courts next door.  Duplex part of the garden with the basement, split up the backyard, do a roof deck... it isn't rocket science (or even that expensive) to make the most of a buy & hold gem like this.

Wanna-be buyers thought they were doing someone a favor with their, "$2.5M and I can close in two weeks," tone-deaf offers.  The Corcoran and Elliman brokers refused to do the deal unless they were assured 6% commission.  (Nice gig, if you can get it!)  But, as always, the truth lay somewhere in between those two extremes.  The sellers knew they were leaving money on the table by not listing it exclusively on or off-market, but when you're almost quintupling what you paid for it in 2006, who's counting?  In fact, speaking of leaving money on the table, we brought them 2 cash offers of $3.3M and they still went with their favorite buyers at $3.25M!  The buyers showed us their 3BR floorplans today at the closing table, and we can't wait to see how it all turns out.  Another off-market gem courtesy of BK to the Fullest, with a lil' help from one of the hardest working commercial brokers in the biz.

Pro's:  huge 8-Family a block from Barclays with 6 free-market vacancies, quintessential buy & hold or condo conversion candidate, totally turnkey units 6% cap at asking price with upside to go, went below asking price, went below highest offer, not bid-up by the masses, better than its neighbor and cheaper!

Con's:  gotta compete with cash offers, sellers raised asking price from $3M to $3.4M after dawdling for some months, gotta spend some serious dough to optimize it

Ideally:  just another day in Prospect Heights, where more off-market deals are going down as we speak that are gems for the long haul

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