On HomeCanvasr.com since last June, this healthy 8-Family off of Nostrand Avenue, a block from the 2/5 trains at the southern tip of Lefferts and Flatbush, has fielded multiple cash offers over $2M before hitting the open market this week with an asking price of $2.4M. In this market, it's hard to blame anyone for vying for top dollar. 245 Martense Street has all the makings of a buy & hold investor's dream. Set up as front & back 2BR apartments, easily used as 3BR's by many tenants, this 25' wide building has unattached sides allowing for windows galore. And windows mean bedrooms, and rental price per bedroom is the most important metric in town for valuing buy & hold properties. The key for rental income in NYC is bedrooms - especially those large enough to accommodate a full-sized bed, couch, and desk. With the old charms of original brick, tile, parquet floors, pocket doors, decorative ceiling beams - all from the 1910's; mixed with a new roof, new boiler, new hot water heaters, new intercom, new electrical service, new kitchens, new baths - all from the 2010's... this building's got the best of both centuries!
You may remember this bad boy from when it was a Platinum Member 10-cap barely over 2 years ago, back when half y'all couldn't pronounce "Nostrand", let alone "Martense". The building has come a long way since then, along with the rest of Brooklyn. And over the years we've had our hand in some of the interior renovations that transformed apartments into product that tenants fell in love with. From the time we felt like the Kool-Aid Man breaking through a wall to make a proper 2nd bedroom:
To the time we took the reno to the next level with little touches that made all the difference...
Some people have called this 2nd tier product in a 3rd tier neighborhood, and they're not too far off. The tremendous value proposition for dozens of tenants still remains. Even at the top rents in the building, whether used as a 2 or 3BR, the $700-$1,050/BR levels are still a very attractive alternative to tenants for this caliber of product this close to the train. Tenants coming from Williamsburg, Bed-Stuy, Prospect Heights, and Ditmas have found these apartments the perfect fit. And they're still very competitive with $1,200+/BR pricing in Crown Heights. The building is fully rented at the moment and can be delivered with as many as 2 vacancies. Most of the units are free market, half of them are renovated, and the 2 remaining stabilized units have legal rents higher than market rent. Rent is on time, paperless, and easier than Apple Pay - automatically deducted from tenants' accounts at the beginning of the month. This is a totally turnkey buy & hold operation with the next leg up plainly in sight. If an 8-Family in a better location can trade for $2.3M and an as-is 1.8% cap, what is 245 Martense worth at a 5% cap or better?
If an 8-Family nearby can trade off-market for $1.6M not even grossing $120K, what it is 245 Martense worth grossing $175K or more?
Only time & the market will tell. This building, affectionately named "The Old Man", doesn't really have much explaining to do on its valuation.
Pro's: flagship buy & hold operation for its size & location, totally turnkey with straightforward value add left to be done, unique size & windows, full of major and minor capital improvements building-wide and in half the apartments, all the heavy lifting's been done
Con's: not everyone's hip to the location, asking price has bubbled up, the most picky investors want more units, higher cap, more value add or a better location
Ideally: this property's exceeded projections for over 2 years, why stop now?
The owners, whoever they are, must be pleased
ReplyDeleteSold last week for $2.72M
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