Platinum Member Gold: 181 Park Place

Long before it listed for $2M this spring, Platinum Members were in and out of the Prospect Heights previously off-market brownstone gem at 181 Park Place.  Yes, we've been tracking this winner since it listed for ~$1.4M immediately after the crash as a stalled-out conversion of a 3-Family to a 5-Family.  We first scoped it out with Cousin John in September of 2008.  The listing expired and it fell off everyone's radar.  Given the rebound in the market heading into the summer and fall of 2011, we were way bullish on this place as a straggler that the market had caught up to.  Especially with the crowd of cash buyers chasing off-market deals, shells for high-end renovations, condo conversion opportunities, and foreclosures - particularly anything to do with Park Slope.  So last year we revisited the house, and the owners were motivated to sell.  For over 6 months, $1.6M would've gotten the deal done, and even $1.35M was good enough for one owner & would've gotten the wheels turning, but no one could touch $1.3M with a bid.  We were shocked.

Did an SRO at 280 Park Place not close for $1.45M a month prior?  Did a developer not buy 33 St. Marks Avenue four blocks away, (before the rebound!) for $1.6M, chop it into 4 condos that sold for well over $4M total?  Granted, that was a larger floorplate, but you've got 5 stories on 181 Park Place and an extra-deep lot.  Plus you're closer to Prospect Park, further from the stadium, a block away from Park Slope, but in an even better school district than Park Slope north anyways.  And you're steps from the B/Q train that goes over the bridge into the city in less than 4 stops.  The $700K condo game was a well-documented phenomenon in this area already, and everyone runs around with $200/sqft as their rough figure for renovations, so even with extremely conservative estimates, we scribbled out this quick back of the envelope on it last year:

$845K conservative profit didn't sound too shabby to us.  Obviously lots of these numbers could go higher, including the condo sales.  One basic blueprint for this type of conversion is clearly 543 Dean Street, which sold all units for over $680K/each before this newest bull market.  That establishes a pretty nice floor.  181 Park Place was clearly the best shell anywhere close to $1.5M in the area. 

While nearby great fixer-uppers with period details, more for end-users, were falling from the $1.8M's to the $1.5M's last winter like 270 Sterling Place and 27 7th Avenue, 181 Park Place simply could not find its price.  Even when the decked-out example of an end-user 2-Family renovation one block away at 124 Park Place was getting run up from its asking price of $2.7M (a price the NYTimes later misquoted by over $1.5M), 181 Park Place was still getting low-balled.  Granted, it also wasn't getting marketed to hardly anyone, but the hair on the deal was too much for Platinum Members to see that this was fish in a barrel.  By the time Elliman listed it for $2M , there was enough momentum to get a cash offer, with tenants, with a rent controlled apartment, covering all tenant costs for over 6 months until they move out.  Yowza!  The owners were obviously in a hurry to lock in that contract.  After months of no one coming within $300K of their price, the owners got $400K MORE than their expected price.  Even a fellow beneficiary of falling up the stairs in this market like 308 Clermont has to be envious of that!  No wonder Prospect Heights neighbor 213 Prospect Place is rumored in contract well above its asking price of $2.15M!

When the market's moving, you've gotta be the one to adjust...

Because the market won't adjust for you.

Pro's: size, location, 5 stories, extra-deep lot, high ceilings, nice block, conversion potential

Con's:  cash deal, stalled conversion, needs a ton of work, not much original detail worth keeping or restoring, a few "meh" neighbors, one RC apartment, 2 out of 5 units with entrenched tenants who are in no hurry to leave even WITH a 6-figure buyout

Ideally:  can't say we didn't tell ya.  If you roll like Platinum Members do, sometimes you get a great chance at these further upstream.

Projects: South Slope SRO Conversion

When we heard architects working on a gut renovation of an illegal SRO conversion in South Slope, it got our attention.  Usually people are trying to convert an SRO into a legal multi-family.  This house was a legal 2-Family illegally used as an SRO.  The owner picked it up with an FHA construction loan, which includes a renovation budget with which to restore the house to its intended 2-Family status.  Architect team Bobby Johnston and Ruth Mandl of Co Adaptive Architecture told us about their project.  The extensive renovation includes new electrical, plumbing, water heater/boiler, windows, roof, staircase, skylight, and replacing joists as necessary.

The property was delivered vacant at closing, and these before pictures give us a glimpse of the condition:

The proposed renderings & floorplan show a sleek, open design for the parlor floor:

With a 2BR and 2 bath upstairs...

The owner's duplex and garden rental each have their own private access to the yard, which is split into two different heights.  Bobby and Ruth designed a bridge to connect to the duplex to the upper level rear half of the yard...

This is an extensive renovation on a very modest budget.  Familiar with Design-Build, Bobby and Ruth say they always analyze a budget before doing a design anyways.  Besides cost considerations, with the FHA construction loan, there's a 6 month timeline from the bank from closing to construction.  Bobby and Ruth say doing their drawings in a 3D modeling program speeds up drawings and renderings.  They're careful about other savings too.  They pay special attention to energy use, picking local materials, and considering the life-cycle of materials.  They'll even calculate for the client the savings over time by going with a certain system or using better insulation and better windows.

With permits coming and construction starting soon, we're eager to see how this one comes along.  It's interesting to see an FHA construction loan in the flesh, especially with such a stylish, practical design and thorough renovation on such a value budget.

Closings of Note: Price Drops on Mostly Subpar Product

The skinny, extraordinarily "meh" 725 President Street in Park Slope was another shot across the bow for super-high price points in Park Slope when it listed last year for the odd price $1.783M.  It took a long time for the price to drop in line with market and close for $1.45M last month.

A sweet 3-story 1-Family in Prospect Lefferts Garden like 151 Rutland Road is a great alternative to South Slope at $1.195M.  It closed last month for an even better $997K.



 

A similar price drop went down for a 3-story gut reno 2-Fam in prime Carroll Gardens at 32 2nd Street.  On Platinum Member radar since day 1, this was less than many were expecting for the price, or too far south for others, but someone looking for over a year pulled the trigger.  It listed for $1.199M, lasted barely a week on the market, and closed last month for $997K.  A great buy, and way better than some neighbors...

49 2nd Place is a 3-story Carroll Gardens fixer-upper that came out for $1.9M.  Corcoran ushered all the ballers through the home and it closed for $1.81M last month.  On just a 65' lot, this is some aggressive pricing.

The estate sale at 1077 Dean Street in Crown Heights was great bones on a great block at a great price.  It took a while, as estate sales do, but closed for $700K last month.

Meanwhile for $710K, this funky semi-attached 4-story 3-Family at 628 Greene Avenue in Bed-Stuy closed in September.

They clamored for the comps in Bed-Stuy, and we said they were on their way (and not to be waited for).  196 Macdonough Street spent about a month on the market at $925K and sold for $950K last month.

453 Decatur Street in Bed-Stuy is only 18' x 35', but a Victorian house with a driveway.  It got its full $599K asking price last month.

8 Garden Place is over 7,000 sqft in Brooklyn Heights, chopped into over a dozen apartments, asking $3.85M in an open listing last winter.  They finally closed for $3.35M last month.

Oh, and don't look now, but a non-brownstone era brick 2-Family in Brownsville at 2427 Dean Street, on an odd block, just closed for $626K.  That's Brownsville, people!  Don't be surprised when it becomes impossible to find that pricing in deep Bed-Stuy if it's already poking into Brownsville.

The Millionaires Are Coming: 254 Gates Avenue

Not to get too Paul Revere about it, but the millionaires are coming to Bed-Stuy.  Most buyers were hesitant as recently as this summer when we lobbed up the next-best buy in all of Bed-Stuy for ~$750K.  They hemmed & hawed.  They clamored for the comps that justified that price, even when we showed them the fixer-uppers around the corner in contract for $900K+ and $1M+, respectively.  We told you comps are a lagging indicator by many, many months.  You can't bet on the Super Bowl 6 months after it happens, or buy a stock that's trading 20% higher for the price it was trading at months ago.  You can't vote for the President the day after the election either.

We told you back in April, "There goes the neighborhood," when the pricepoint of $1.5M poked across Classon at 252 Gates Avenue.  Despite the doubters, that house later sold for $1.45M.  Well, it appears that the neighbor decided "anything you can do, I can do better".  254 Gates Avenue wants, wait for it.... $2.2M now!  That's right.  Cry for the comps if you must, but cash offers well over a million have been getting rejected on a regular basis for nice houses listed with big brokers in Bed-Stuy over the past few months.  That phenomenon is a no-brainer, because ~$1.5M money simply has nowhere else to go in this market.  Now you may claim you simply won't pay over $2M to live in Bed-Stuy, but you also won't be finding housing this decked-out much cheaper anywhere else...

We told you some 9 months ago that $2M wasn't just for Park Slope anymore when it came more regularly to Clinton Hill.  And if you've been following the recent closings (for you comps fiends out there), you'll know that $2M+ has been closing up and down Brooklyn's best neighborhoods.  Now you can get a mansion that'd sell for $4M in Park Slope or $6M in Brooklyn Heights, for the relative value price of $2.2M.  Still need more perspective to digest this pricepoint?  Let's take the Brooklyn phenom out of the equation.  How much do you think a house this tricked-out would cost if you plopped it in the middle of the countryside? 

We're talking restored original everything, modern upgrades, supposedly 22' wide, 5 stories, supposedly 5,000 sqft.  We can already hear 'em griping, "But the owner bought it for just $1.1M in 2003."  Yup, and they probably put another half million at least into it.  Besides, you didn't even have the guts to walk down Bed-Stuy in 2003, let alone put over $200K down on a fixer-upper there back then.  So what are you complaining about?


Pro's:  top notch house, restored and updated completely, west Bed-Stuy location, duplex and a triplex!

Con's:  price ain't cheap, Corcoran listings are no secret, ripple effect this house will have throughout Bed-Stuy

Ideally:  if you ain't bullish on Brooklyn now, what's it gonna take??

Closings of Note: Results Tell the Story

It was barely a year ago that developers picked up this squat little 2-Family just off Vanderbilt in Prospect Heights and tried to flip it unrenovated.  678 Dean Street was a canvas asking $999K, then $899K, but couldn't get it...

Once they scrubbed the paint off the brick exterior, revived the interior, and maxed out the garden space, by this spring they wanted $1.575M.  And guess what?  They got that price 2 months ago.  Despite drawbacks in size, residential feel of the block, the bus stop out front, and the quality of renovation, we told ya $1.5M is the pay-to-play price for almost anything in Prospect Heights now.  Sometimes when a flipper can't get their price for the canvas, they take matters into their own hands and renovate for that end-user upside.  We didn't think this was the price for this play, but it's the market that decides.  And this is another telling indicator of where that market's at.

460 Classon Avenue was a nice, narrow, turnkey 2-Family where Clinton Hill meets Bed-Stuy.  Corcoran came out with it for $975K the same time that they dropped 10 St. Charles Place up the hill in Crown Heights on ya for $920K.  Just 15' wide, 460 Classon sold for $1.05M last month.

Speaking of 15' wide 2-Family's, 135 Cambridge Place - in more prime Clinton Hill - listed for $1.2M and we called it a relative value.  It closed for $890K last month.  Compare to the more updated 368 Grand Avenue that listed around the corner for $1.3M and may go higher.

Not to be outdone, the renovated 371 Carlton Avenue in Fort Greene lasted just 2 months on the market after they dropped their asking price to $2.2M and closed for $2.275M last month.


Or were you still thinking Fort Greene, but more in the sub-$1M category?  Well, that's called a "vacant lot" in this market.  Besides closing for its asking price of $750K last month, 67 Greene Avenue will require plenty more funds to build this...

On top of this...

Speaking of vacant lots, (and at the price points people would like to buy actual houses for in the area) this 25' x 131' lot in Prospect Heights (on the Crown Heights end of it too) sells for $1.2M last month at 375 Prospect Place...

Over in "deep" Bed-Stuy, 918A Lafayette Avenue is a renovated 4-Family that flips around this year from $485K to $699K last month.  Unless you're willing to go this far into Bed-Stuy, don't expect to find too much else around these prices in the prime stretches anymore if this is the market.

Solid Crown Heights Buy & Hold: 1243 Dean Street

When we strolled down a popular stretch of Montague Street one time with a developer, she told us, "Welcome to Brooklyn Heights."  When we strolled down the historic blocks of Crown Heights on Dean, Pacific, and Bergen Street with her a few months later, she was in awe of the architecture.

"I mean, this isn't just Italianate," she marveled, "this is Greek Revival and Beaux-Arts!"

Welcome to Crown Heights, home of beautiful architecture for blocks & blocks.  Where this spring a killer 20' x 50' 5-story 2-Family with original details at 1142 Dean Street sold for the relative steal of $930K:

And across the street, a renovated 2-Family at 1139 Dean Street easily fetched over $1M just before that:

Now, just on the other side of Nostrand, another killer 2-Family at 1259 Dean Street is closing higher than that:

On the same block, 1243 Dean Street is a 5-story 8-Family on a tree-lined stretch that wants $1.2M.  This 20' x 50' row house has been chopped into way-decent 1BR and studio apartments, rent stabilized, but pushing $100K gross annual rent.  There's even more upside in it if you know what to look for.  It took us weeks of reaching out to the Elliman listing agent to get a response, but the broker at Space Real Estate (who had the listing even prior to Elliman) got us in the house in no time.

The gameplan on the house is nuanced, but with stunning houses to the left and right of you, it doesn't take much vision to see where a block this nice will sit in a few years:

With 1BR's around the corner already fetching $1,350/month and higher, there will always be a place for affordable studios and 1BR's at the current rents of 1243 Dean Street and above.  (Just ask the buyer of 1379 Pacific Street!)  And that's before you factor in how Brownstoner's "empire" setting up shop at 1000 Dean will reshape the area.  Or do you not think so far ahead?  It was just 4 years ago that something as simple as a bar with nice space and decent burgers like Franklin Park contributed to repositioning Crown Heights as we know it today.  You already saw it happen in Fort Greene and Clinton Hill, once a certain demographic got the green light that it was okay to descend upon great housing stock.  In 2009, a Fort Greene native wrote in the NY Times:

"I’ve been gentrified, and while I’m not as mad as hell, I’m not entirely comfortable as an artsy, graying black man of 51 when I walk the streets of the neighborhood where I’ve lived half my life.

There are plenty of men and women pushing strollers, all of them white. Lots of interracial couples. I walk past a bodega where the 'clockers' used to sell drugs by the pay phones. My friends and I used to joke that the presence of these crack dealers on select corners 'protected' us from real estate speculators and home-hungry Manhattanites.

Once the aura of danger left Fort Greene, its many charms could no longer be hidden. When Corcoran opened a real estate office on Lafayette Avenue several years ago, it was clear to me that my Fort Greene was history."

That's right - while neighborhood newbies worry about protection from the drug dealers, neighborhood natives tease that the drug dealers are protection from the newbies.  Cue the Connecticut Muffin that just opened on Nostrand.

$1.2M may not be the price on 1243 Dean Street, but with an owner sitting on a ton of equity, there may be some price flexibility.  Wouldn't be a bad look to pick up even the grimiest 8-Family's going on any of these soon-to-be even-boudgier blocks, and this one isn't even grimy by any stretch.

Pro's:  great block, relatively turnkey investment, upside potential

Con's:  different category than the luxury 2-Families, deferred maintenance to be done, not for buyers who say they "don't want to be a landlords"

Ideally:  with the cash offers people are throwing around on properties at this price and below in these neighborhoods, 6%+ cap with "just" 30% down is a great way to participate in the long-term trajectory of this area

Closings of Note: What's Surprising to You?

When a 3-story 2-Family fixer-upper in Crown Heights at 355 Eastern Parkway lists for $869K with Corcoran, is descended on by yuppies, voyeurs, and developers alike; has offers ranging from $750K to the mid-$900K's, and closes for $945K last month - should anyone be surprised?  We'd be more surprised at how comfortably the $2M-$3M+ range has settled in for BoCoCa and Park Slope, if we had to pick something to be surprised about.  But that's just us.

251 Clinton Street was a 3-Family Cobble Hill beauty that was asking $3.2M in the Summer and got $3.227M last month.  So much for low-balling.  We're sure if they had asked $2.6M, someone would've bid $2.2M and wondered why they didn't get it.  Price anchoring is an amazing thing.  And yet more people will probably be surprised that a Crown Heights home under $1M goes for $76K above ask, than people will be surprised that a $3M home goes $27K above ask.

There are original details for days in this North Slope brownstone at 226 Lincoln Place.  Even with an asking price just under $4M, it barely lasted 2 months on the market and closed for $3.7M last month.  All the more reason why this under-marketed beauty just around the corner for ~$1M less should be flying off the shelves if these ballers knew what was good for them.

A gorgeous Carroll Gardens townhouse comes out this Summer for $2.65M?  328 President Street wasn't going to last long.  This 3-Family sold last month for $2.45M.  This is why everyone hunting in the $1.5M range over here shouldn't be surprised when all they find is shells, fixer-uppers, and condos.

"Well, how come 177 Warren Street just closed for a mere $2.1M last month, then?" you might ask.  Well, silly, that's because it's an estate sale fixer-upper with "mechanical systems, kitchen and baths [that] need upgrading", that had been in contract for over a year, with a contract price negotiated within barely a month of it coming on the market last August 2011.  Besides, we told you last year that it was already one of the best buys under $2.5M.  So if a fixer-upper that takes a year's worth of sitting in contract for $2M+ isn't what you were looking for, you may not want to look in Cobble Hill anymore.

Brownstoner said they didn't think the 18' width would matter much on this $3M listing for 501 4th Street in Park Slope.  Indeed, it sold for $2.65M last month.  Boy, if you could've gotten 352 4th Street for over a million dollars less this Spring (like Platinum Members), you must really be kicking yourself!  And it wouldn't've taken too much vision (but a lot of funds) to pick up the FSBO neighbor 491 4th Street once upon a time (2011) for a mere $1.6M.

Unicorn Hunters, don't despair!  You can still get something for around $1.5M.  Only it's a trapezoidal, bombed-out building zoned as a factory on the edge of Prospect Heights and Crown Heights.  735 Bergen Street closed for $1.575M last month and we can't wait to see what someone does with the many thousands of buildable square feet left on this wide lot.  The exterior's been re-done in brick since this Google Streetview was taken, fyi.

Listed with no one you've ever heard of, 319 7th Street was an estate sale fixer-upper in Park Slope that closed for $955K in August.

You can get your Gowanus on at 105 2nd Street - a small single family "awaiting your TLC" that listed for $970K in March and closed for $875K last month.  Wouldn't you rather pay $76K above asking for 355 Eastern Parkway than $95K below asking for this?