Friday, February 6, 2015

8-Family Closed in Lefferts Last Week: 2031 Bedford Avenue

When deals trade off-market at a great price, it just goes to show that it doesn't always take a broker to get the best number.  2031 Bedford Avenue is an 8-Family in Lefferts, on the corner of Bedford & Clarkson.  Ever since it was listed with a big broker for $1.5M a while back, we had our eye on it, very curious to see what kind of number they might land for an 8-Family in this neighborhood.  A corner piece that's almost 50' wide, but barely even 40' deep, you gross just over 7,000 sqft.  Very reminiscent of a 10-cap Platinum Member pick up around the corner a few years ago.  2031 Bedford Avenue has a ton of updates to the building, but only 2 of the units gut renovated, which leaves 6 units with plenty of room to run on the rent roll...

Updated kitchens & baths, parquet floors in great shape, all in 2BR apartments none of which have touched $900/BR yet.  With the conversion to gas, insulation, plumbing, and roof work done already, the remaining work to the apartments is the kind of stuff you see back on the rent roll right away.  Currently grossing almost $120K/year, the building closed last week for $1.6M.  Netting even more for the owners with no big broker commission on the scene.  Pro-forma rents over $160K were thrown around on the set-up from when it was listed, and we're sure the market could bear it.  No wonder 8-Family buildings around the corner grossing almost 50% higher expect to trade for almost 50% more.  These buildings do have some pretty steep taxes, over $16K/year on this one.  But the rental income potential is powerful when you're sitting on 16BR's in a building where tenants are fleeing from $1,200+/BR prices in Crown Heights and elsewhere.  So the right buyer is willing to pay under a 5-cap to get exposure to that upside potential.

Pro's:  corner piece, buy & hold dream, near trains, tons of "weatherization program" renovations, 2 units renovated, huge rental income upside potential in the remaining unrenovated units, work left to be done is high ROI stuff

Con's:  the spread between the legal rents and market rents is significant, taxes are high, aggressive cap rate and GRM for the neighborhood

Ideally:  an off-market deal at a price that worked for buyer & seller

1 comment:

  1. Looks like a building with a lot of potential. Those numbers do make it look good. Should add to the transformation of the neighborhood, a back-to-its-past kind of glory that made Brooklyn the place it used to be, when the Dodgers were still here.