Checking In On One Sunset Park

My how times have changed.

When I was a kid in the 60's, "apartment buildings", as these types of places were invariably called, were the last place anyone would want to live. They were generally subject to rent control, and maintenance was kept to a minimum. In other words, these type of buildings were widely seen as thread-bare places to live for those who needed to get by. Back then, the general rule of thumb for buying a home in the city was to avoid areas with "too many apartment buildings" because they were generally shabby and led a neighborhood's deterioration.

It's amazing how a little TLC goes a long way in making these buildings shine. I especially like how they spruced up the courtyard. I lived in an area that had many such buildings,and I don't recall any of them having done anything nice with the courtyard.

Nice to see what they've done with this building. It seems to me that the lobby could use some furniture. Other than that, this looks like a nice, more affordable option for folks.

Posted by: benson at February 2, 2009 11:53 AM

Vinca and Snark;

The NYT featured these apartments yesterday too. All cash is required.

I suspect that this requirement is due to necessity. This is a conversion from a rent-controlled building to a condo. Sometimes it takes years and years to complete such a conversion, and in bad times some of these conversions can go belly-up (this happened to a cousin of mine).

Even in normal times, banks are reluctant to finance buildings where the majority of occupants are non-owners. In times like these, such buildings are radioactive to them: they won't finance such a purchase. Hence, the all-cash requirement,and the more affordable price.

In a certain sense, you've got to have nerves of steel to go into this type of transaction. You had better have confidence in the long-term viability of the building and the neighborhood.

Posted by: benson at February 2, 2009 12:13 PM

Appoggiatura;

Whoops - you are correct. Sorry, I stand corrected about the NYT article.

I still stand by my belief that financing options for this type of conversion are highly limited in this market.

Posted by: benson at February 2, 2009 12:39 PM

Appoggiatura;

O come on! What do you suppose the developer's site is going to say: "Financing for these units will be really,really tough" ?!?!?

All they have done is make an arrangement with Wells Fargo for possible financing of the building. The developer probably receives a 1% commission for any potential buyer they steer to Wells Fargo, and the loan actually closes.

None of what is written on this web-site means that Wells Fargo is actually making a commitment to financing a purchase. All the usual weasel words are there.

I remain highly skeptical of the possibility of obtaining financing of this type of conversion, in this type of market.

My cousin bought into just such a conversion in the last real-estate downturn. In his case, it was a co-op conversion, and they were only able to sell about 20% of the units in the initial offering. After that, financing for future purchases totally dried up, as the banks' tightened standards refused to lend for purchases in which the majority of occupants were not owners. This led to a further downward spiral, as those (like my cousing) who had purchased their units but couldn't sell turned to renting them out, which led to a further reduced owner-occupancy level.

Be very careful in this type of situation. My words of caution above still apply.

Posted by: benson at February 2, 2009 12:57 PM

Appoggiatura;

I'm not trying to knock the building. As I remarked above, they've made the place shine - I like it too. All I'm advising is that folks make sure that financing is really available for would-be buyers. Without financing, there is no liquidity, no market,etc.

Posted by: benson at February 2, 2009 4:31 PM