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December 30, 2008

House of the Day: 189 6th Avenue

For the millionth time, why do sellers use brokers with crappy websites! This four-story brownstone at 189 6th Avenue in Park Slope is an interesting listing though. At first glance, the asking price of $1,395,000 seems absurdly low for the neighborhood. Look a little further and the explanation makes itself known in the form of the capital letters: SRO. The listing says it will be delivered vacant, but that's barely half the battle when it comes to converting an SRO. The real battle is getting HPD to sign off on a Certificate of Non Harrassment, which can take the better part of a year. Meanwhile, your carrying costs are burning a hole in your pocket. SROs are also much harder to finance. Still, a cash buyer could probably end up doing well with this.
189 6th Avenue [Century21] GMAP P*Shark

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Century 21 is the bottom of the barrel. We'll all agree on that. I don't see any "charm" in the interior of this place at all. I hope someone like Morris and Mary-Anne from Bed Stuy get this and turn it into something really modern and nice; as long as the last remaining fireplaces go to someone who needs them.

Posted by: daveinbedstuy at December 30, 2008 1:23 PM

Dave, here's your chance! A white, blank slate!
I say chartreuse for the walls, aquamarine for the window surrounds, maybe red sash to set off the aqua and a little gilding on the cornice!

Posted by: Inigo at December 30, 2008 1:26 PM

I never suggested that a brownstone, or any stone building for that matter, ever be painted. It's a travesty.

Posted by: daveinbedstuy at December 30, 2008 1:28 PM

This had a big price chop. which means crap cause it is still over priced.

Posted by: billyboomer at December 30, 2008 1:33 PM

Is it illegal to rent it out to fewer than capacity? Can't you remodel and rent out a unit or two before you change the SRO designation?

Posted by: mopar at December 30, 2008 1:35 PM

Yes, maybe Mr. B or someone else could write a brief summary of the whole process of what's involved with changing a SRO to a one or two-family house. I'm not even sure how they are delivering it vacant. Did they just pay the people to get out? I guess that's the first step but probably not always.

Posted by: daveinbedstuy at December 30, 2008 1:39 PM

could they keep it as is as an SRO and just remodel it cheaply and sell / rent out the individual units? i assume it's just a collection of mini studios? and maybe shared bathroom per floor? im sure that would rent and / or sell. why not?

*rob*

Posted by: PitbullNYC at December 30, 2008 1:40 PM

The brokers are the owners. This century 21 group buys up SROs, empties them out, gets the CofO changed and converts them to condos. They try to sell the thing all along the way. This one has been mostly empty for at least 6 months if not a year. The guy on the garden floor was probably the last hold out and was out by the end of the summer I think.

If I recall correctly, it looked well laid out as 4 floor throughs with central kitchens and baths, bedroom(s) in back and front living area.

Generally a very good location for trains and neighborhood amenities. But there is a noisy school across the street.

Overall this is an investment property for someone looking to be a landlord. If you want to run a business, buy it. If you want a home, don't.

Posted by: ownhs at December 30, 2008 1:49 PM

As per my 1:39 post, how is this building, with its current SRO C of O different from a 4 unit building, aside from the financing difficulties???

Posted by: daveinbedstuy at December 30, 2008 1:51 PM

One of the occupants of this house is someone I noticed some time ago in a cafe I spent time in regularly: one of those unforgettable NYC characters you keep running into. I happened to be walking home one evening two years ago and noticed the person returning here; when I pass it on my way to work I always recall the memory.

Posted by: infinitejester at December 30, 2008 1:59 PM

As I thought, ownhs...so lets do the math...I'm sure these places would rent out for $1,500 each with very little work...$72,000 per year...that's a 5.6% gross yield.

Cash purchase...no mortgage
Taxes: $7,500
Ins: $4,000 (maybe less but not much)
Water: $800
Heat: $3,000
Total: $15,300....Net yield is then 4%...but would go to 5.0% if rents were $1,800.

What do you people think the rents should be????

Posted by: daveinbedstuy at December 30, 2008 2:01 PM

This has been on the market for over a year. The price started over $2M andwas laughable.
$1.3M seems pretty fair for that location......assuming that the building is in fact vacant. The guys at century 21 really are the lowest of the low.....

Posted by: PHfamily at December 30, 2008 2:06 PM

Clean them up a bit and you could easily get $2000 or more.

Posted by: SnarkSlope at December 30, 2008 2:07 PM

Dave, this is the north slope. Walk to the N and you are 1 express stop from Canal st. These would be very decent sized 1 bedrooms or small 2 bedrooms. You could easily rent them even now for $2200.

Posted by: ownhs at December 30, 2008 2:10 PM

Obviously wiser heads than I have passed on this place, but I'm not sure I'm seeing the huge downside. If you could get it for $1.3 million (say 50% down), then gut reno it for, say, 300k, plus your carrying costs for a year and legal fees, you'd have a 3600 sf Park Slope brownstone in a slightly less than prime location for a (conservative) outlay of 1.75 million. Not bad?

Is there any reason a competent expediter can't get the C of O changed to single-family or even 2-family in a few months, esp. if delivered vacant?

Again, it's not been sold so there's clearly some kind of catch. I just don't know what it is.

Posted by: Bolder at December 30, 2008 2:13 PM

So at $2,000, the net yield is 5.8% and at $2,200 it is 6.5%....these are VERY attractive yields. You would be lucky if your IRA yields 6.4% ad infinitum...and remember that yield increases as rents do over the years.

Posted by: daveinbedstuy at December 30, 2008 2:15 PM

How is a four family an SRO, as in single room occupancy? The floor plan shows floor through apartments. Most SRO's of this size would have had 2, maybe even three, rooms for let on each floor. Was the house a real SRO before, and the C of O was never changed? Wouldn't that make a difference in whether or not a buyer would have a hard time getting a new C of O. It's certainly easier to renovate 4 floor throughs, even configuring down to a duplex plus rentals, over a real SRO with about 8-12 kitchenettes, extra closets, and usually a lot more water and wear and tear damage.

Posted by: Montrose Morris at December 30, 2008 2:16 PM

This is a very specific use type. The City regards SRO's as an endangered species. It is very reluctant to change the C of O of these buildings. They will try and use any excuse to delay it. Meanwhile the former tenants can come out of the woodwork and claim they were harassed into leaving, this usually means a little more dough in their pockets. If you did wish to keep the building as an SRO, I'm sure the city would give you all kinds of incentives and tax breaks to upgrade. but the house could not revert back to apartments or single family for a long long time. This will probably be bought by the large family-owned realty companies that specialize in these kinds of hassles and who have family members well versed in the "art" of converting and certifying. I have actually heard that these families have their people in civil service jobs in the various agencies to smooth things out for them. I would not be surprised. It's New York, you gotta have a gimmick...This is not a project for a newbie.

Posted by: sam at December 30, 2008 2:22 PM

There is NO C of O on file for this property. Nor are there any violations listed. Propertyshark has it listed as 4-family, C3...taxes next year will rise to $8,500. No mention of SRO

Posted by: daveinbedstuy at December 30, 2008 2:24 PM

didn't we just read last week in the Times about those kids paying $1450 for an SRO / shared bathroom in ft. greene and they thought it was a "deal"? Just leave it as a freekin SRO!

Posted by: bowl of dicks at December 30, 2008 2:25 PM

Cash purchase...no mortgage
Taxes: $7,500
Ins: $4,000 (maybe less but not much)
Water: $800
Heat: $3,000
Total: $15,300....Net yield is then 4%...but would go to 5.0% if rents were $1,800.

Dave - That's pretty accurate. I'm impressed.

Posted by: landlord at December 30, 2008 2:30 PM

It would be hard to prove that it wasn't an SRO if it was an SRO, regardless whether there is a C of O.

Posted by: Inigo at December 30, 2008 2:31 PM

Thank you landlord. I'm one too and have been on and off for over 23 years.

Posted by: daveinbedstuy at December 30, 2008 2:37 PM

It is definitely an SRO with 1 class A unit and 9 class B's. (The class B units are the SRO rooms). I see 35 violations, many of them recent.

It looks like a previous owner renovated the building without permits (and a Cert. of Non-Harassment from HPD) so the building dept's. records no longer match the current configuration as a 4 family. The violations against the building confirm this; One of them states "file plans and obtain a certificate of occupancy to legalize the following alteration or restore premises to prior legal condition reduction in occupancy 1 class a apt & 9 class b room to 4 class a apts."

It won't be fun trying to legalize the illegal 4-family configuration and will probably cost a lot in building dept. fines.

Posted by: nise17 at December 30, 2008 2:43 PM

I think it's pretty cute, Dave. Kitchen/bath upgrade and floor refinishing wouldn't hurt, but other than that, it's got all the original details that make it charming.

Posted by: mopar at December 30, 2008 2:44 PM

nise17...you and I are looking at something completely different on the DOB website then. Send me the link if you would.

Posted by: daveinbedstuy at December 30, 2008 2:47 PM

quote:
didn't we just read last week in the Times about those kids paying $1450 for an SRO / shared bathroom in ft. greene and they thought it was a "deal"? Just leave it as a freekin SRO!

that was an EXTREMELY isolated incident, and that girl was a certifiable moron. i mean yeah, you might eventually be able to pack a big house full of morons, but i wouldn't be on it.

*rob*

Posted by: PitbullNYC at December 30, 2008 2:52 PM

"So at $2,000, the net yield is 5.8% and at $2,200 it is 6.5%....these are VERY attractive yields. You would be lucky if your IRA yields 6.4% ad infinitum...and remember that yield increases as rents do over the years."

This is why we are in this mess. This scenario works in a perfect world. A world without fiction. If you want to understand the concept of fiction then I suggest you read On War by Carl von Clausewitz.

Cash purchase...no mortgage
Taxes: $7,500
Ins: $4,000 (maybe less but not much)
Water: $800
Heat: $3,000
Total: $15,300....Net yield is then 4%...but would go to 5.0% if rents were $1,800.

Dave - That's pretty stupid. I'm not impressed.

You have a environment of falling asset prices and the the lost of equity is not factored in. So you are losing value and income at the same time. Assumptions is what got us into this mess...

The What

Someday this war is gonna end...

Posted by: Return of The What at December 30, 2008 2:56 PM

You're a fool what. There's no loss of equity if you keep this as a rental property jackass.

What gets PWNED so easily these days.

And you want us to believe that you were a broker. probably you were, but a stupid one at that.

Posted by: daveinbedstuy at December 30, 2008 2:58 PM

Thanks, I do see the point about having to deal with old violations, including long-term illegal use as a four-family. I wonder, however, how many illegally converted SRO's have been restored to that use, esp. in a place like Park Slope. My guess is not many. Also suppose there are probably title issues.

If this is an illegal 4-family, would it be playing with fire for a new owner to continue its use as one? Put another way, what would your chances of getting caught be?

Posted by: Bolder at December 30, 2008 3:09 PM

Bolder...if nise17 has seen 35 existing violations somewhere deeper within the DOB that he has access to then it's Game Over for the average homeowner/non-professional landlord.

Although even if it costs $100,000 to clean it all up and get a 4 family C of O then its still worth it on those numbers.

Posted by: daveinbedstuy at December 30, 2008 3:14 PM

Crappy website = lower commission.

Imagined savings for the seller = the only reason people go with these schlock outfits.

That said, I picked up my last house through Fillmore. Sometimes properties with a lot of potential (usually in fringe areas, say Ditmas Park 6 years ago...)sometimes slip through the cracks.

Posted by: Architerrorist at December 30, 2008 3:39 PM

DIBS, I agree that if 100k would get it done it's an still an attractive price. Look, to my thinking, almost any full-size house in North or Center Slope is still worth at least $2 million if it's in move-in or rentable condition.

Posted by: Bolder at December 30, 2008 7:00 PM

I just want to respond to Brownstoner's initial claim that Century 21 has a bad website and that he can't understand why anybody would use them.

The broker's website includes more photo's than most listings, and I don't understand this broker elitisism that Brownstoner seems to spout every once in a while.

Love brokers or hate brokers, the "firm" they're associated with makes no difference. It means absolutely nothing and is just a form of advertising to the moronic masses that might actually believe something they read on the side of a bus.

I've worked with agents at the biggest name firms and ones from firms so small you folks have never heard of them, and can say with 100% confidence that there's ZERO relationship between the diligence and honesty of an individual agent and his respective broker.

It all depends on the individual representing the property you're either buying or selling.

Posted by: IronBalls at December 30, 2008 8:05 PM

Even though it has been used as an investment property and that might be the more obvious route to continue with, I was thinking it could be a great single family in the north slope...in the realm of possibility for my family price-wise. As a first time buyer, I obviously have no experience with converting an SRO, but it is possible, right? Then, of course, there is the whole financing dilemma (we are sadly not in the "all cash" camp). I second DIBS' request at 1:39- can anyone relate their experience converting an SRO to a 1 or 2 family? Thanks!

Posted by: onefineday at December 30, 2008 8:22 PM

Brownstoner converted his house from an SRO, I think.

But he's too busy to comment much on his own blog of late.

In the good old days, he used to banter more with the common folk.

Posted by: IronBalls at December 30, 2008 8:30 PM

I believe you are right, IronBalls. Maybe Brownstoner will throw a little "pitfalls and joys of SRO conversion" banter our way in the New Year : ) Curious about your defense of Century 21, particularly as the broker with this listing has received negative feedback in a past thread when this property was an open house pick back in July. Do you know this broker, or were you making a general comment on the fact that even big, "fancy" outfits can have slimy brokers and bad photos?

Posted by: onefineday at December 30, 2008 8:39 PM

"You're a fool what. There's no loss of equity if you keep this as a rental property jackass."

Let's say that you took you own money a brought this retail property for 1.3 million. The Mutant Asset Bubble implodes and now that house is worth 650,000. That's a 50% haircut and let's factor in falling rents Dave and you will see that investing in these conditions is very difficult. I hope that when people are buying now they should look at all aspects of the deal.

The What

Someday this war is gonna end...

Posted by: Return of The What at December 30, 2008 9:06 PM

Onefineday,

I don't know this agent and was just making a general comment.

I'm not a real estate agent, and, if anything, I'm the kind of person to try selling FSBO first.

All it takes is running an advertisement in the NY Times, because that's where 99% of folks look for properties, since there's no real MLS in NYC.

It's unbelievable how many real estate agents don't even return phone calls.

When the market was flying, I had particular trouble getting in touch with one of the most successful agents at one of the largest firms.

Big or small, there are jerks everywhere, and it's best to use somebody you trust.

Obviously, this guy trusts this agent, or he wouldn't be using him.

Posted by: IronBalls at December 30, 2008 9:24 PM

Dave IBS can't seem to comprehend the simplest of cause-effect. I reckon hes one of those "well housing won't go down because the sellers simply won't sell until prices jump back up"

Posted by: cornerbodega at December 30, 2008 10:00 PM

from personal experience, this agent is a slimeball. wouldn't touch a thing that this company's name is attached to.

It's a fine mess to work out the permitting problems when you've changed the configuration without a Certificate of non-Harassment. Now, you've got to straighten out problems with both the DOB and HPD. Good luck with that.

Posted by: tiptoe at December 30, 2008 10:31 PM

cornerbodega,

You "reckon" wrong.

Next time you feel the urge to hit the crack pipe, eat an apple instead.

Posted by: IronBalls at December 31, 2008 3:41 AM

HPD has this building listed as 1 "A" Unit and 9 "B" Units. The I-Card shows this as being divided up with an owners apartment on the garden floor, and 9 SRO rooms spread through the other floors. This is the only way to legally occupy this building until going through a hellish C of O change.

Posted by: Shahn Andersen at December 31, 2008 7:45 AM

Shahn...what's the website for HPD to get that info?

cornerbodega & What....eat shit for the New Year....you don't go into an investment property with numbers like that and really care what's going to happen to its "value" in the next 2 years. You're both showing your ignorance here.

Posted by: daveinbedstuy at December 31, 2008 8:43 AM

The reasoning shoud be banks are looking for a ROI in ten years so if rents are 1800 a month minus yearly maintance costs you are looking at and annual income if 50,000 dollars give or take a penny. Therefor banks not I value that property at no more than 600-650,000 dollars so when they half that 1.3 it will be sold at a fair price.

Posted by: hannible at December 31, 2008 4:36 PM

Keep it as an SRO. Rent the entire building to a NFP Social Service Agency for supportive housing. Ground floor to be used for office space to provide in house service to those in their care. Landlord has minimal responsibilities as renter has own maintenance staff. ????

Posted by: IMBY at January 1, 2009 10:10 AM

« Condos of the Day: 542 St. Mark's Avenue Development Watch: Aloft Hotel Starts to Take Shape »

December 30, 2008

House of the Day: 189 6th Avenue

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