Closings of Note: Can't Buy What You Don't Know is For Sale

As the New York Times points out, we often point out, "You can’t buy something you don’t know is for sale."  Case in point, this juicy 5-story at 238 Gates Avenue in great condition that Platinum Members snagged for $1.3M before it could even hit the market in full force.  Probably worth much more if delivered vacant and touched up a bit, but the owner wanted a quick sale and got one.  The next 5-story coming up from this same broker is even juicier than this.

Speaking of going in contract for $1.3M before it could even hit the market, 1138 Bergen Street had offers as high as $1.4M we're told, but closed for $1.3M last month.  Brokers never even needed to bring it to market (or bring the sellers the highest offer) to get it done.  If you think you're too good for Crown Heights, that's not what cash buyers from Carroll Gardens thought.  This sale price makes the Platinum Member pick-up for the identical (but better-renovated) limestone two doors down at 1134 Bergen Street look even better.

Or maybe you're still doubting Crown Heights?  Did you see 100 Brooklyn Avenue, just around the corner?  An easy, stylish flip that listed for $1.5M and closed for $1.6M last month.  Only 16' wide and on a short lot didn't stop buyers from Brooklyn Heights from making their way all the way out to Brooklyn Avenue.

Also last month, buyers from Clinton Hill closed on this amazing Prospect Heights fixer-upper.  We ventured to guess that 390 Sterling Place was in contract over asking price, but we guessed wrong.  It closed for a very nifty $2.085M.  Don't expect your low-ball offers to always come through, but they're certainly worth a shot.  We're willing to bet it's a cash deal and that the buyers sink another $500K into the place, so don't bring 25% down and expect to duplicate this result.  However, it's still one of the best buys all year in this neighborhood.

Why is 390 Sterling Place such a good buy??  Look no further than across the street at 385 Sterling Place to see what fetched over $2.7M in Prospect Heights nowadays.

Still in Prospect Heights, the list price of $3.5M shocked and awed folks when 195 Prospect Place hit the market last year.  The house had a unique size and some unique details to match.  So while many moaned, and big brokers salivated over what they'd have done with the listing, buyers from the Upper West Side bought this 4,000+ square foot townhome for $3.05M.  It's not like a smaller 3-story around the corner or a fixer-upper around the corner didn't go for over $3M too.

Also in Prospect Heights, we knew that $2.4M wasn't the right price for 655 Vanderbilt Avenue as soon as it hit the market.  After a few quick price drops and another year in time out to think about what it did, it finally closed for $1.475M

Lingering in probate court, the estate sale at 425 Washington Avenue closed for just $1.6M in December.  Not bad for a 4-story 5-Family in prime Clinton Hill.  And to think, it was just a few years ago that people wouldn't pay this much for the monster 8-Family from this same estate at 234 St. James Place.

With an asking price of $1.299M and a few shiny pictures, 398 Lafayette Avenue in Bed-Stuy probably blends in with a lot of listings like its neighbors.  Most people whined that it was a 3-story across the streets from the projects (true), but it still closed for $1.1M last month.

Speaking of Bed-Stuy, are you ready to head east of Ralph Avenue?  A buyer from Prospect Heights was, closing on 556 Decatur Street just over asking price of $899K.  On Platinum Member radar, but not on Corcoran.com, the even juicier 557 Decatur Street across the street also just closed for $925K.

Just off the park in Park Slope, 194 Lincoln Place was asking just under $3M and closed for $3.115M last month.  The buyers came from nearby in Park Slope.  Now Platinum Members are scoping out the fixer-upper on the next block at 115 Lincoln Place (pre-market for the second time in 2 years!) that now wants $2.5M.  We toured it last week and saw how the progress of tidying it up was coming along.

Uncooperative tenants couldn't stop 45 Halsey Street in Bed-Stuy from getting dozens of offers and closing for over asking price.  $1.15M cash got it done on a stretch of Bed-Stuy where sellers have balked at cash offers well over $1.4M.
 

Over in Williamsburg, the small frame house at 199 Devoe Street gets its $1.15M afterall.  One of the reasons we rarely go to the 'Burg, but many would rather have this than a brownstone in Bed-Stuy.  Go figure.

Ballin' Out in Bed-Stuy: 50 Madison Street

Since 8-Family week on the blog is over, it's time to get back to what we do best.  You know, quaint townhouses in "fringe" neighborhoods with over 100 people at the first open house that go in contract quickly with an all-cash offer about a quarter-million over asking price.  Welcome to 50 Madison Street.  It's basically Clinton Hill over here, but it is just east of Classon, and Streeteasy's calling it Bed-Stuy, and it packs a little more punch if you think a 3-story is going for this much in Bed-Stuy... so we're stickin' with the Stuy on this one.  Although, it's not just a 3-story either.  There are 4 stories in this house, even if you can't see the top one from the outside.  Or, as the listing broker Nadine Adamson told us, "It's called a 'set-back'.  Ever heard of it?"

Touché!!

With an asking price of $1.299M, over 200 people descended on the house in the first week and a few dozen offers came in quickly...

Don't forget the backyard!

When we saw the house, we were digging the wide-plank floors...

And the huge glass windows in the rear where a rag-tag group of local cats like to converge...

With frame houses interspersed all around, and a condo construction project across the street, is this not the look of the block you were expecting to fetch over $1.5M cash these days?  Well, this is our Brooklyn, y'all!

There's also some killer architecture at the church on the end of the block...

The listing broker Nadine told us she sold 25 townhomes last year, so she certainly knows what she's doing with an exclusive like this.  And she's already got her eyes on a few other homes on the block she thinks might fetch even more in the right condition.

All in all, when 200 people see a property, is it any surprise to see it go for some $200K over asking price?  The trees that fall in the forest for less are ones that almost no one hears about.  Even with a "bidding war", it's still under $500/sqft.  Manhattan buyers would be hard-pressed to find one of these under $3M without going deep into Harlem.


Pro's:  totally live-able 2-Family with some great details and a few upgrades, pretty much Clinton Hill location for most intents & purposes, under $500/sqft

Con's:  not everyone's favorite curb appeal or exact preferred block, gone already, all cash won the day

Ideally:  unless you've been living under a rock, it's becoming clear you can't afford to be too picky near Clinton Hill anywhere in the $1.5M range

Super-Sized 8-Family in Crown Heights: 790 Classon Avenue

Our final entry for this week's look at 8-Family properties in Brooklyn is one in Crown Heights that just got super-sized into 13 units.  The developers over on 790 Classon Avenue knew just what to do with this 25' x 50' building that had plenty of buildable square footage left to grow.  They popped an extra story on top and a healthy extension on the back...

They actually gained almost 3,500 square feet.  You don't have to go all-out to get $2,500+ 2BR rentals in this area, where 2BR apartments can fetch $3,000/month in the right shape.  Quick but tasteful upgrades got them there...

Certainly not all of the bedrooms are the size you're looking for, but they get the job done.  Some units were duplexed, some with balconies.  You could sell these as 1BR+ condos at $500K+ as-is.  But the buy & hold game is fruitful too.  They went just as sensible and stylish on the exterior and the entry...

With so many local destinations right around the corner, including Glass Shop and Pete Zaaz on the same block giving it their hipster blessing...

...this repositioning was a no-brainer.  Development on this level isn't rocket science.  Give people something nice and they'll pay you for it.  As one Manhattan developer said when he went by, "We're sleeping..." thinking that even fringe Brooklyn stylings are keeping up with what would pass for good taste in Manhattan.  Sounds like he thinks Manhattan needs to step its game up.

For a bigger version of this, see what's going on at nearby 1502 Bedford Avenue.  But don't under-estimate the potential of these large pieces when they come available.


Pro's:  totally stylish super-sized gut renovation, pretty nice value on the rentals, balconies, duplexes, new kitchens & baths, great location

Con's:  maybe not the best quality ever, some rooms are small

Ideally:  they knocked it out of the park on this one!  Bring this quality and style east or west of here and watch the potential blossom.

Slim 8-Family in Fort Greene: 220 Cumberland Street

The next 8-Family we're covering is a narrow little slice of prime Fort Greene, asking under $1.5M.  220 Cumberland Street sold for $1M in August 2013, quickly listed for $1.275M with one commercial broker, and now wants $1.35M with another commercial broker.  This is a small 16' x 47' house chopped into two 320 square foot studios per floor.  If you didn't like it at $1.275M, the price increase certainly doesn't sweeten the pot.  However, we're not convinced everyone who might be interested in this property has even seen this property.  Much like 394 10th Street was in Park Slope, 220 Cumberland is a townhouse that's worth a lot more money if it weren't chopped into so many units.  394 10th Street's units were SRO's, 220 Cumberland's units are rent stabilized.  However, 3 of them will be delivered vacant.  Not sure where this expired rental listing for a 700 sqft. apartment fits into play...

The studios all rent for under $1,000/month according to the previous rent roll, which projected the free-market studios to fetch $1,950/month.  That would still put it at a 5-cap at current asking price.  But we haven't seen these places or handled Fort Greene studios in a while, but the last one we saw was able to command that much (for a much larger space though!).  Still, 220 Cumberland is another example of under $500/sqft in a prime location where good renovations without these encumbrances can achieve twice that.  With Fort Greene Park right on the corner, it turns out there's more to Fort Greene than just South Oxford and South Portland.  We think someone with a long time horizon takes down this tweener play at a nice discount to typical product in this area.


Pro's:  location, price point, 3 vacancies (some adjacent), upside, Fort Greene townhouse at condo prices

Con's:  narrow 16' wide, just about 3,000 sqft, not your typical townhouse, chopped into lots of below-market rent stabilized units, tweener play, might be hard to manage

Ideally:  too small for the big guys, too big for the little guys, and not right for the typical home buyers.  But there's a bound to be a buyer this tweener play is perfect for.

8-Family Week Continues in Park Slope: 703 Carroll Street

It's becoming a week full of 8-Family buildings here at BK to the Fullest, and today is no exception.  This time we're in prime Park Slope.  Platinum Members had the early lead on 703 Carroll Street just before it came out in December.  This beautiful bowfront building is 27.5' wide and a hefty 80' deep.  So you're still working with narrow apartments left and right (like 531 Bergen Street), but you get an even deeper floor plate.  Not only is this on a killer block in Park Slope, but it's in the most coveted of all school districts in Brooklyn: PS 321 (for all you school-conscious folks).  The Berkeley Carroll School is also on the same block.  School expert Joyce Szuflita says that PS 321 is "the mecca" for good schools in Brooklyn; however, you can have too much of a good thing.  And folks these days complain that the school is over-crowded.  But being in PS 321 has propelled 8-Family condo conversions before, like the successful bowfront cousin to this house at 397 1st Street.

How close is 703 Carroll Street to the path of 397 1st Street?  Well, there are 6 free market units, 1 rent stabilized, and 1 rent controlled.  Lots of leases and not a lot of vacancies.  Still sitting prettier than 531 Bergen Street in terms of quickest path to conversion, but if they were serious about selling near the lofty asking price of $4.9M, we don't think they should've renewed leases on those free-market units.  But it's hard to give up that rental income bird in the hand for that $4.9M bird in the bush.  It's not everyday that big pieces on blocks this pretty come up...

The inside?  Well, this is what some $3,000/month gets you...

The marketing package is projecting $1,200/sqft on the condo sell-out.  Maybe buyers will believe that number from Cpex, because certainly no one wants to hear even $900/sqft from us in Prospect Heights (while $1,000/sqft comes in on a regular basis now...).  With a projected profit almost as high as the asking price, we're sure someone will underwrite a rub in there somewhere.  Maybe you missed over the summer when 709 Carroll Street, #1R listed for $1.15M and closed for $1.3M (or almost $1,100/sqft)...

You'd better believe folks have their eyes on reproducing or exceeding that result at 703 Carroll Street!  But, as it sits today, the asking price is almost $1.4M more than even 12 times the projected rent roll.  And the projected rent roll is almost 40% higher than the actual rent roll.  So the buy & hold approach isn't paying off at this asking price for a long time to come.  Either someone with deep pockets who needs this block in particular or some one with some patience for the condo conversion will make this happen.


Pro's:  size, curb appeal, block, school, uncontested location with stellar condo conversion potential, 6 free-market units, asking just over $550/sqft in the land of $1,000/sqft+ condos

Con's:  lofty asking price by many calculations, narrow left and right apartments, full of tenants at under-market rents, 3.3% cap at asking price, very little to reposition on it for a long time

Ideally:  these don't come around everyday, so when they do, they expect a premium.  Would $500/sqft get it done?

Another $3M+ Listing In Bed-Stuy: 75 MacDonough Street

Another $3M property has hit the market in Bed-Stuy.  This time, a huge corner 8-Family named "The Raleigh".  Once a Brownstoner Building of the Day, at the corner of Tompkins Avenue, 75 MacDonough Street is a 12,000+ square foot monster asking $3.2M these days.  At 35' x 90' with windows on all sides, you get big units with lots of bedrooms.  According to the listing, 4 of them are already free market.  And, according to these folks, apartment 8 is in particularly nice shape...

They're calling them 4BR/1 bath apartments, which isn't impossible with about 1,500 sqft to play with.  With the building already grossing some $182K/year (and pro forma calling for another 27% leg up on that number), it'd be a 6-cap at $2.8M, which looks downright affordable compared to the other Bed-Stuy corner property that wants $3M, 288 Decatur Street.  And 75 MacDonough's held its own over the years...

We're curious to see where valuations come in on this.  We saw a much smaller piece go for more in a more coveted location last week at 531 Bergen Street.  We've got an even larger corner piece coming up soon, delivered all vacant in an arguably better spot in Bed-Stuy than 75 MacDonough.  No wonder they expect to fetch even more than this place.


Pro's:  huge corner piece, buy & hold or condo conversion, curb appeal, huge apartments full of windows and bedrooms, half free market already, hipster hotel potential

Con's:  as-is rents are nothing special and pro forma rents aren't exactly around the corner, probably doesn't go below $2.8M

Ideally:  a pretty good look all around.  If the asking price feels lofty, what else is coming this nice at $250/sqft?

8-Family Closes in Prospect Heights: 531 Bergen Street

Asking $4.5M over the summer, the prime Prospect Heights 8-Family at 531 Bergen Street closes for $3.425M this week.  Just a block from Park Slope, a block from Barclays, and a block from the Bergen stop on the 2/3 trains is a healthy ~7,000 sqft building with railroad 2BR apartments, and even a bonus legal unit in the basement.  In a great little pocket of Brooklyn, full of tenants at decent rents, this had great buy & hold potential written all over it at the right price.  The left and right configuration creates two ~14' wide railroad apartments on each floor, which isn't as ideal as front & back, but with one side unattached you get some bonus windows too.

Surrounded by brownstone blocks of $2M-$4M+ townhomes, at asking price, 531 Bergen Street is a 3.7% cap.  At its closing price, it's a 4.8% cap rate.  And with no unit currently renting above $2,500/month, there's plenty of room to run on the rent roll in our opinion.  In terms of valuation, there were lots of doubters.  If this were 2 blocks away across Flatbush into Park Slope proper, we're sure the reaction would be different.  You need look no further than Newswalk a block away on Dean Street to see what the potential is for flagship product in the Prospect Heights area...

With the decked-out rooftop...

Or, for a more apples to apples comparison, check out the project at 509 Dean Street...

A similar 8-Family that started out railroad and now the managing rental broker tells us fetches $2,800 - $4,200/month per apartment with very simple & modest upgrades...

At $2,800/unit, 531 Bergen Street is a 5.5% cap rate at its closing price.  With mostly rent stabilized units in place (even if they're close to market rents), the condo conversion isn't around the corner or anything for this building.  However, purchasing a functioning income property at under $500/sqft in the land of $1,000 sqft isn't bad either.  We've seen what condos can do over there.  An even more interesting property offered off-market on the same block had 6 vacancies, and a much easier path to condo conversion.  However, developers were still pretty conservative on their price per square foot estimates on the potential sell-out.  Naysayers were eying some $700/sqft.  Whereas $870/sqft like 405 Dean Street is about the cheapest we'd expect.  96 St. Marks Avenue got up to $966/sqft a block away.  And don't forget 171 Prospect Place.  From a whole-dollar perspective, it's hard to even stand in a sheet rock box on this block under $750K for a condo, but the conversion project itself was another case of $750K net not being enough profit for plenty of bidders.  Whether you underwrote it at $400/sqft ($2.8M), at a 6% cap rate ($2.75M), or at 12 times rent roll ($2.725M) - the no-brainer bids were not going to get it done for this deal.  Even without a flashy broker on the case, all it takes is a few off-market phone calls to bring in well over $3M.  Low-ball bidders abound, but it's not the first time a sizable piece in this corridor's gone undervalued at first glance.  We're curious to see what the winning bidder does with it.

This week we'll take a look at a super-sized Crown Heights 8-Family that's one possible blue print for 531 Bergen Street and any comparable 8-Family in the area.  Even a project at the caliber of 564-566 Sterling Place would be a step up.  But the sky's the limit in an area as coveted as prime Prospect Heights.



Pro's:  size, a block from Barclays and much more, decent rent-roll as-is, upside in the rent roll, condo conversion down the road

Con's:  not a lot of vacancy to play with, multiple cash offers to compete with even without a huge on-market presence for the listing, full of stabilized tenants

Ideally:  anything in the $3.2M-$3.5M looked like a good compromise for both sides, so the closing price for 531 Bergen Street is no surprise.  Can't wait to see what the next one fetches...