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August 11, 2008

House of the Day: 531 11th Street

531-11th-Street-0808.jpg
The owners of 531 11th Street appear to have done quite a nice job with the three-story brick house. While not as grand as many of the houses in the North Slope, this 2,800-square-foot three-family definitely has charm, though it probably doesn't make a lot of sense for a family buyer in this current configuration. It's also tough to make the numbers pencil out as a rental property: At the asking price of $1,895,000, the monthly mortgage alone will likely be well over $10,000 a month, meaning you'd have to rent out each floor-through unit for at least $3,500 a pop just to keep the bank happy. Then there are real estate taxes, maintenance, utilities, etc. Tough.
531 11th Street [Corcoran] GMAP P*Shark




Posted by Brownstoner at 1:18 PM | Comments (27)
Categories: HOTD, South Slope

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Brownstoner, it would have been nice if you listed the price!!!

BTW...1.895

Not sure someone paying this kind of money, wants to live in a 1-bedroom.

Posted by: bayridgegirl at August 11, 2008 1:38 PM

Yeah, for all the reasons listed in the above post this is a tough sell. Needs too much work to be a reasonable one-family and the rental economics don't add up. Hard to see why they would even bother listing it at that price.

Posted by: wasder at August 11, 2008 1:42 PM

Whoever buys this would do so an income-producing property, no? You don't have to live in every building you buy.

Posted by: sam at August 11, 2008 1:51 PM

It would be easy enough to change the C of O to a single-family--just rip out the upper kitchens. (Although from the floor plan it looks like the nice kitchen is on the top floor because an island is shown there, which is a drag.)

I can't imagine that anyone could seriously consider this for the rental income, unless you wanted to keep it that way for just a few years and eventually took over the space yourself.

Posted by: tinarina at August 11, 2008 1:51 PM

Yeah it is a weird situation on this one. Being recently renovated just isn't as valuable when you have to rent out the place. Normally this much square footage recently renovated at this price would be decent.

Posted by: Paluka at August 11, 2008 1:52 PM

I actually know 3 or 4 people who are out there looking for investment deals right now. Some people like to take advantage of buying in a slowing market, instead of at the top.

Imagine that.

Posted by: 11217 at August 11, 2008 1:53 PM

You know, it begs the question:If an owner chooses not to occupy a unit in a brownstone, rents out all of the units at market rate and cannot cover his mortgage, insurance, Con Ed, ect., is not that property overvalued ? Just sayin'.

Posted by: 007 at August 11, 2008 1:56 PM

On the investment issue, Mr B. is right. Unless you can tell me that the units will fetch more than $3,500 per month, assuming a 70% LTV, there's not much profit after mortgage, taxes, utilities and maintenance.

Posted by: daveinbedstuy at August 11, 2008 2:02 PM

For this price, where's my central A/C (window units?!), where are my upgraded mechanicals and fancy new radiators (old cast iron?! probably steam!). Where's my mention of working fireplaces and landscaped garden? Where are the 'renovated bathroom' pictures (no pics = they are gross)? Where's the master suite with bath (oh wait, there's a kitchen there!)? etc, etc, etc

Posted by: Mr Joist at August 11, 2008 2:13 PM

A couple of thoughts. First of all, this building was never built as a single-family house I don't believe. It was built as flats from the beginning. it has that look and the floorplans look like they were always apartments. secondly the rent roll is the most iportant thing but there is also depreciation and long-term return. Very few investments make a lot of money right away. One of the beauties of income producing properties is the depreciation write off and the other many write-offs one can take as owner. If the property is not rent regulated it will turn a profit for sure in a few years, in the meantime it helps alleviate tax burden you may have from other holdings. Life is complicated.

Posted by: sam at August 11, 2008 2:15 PM

Sam - I'm just curious - what about the floorplans leads you to the conclusion that this was originally built as an apartment building?

To me this look pretty much like every other cutup townhouse. Worse than many, actually, as one could have easily fit two bedrooms into each floor and made more money in rent.

Posted by: SnarkSlope at August 11, 2008 2:26 PM

Sam 2:15pm:

If you want an "investment" go buy 4 850sf 1-bed condos at Novo for $500k each, rent them for $3,000 each, make $ right away, same price.

Don't try to pitch this p.o.s. (531 11th Street) as making sense as an investment.

Posted by: Mr Joist at August 11, 2008 2:38 PM

The buildings that have those angled bays from top to bottom are usually "flats buildings" -their historical name-A single family home will usually have architectural variation from one floor to the next to convey the internal hierarchy of rooms. windows will get shorter higher up, a prominent bay will protrude above the doorway or stained glass transoms will grace the parlor floor, etc. Buildings that have exactly the same features from top to bottom like this one, express the fact that they contain repetitive apartments. that's my take.
In terms of the plans, the placement of the toilets and kitchens are typical of these kinds of early multi-family houses.
We see a lot of chopped-up single family houses on this site (some done worse than others) so it is natural to assume that this is also a chop job. But I would wager this one was originally built as cold- or hot-water flats.

Posted by: sam at August 11, 2008 2:47 PM

Ah, that makes a certain sense. Thanks Sam.

Posted by: SnarkSlope at August 11, 2008 2:56 PM

This is a twin of the same house as a HOTD on 8th Street, right?

http://www.brownstoner.com/brownstoner/archives/2008/02/open_house_pick_170.php

what did that go for, if it was ever sold?

Posted by: Rookie at August 11, 2008 2:56 PM

Betancourt had this listing for months and could not sell it (at same price) so seems as the sellers are trying to see if Corcoran can do any better - but if it did not sell already, they should realize the price is too high. I saw it and found it disappointing - huge amount of work to turn into 1 or 2 family, and definitely does not make financial sense as a 3. I know several people who have snapped up 3 families in the area for far less. I foresee a significant price chop for this to sell.

Posted by: Miss Muffett at August 11, 2008 3:14 PM

The HOTD at 407 8th Street listed for 1.425 and Streeteasy says it sold. No closing price has been listed yet though.

Posted by: SnarkSlope at August 11, 2008 3:26 PM

This property makes no sense as an investment (or any type of purchase anywhere near that price).

Sam, your statement that "One of the beauties of income producing properties is the depreciation write off and the other many write-offs one can take as owner." does not work for this property. These "write offs" such as depreciation are written off against taxes that you would pay on any profits from renting this building. Unless you could rent each floor through for $4000 a month, you have no profits to write anything off against --- after payment of mortgage and other expenses, you would be operating at a loss. Accordingly, the "beauties" of investments don't work here. No rational investor would get anywhere near this property at this price. Needs to come down by at least 40% before it starts to make sense.

Posted by: LOL at August 11, 2008 3:55 PM

531 11th was most certainly built as flats - the whole cluster of houses that this is part of was, as were almost all the houses on the block of 10th st between 7th and 8th ave. The house seems over/under valued much the same way most other houses at the moment are. Time will tell, and whatever it sells for is what it's worth to somebody at the time of sale. Money is going to have to get easier if sales are going to get easier, but eventually it will. Did anybody see the house? What condition were the rentals in?

Posted by: raphael9 at August 11, 2008 4:03 PM

Another negative: there are two VERY ACTIVE firehouses on this block. The noise they make, at all hours of the day and night, is significant (though not unappreciated!!!!), as is the loss of parking. Living on that block looks to me very much like living IN the firehouse. I think rentals would be the only way to go: you'd be crazy to buy that for your own house.....

Posted by: slopenick at August 11, 2008 4:15 PM

Thw write off from a net loss on this building could be applied to profits from other properties, or it could reduce other income you have -- but if this is all you've got, then the loss won't help at all.

And no 1 BR in the Novo is going to rent out for $3K/mo. Maybe $2500.

Posted by: babs at August 11, 2008 4:37 PM

These houses were designed to be used as multi-family. In fact, some of them were used as tenements (multi-family on the same floor). I think this is the same type of house that Ricky (of Ricky's fame) renovated - it was in the Times a couple of months ago.

Posted by: Rookie at August 11, 2008 4:39 PM

Why do people always assume a minimum down payment when figuring rent rolls vs. mortgage payments?

I'm not saying this house is priced right or wrong, but if you believe that the market is at a low point and are an experienced investor or landlord (and have the cash), why not put down 1 mil, take out an 800k mortgage (payments would be around 6k? havent looked it up), then rent whole thing out for total of 8k a month? You've got income and are poised for the next market spike.

I'm sure there are a whole host of tax consequences/benefits, too from the standpoint of an incorporated business.

Posted by: Bolder at August 11, 2008 7:06 PM

As a renter, I would never, ever pay $4000 for a one bedroom over here. I mean, people pay that for luxury places in the city, and sure, this place is very nice and pretty big, but any sensible renter who's putting up that kind of dough would want a better layout and a a lot more interesting stuff for there money.

Posted by: BSandCHBorderBaby at August 11, 2008 7:07 PM

some friends rent a floor similar on 12th st and 8th which is $2800. Its on a corner so the "dens" have windows so make good bedrooms which makes it better however.

Posted by: Santa at August 11, 2008 8:35 PM

Does anyone know what these apartment would rent for? If they are $2800 with windows in the "den" what would they go for without?

Posted by: pmmtenement at August 11, 2008 9:32 PM

This is one of a long row of very similar houses on that block. I have a friend who lives in a floor-through in one of them. This one is probably right opposite the fire house (there's only one). Parking is a big problem on that and surrounding blocks, but the fire engines don't turn on the siren until they leave the block so it's not so bad noise-wise.

My friend's apartment is a rental, on the parlor floor, although I'm sure the building was constructed as separate floor-through apartments. It's a railroad flat but very nice--there's a big room in the front, a big room in the back, and 2 smaller rooms in the middle. The nice size galley kitchen (no room for a table) is off to the side in the back, and the bathroom is behind the kitchen. She and her daughter have rearranged the use of the rooms a few times, but right now the back room is a bedroom, the middle rooms are a dining room and a bedroom, and the front room is a living room. The upper 2 floors are a duplex where the owners live. The garden level is not finished but probably could be, although it's substantially below grade in the front. I don't know how the upper duplex is laid out.

My friend has been there for many, many years and I think she's paying way below market rent (less than $2k). I think her apartment could probably rent for $3k in that location.

Posted by: rf at August 11, 2008 9:58 PM

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