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November 25, 2008

House of the Day: 208 Carroll Street

208-Carroll-Street-Brooklyn-1108.jpg
We don't usually include four-family houses in the the running for a House of the Day slot, but this one at 208 Carroll Street in Carroll Gardens has a nice look and feel to it. Plus, in this economy, the idea of gradually growing into a house my be appealing to some people. The 4,500-square-foot house is currently divided into four floor-through rentals, all of which are occupied on a month-to-month basis; there have also been a number of infrastructure improvements recently. The asking price is $2,050,000. The first question to answer is probably whether you could cover your expenses if you kept renting the entire thing out. Waddya think?
208 Carroll Street [Brown Harris Stevens] GMAP P*Shark




Posted by Brownstoner at 1:11 PM | Comments (11)
Categories: Carroll Gardens, HOTD

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Comments

actually seems like a decent deal if you assume 10% off ask. You could definitely almost cover rent roll with three apts renting at around $2800 each and if you wanted two floors, your monthly after rents would only be around $4000.

Posted by: gkw at November 25, 2008 1:28 PM

of course it depends on what you put down. I think $2800-3000 isn't unreasonable rent to ask assuming the apartments are all in move-in condition. of course the current tenants may be paying substantially less, and if they're reliable it may not be worth the effort to find new ones.

On the face of it, though, the price looks in the ballpark.

Posted by: Bolder at November 25, 2008 1:33 PM

I could be wrong, but I believe that you need a commercial loan for a building with more than 3 units - so it's 20% to 25% down.

So, you have a $1,500,000 mortgage. Assuming a 6.5% rate and a 25-year mortgage, you're looking at $121,000 in mortgage payments. I think $2,800 is the most you're going to get - but hey, that's me. At that rent, your gross income is $134,400. Even if you get $144,000, that means you basically make very little on this property.

Who would give up $500,000 to make $20K a year, and that's only if you do all the labor yourself or simply cease maintaining the property forever.

I sure wouldn't.

Posted by: Polemicist at November 25, 2008 1:48 PM

Don't know about the financials, but this looks like an apartment building, not a single-family house broken up into rentals.

Posted by: tinarina at November 25, 2008 2:00 PM

Is it a feasible purchase as a future Condo conversion?
Each floor can be a 2-bed, 2-bath, except for the 1st; 1-bed, 1.5-bath.

Posted by: bayridgegirl at November 25, 2008 2:07 PM

Seems like a decent deal. Your break-eben point is at about 30% down, ie about $600k down and a mortgage of about $1.4mil. Then it clearly pays for itself (inc. taxes and heating bills). So if you got the cash, I would say it's a good investment.

Posted by: brownie77 at November 25, 2008 2:22 PM

Looks like a nice building except for the location of the bathrooms next to the kitchen instead of near the bedrooms. Also, how do you access the back yard?

Posted by: Bessie at November 25, 2008 2:31 PM

Can you assume a 6.5% at this point? I thought jumbo rates were more like 7.2?

Posted by: gkw at November 25, 2008 2:54 PM

An unusual layout, but judging by the details, it's original. I wonder if it is. Very pretty details.

If I were living here, I'd use the room with the fireplace as a living room, though I guess you have no choice but to use the room off the kitchen as a dining room. Pity about that.

Posted by: mopar at November 25, 2008 3:14 PM

1. up to and including a four family, if owner occupied is not a commercial loan, and could even be a conforming loan, not sure what the limit is at the moment.

2. for this deal to work as an investment, after expenses, taxes, insurance, utilities, maintenance, depreciation, etc., it needs to yield 5 - 8% on a net after taxes basis. you have to play with the variables - purchase price, down payment, amount financed, interest rate, rents, initial outlay for capital improvements - to see if there is a sweet spot where the basic requirement is met. whether you live in a unit or two is another issue - first you have to do that analysis.

3. jumbos are extremely expensive now - well over 7%, some over 8%, and some with several points. apparently the banks do not want to make those loans, so going into this one would need to know exactly what the cost and likelihood of financing is.

4. recent 3 and 4 families available, when put through this analysis based on +-10% of asking price have demonstrated a potential yield on invested cash of about 1%. this tells me that the market is not at equilibrium, so I would be in no hurry at this point. that does not mean that prices have to fall - it simply means that some combination of lower prices, higher rents, lower interest rates, better existing conditions in the units is required in order for there to be a significant level of qualified competition on the buy side.

Posted by: raphael9 at November 25, 2008 5:05 PM

Well reasoned, Raphael9 at 5:05.

Posted by: mopar at November 25, 2008 7:20 PM

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