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April 1, 2009

306 Washington Sells for 26 Percent Below Initial Ask

When we last checked in back in November, the price on 306 Washington Avenue had already been reduced from $2,300,000 to $1,900,000. Not far enough, it turns out. The five-story brownstone just closed at the end of last week (not long ago enough to make it into public records or the Top Sales list) for, get this, $1,680,000. The four-family brownstone went to contract in January just shortly before one of the rent stabilized tenants vacated, creating some instant value for the new owners. GMAP

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That was one great house. Those buyers lucked out.

Posted by: TownhouseLady at April 1, 2009 10:16 AM

They definitely lucked out with the rent stabilized tenant moving. I wonder if they paid them to leave. Wouldn't be surprised.

Posted by: 1842 at April 1, 2009 10:19 AM

There are still other rent stabilized tenants there I believe. If there were no other tenants that price would be a great deal for the buyer. But with tenants I am surprised the house sold for that much.

Posted by: wasder at April 1, 2009 10:22 AM

But there is still one more rent stabilized tenant, correct? That explains the good deal (which can be a good deal if the tenant is a good tenant - or not so good if they are not...).

Posted by: 1842 at April 1, 2009 10:22 AM

"That was one great house. Those buyers lucked out."

Really??????!!!! Based on what???? I willing to bet the comp on this disaster is 1.1 million!

The What

Someday this war is gonna end...

Posted by: Return of The What at April 1, 2009 10:25 AM

I seriously doubt the tenant move was a coincidence.

Posted by: lechacal at April 1, 2009 10:27 AM

it's a rent-stabalized tenant people, not a rent-controlled one. why do people act like that is SUCH a big deal. perhaps the owners met the tenant? perhaps the tenant is not some "problematic scourge on society" that so many people think them to be. chances are that the rent stabalized tenant is paying closing to market rate to begin with.

*rob*

Posted by: PitbullNYC at April 1, 2009 10:28 AM

agreed the buyers lucked out on that purchase
I mean wow to start at 2.3 and get it for 1.68 is a deal!
remember - these people were looking at it when it was around 2mil so they obviously had that sorta dough from the beginning and to get it for 380K less is a deal for sure!

Posted by: gemini10 at April 1, 2009 10:28 AM

"I willing to bet the comp on this disaster is 1.1 million!"

ROTW --
Why don't you do the research? Look up the house on zillow, find those you think are comparable in size, make-up and location, and post them in this thread? Curious what you come up with.

Posted by: slopefarm at April 1, 2009 10:41 AM

slope--good suggestion. Some actual facts would be a nice change of pace.

Posted by: wasder at April 1, 2009 10:44 AM

Rob -
and if they are not?
No owner likes to be short changed. If you are paying market rate, you want your tenants to do the same.

Posted by: crimsonson at April 1, 2009 10:44 AM

but who is being short changed? obviously rent controlled and stabalized buildings and houses cost less. no one is being short changed and from what i see, hear, read, most rent stabalized tenants are close to market rate to begin with.

*rob*

Posted by: PitbullNYC at April 1, 2009 10:47 AM

crimsonson -- I am an owner, not a renter, but I agree with rob for the following reason: If you buy a building with stabilized units, the price you paid reflects the discount in rents. If the rents are below market, you are not being shortchanged because you paid less to own the building than you would have paid if all the units were renting at market. The only "shortchanged" owners are those who owned when the units were stabilized in the fist place.

Posted by: slopefarm at April 1, 2009 10:48 AM

"instant value"

Minute Price? Looks like a peak price to me.

***Bid half off peak comps***

Posted by: Brownstones Half Off at April 1, 2009 10:49 AM

rob, you beat me to it.

Posted by: slopefarm at April 1, 2009 10:49 AM

For all that house....1.6M....not bad at all.

So they now have ONE rent stabilized tenant left and once they're lease is up, they don't need to offer a renewal.

Posted by: bayridgegirl at April 1, 2009 10:53 AM

should be:
and once their lease is up,

Posted by: bayridgegirl at April 1, 2009 10:54 AM

Hello New York: rent-stabilized tenants do not just "happen" to move out. I would guess they were paid handsomely for the favor of their departure. Also the myth that stabilized rents are close to market value is something I hear repeated a lot. As far as I know, and I have in this business a long time, nothing could be further from the truth especially in desirable neighborhoods.

Posted by: sam at April 1, 2009 10:55 AM

Rent stabilization is for buildings with 6 or more units. Those arpartments in those buildings are automatically rent stabilized. This building is a four family, so all the apartments are market rent, unless there are rent controlled tenants, which is a different beast.

You can have rent controlled tenants in any multifamily building (even 2 family buildings). These people don't just leave. Even if they are old and are dying, a relative can move in for 2 years preceding their death and then become the new "owners" of that rent controlled apartment. If you want them to leave, usually they get paid a lump some based on what they are actually paying and current market rents. I don't know the actually numbers, but if they were paying $300.00 per month, they could have easily received 50k-100k just to leave. I knew some people who were very wealthy who had rent controlled apartments in Manhatten. It's a ridiculous law and has to change.

Posted by: GabeS at April 1, 2009 10:56 AM

BRG, Good morning!
A landlord cannot refuse to renew the lease of a rent-stabilized tenant. Think about it. If they could, the law would have no teeth. And believe me, the law has both upper and lower incisors and a couple of poison fangs. Even if the tenant does not pay ANY RENT they can, if they are clever, continue to occupy the apartment for years and years. There are many renters in Brooklyn who have not paid rent for a decade.
Now Albany is proposing to strengthen the rent protection law further. In that case a landlord's hand would be weakened even further, although that is hard to believe. Forget diamonds, a rent-regulated tenant is forever.

Posted by: sam at April 1, 2009 11:03 AM

have you ever met any rent controlled tenants? they are oftentimes hysterical and add a lot to the character of nyc. them and the laws were here way before most of us got here. it will die out on it's own, stop being jealous cuz someone has a 300 dollar apartment in a prime area. most likely that prime area wasnt very prime before you got here and was just a flicker in your dad's eye.

*ro

Posted by: PitbullNYC at April 1, 2009 11:06 AM

Many buildings that are currently four-family, or three-family, or whatever, used to be six or more fmilies in the "bad ole days". The tenants who remain are covered under their original rent protection. Why is this basic fact debated over and over on this blog?

Posted by: sam at April 1, 2009 11:09 AM

"And believe me, the law has both upper and lower incisors and a couple of poison fangs."

Care to explain? The ability to deregulate at $2000 strikes me, as a humble renter, as pretty poisonous to anyone who is trying to hold on in Brownstoner's favorite neighborhoods.

Even if the tenant does not pay ANY RENT they can, if they are clever, continue to occupy the apartment for years and years. There are many renters in Brooklyn who have not paid rent for a decade.

Really? How many could there be? A quick check of the 2000 Census shows less than 2% of units in Brooklyn had no contract or gross rent.

Posted by: tonewlots at April 1, 2009 11:13 AM

"A landlord cannot refuse to renew the lease of a rent-stabilized tenant."

If the owner is converting the townhouse to a one-family, they most certainly do not need to re-new the lease and can start eviction.

Posted by: bayridgegirl at April 1, 2009 11:16 AM

Let's say the buyer had a 20% downpayment... and was able to finance the rest.

Why is $1.68 million a "good deal"?? They'll have to come up with $10,000 a month to cover the minimum ownership expenses, not including utilities or maintenance.

That's $2,500 per unit if they are all the same. Now, what if they need a new boiler or a new roof or actually wants to pay someone to sweep and tidy the common areas?

I honestly don't get the financial calculations here. Of course, the buyer could be plopping down a lot more, but now his/her cash is tied up in a fixed asset that (from the above calculations) isn't worth the price. Shouldn't the rental income have the potential to make the property self-sustaining?!?!

Posted by: tybur6 at April 1, 2009 11:46 AM

"If the owner is converting the townhouse to a one-family, they most certainly do not need to re-new the lease and can start eviction"

brg, I have never tried to do this, but I don't think it is that simple. The courts in Brooklyn see ownership as a set of responsibilities, not rights. The tenants have most of the rights. There are a lot more renters than landlords in the Borough. One has to accept that political reality. Fortunately, most tenants are good, decent people and do not want to have their credit ruined etc by not paying rent and holding out contrary to the landlord's wishes. BUT there are those indivuals who use the law to live basically rent-free for years and to procure a large amount of money from the landlord in order to vacate. No everyone is nice out there. The judges are entirely on the renter's side. It is just one of those things.

Posted by: sam at April 1, 2009 11:46 AM

BRG, it ain't that easy:

- http://www.villagevoice.com/2008-10-01/news/a-hip-young-couple-clears-out-low-rent-tenants-for-its-television-and-playroom-needs

Posted by: SnarkSlope at April 1, 2009 11:52 AM

I went to look at that house and I think that while the buyer got it at a good price, it's hardly a "steal". That place is mess! It has great bones, but I'm sure that the new owners will have to spend several hundred thousand dollars to make it livable (particularly if it's going to be a one family). EVERYTHING in that place needs to be renovated...kitchens, bathrooms, fixtures, windows...EVERYTHING! The day of the "open house" that I went to, it was so gross in there I felt like I needed to take a shower as soon as I left...

Posted by: FtGreeneCorey at April 1, 2009 12:03 PM

By the way... my post above was an invitation. I REALLY REALLY want someone to explain how a $1.68 million price tag is appropriate for a 4-unit rental property. Honestly, I am open to be corrected, but this does NOT seem like a good investment decision.

(Especially with the comments about what poor condition it's in... suggesting it would be even more difficult to produce adequate rental income to make it self-sustaining.)

I may be missing something major here...

Posted by: tybur6 at April 1, 2009 12:10 PM

"Why don't you do the research? Look up the house on zillow, find those you think are comparable in size, make-up and location, and post them in this thread? Curious what you come up with."

Um Retard, I'm a Broker and I would use Brooklyn MLS Comps. The same ones used by Banks and Appraisers, not the "Zillow" jack-off crap.

The What (1.1 Million)

Someday this war is gonna end...

Posted by: Return of The What at April 1, 2009 12:20 PM

"Um Retard, I'm a Broker and I would use Brooklyn MLS Comps. The same ones used by Banks and Appraisers, not the "Zillow" jack-off crap."

So do it. You could actually have a very positive effect on this conversation by giving us real hard comps.

Posted by: wasder at April 1, 2009 12:23 PM

"You could actually have a very positive effect on this conversation by giving us real hard comps."

I just did! The Bank and Appraisers are going to use INCOME (remember that?) to calculate this building worth!!!! All of this crap happen LAST YEAR, we are in a new dynamic retards. No more crack for you!

The What

Someday this war is gonna end...

Posted by: Return of The What at April 1, 2009 12:27 PM

With the recent downturn in the NYC rental market, I'm finding it's much easier/cheaper to get rid of rent stabilized tenants.

I just got one out for $4500. After spending about $40,000 on the renovation, I should be able to increase the rent about $800/mo -- not an amazing but not bad either.

Rent stabilized tenants are much more interested in making deals since rents elsewhere have dropped so much.

Posted by: IronBalls at April 1, 2009 12:28 PM

Sam and all, I don't know much about real estate law.

However, last year I finished a renovation project (upper west side) for a client that bought a SRO with one rent stabilized tenant left in the front parlor floor (studio apt). He offered her a lot of cash AND a comparable apartment in the neighborhood for the same rent she was paying. She stupidly didn’t take the offer and insisted on fighting him.

We gut renovated this 6 story townhouse around her, she lived around a construction zone the entire time (2 years) and when I say gut renovated, I mean we left nothing in the building, except the beams, brick party walls, front and rear façade and her studio apt. We were doing all new plumbing, electrical, mechanical, and structural and had to provide so many provisions for her during construction, temporary utilities just for her. It was a nightmare. She called 311 / DOB every other day and reported something. Most of the time, it was nonsense, as we were doing everything by the book. Yes, we got a ton of stop work orders because of her.

Needless to say, my client kept offering her more and more money to leave, but she wouldn’t budge. She was a fool not to take his last offer, because if invested properly she could have modestly lived on it.
He stopped negotiating with her 4 months before her lease was up. He and his family moved in with her still occupying the front parlor room and when her lease was up he started eviction, citing conversion to a one-family residence, to be occupied by owner.

FYI – with DOB, we initially tried to file it as a conversion from a 10-family (SRO) to a one-family but because there was a tenant we had to file it as a conversion to a two-family.
Once the tenant was gone we filed it with DOB as a conversion from a two-family to a one-family. Yes, lots of DOB paperwork and drawings...fun, fun, fun!!

Yes, it’s doable to get a rent stabilized tenant out of an apartment. You have to have balls of steel, money and time.

Posted by: bayridgegirl at April 1, 2009 12:35 PM

First thing I would do if i was buying this would to subtract the amount of square feet of any rent stab. or control apts. in the building from what i was buying. Its very hard to get them out and unless you have a lawyer on retainer not worth the legal fees.

Secondly Zillow is skewed huge, and if you are using it blindly you are gonna get burned. If you look at the Zillow figures for this area the past 5 months the values have gone up 40 percent during an economic downturn. There are a couple of outliers in the zillow stats that have made this happen. One was a townhouse that was sold for a rid. amount in the area that is highly suspect of a mortgage fraud scheme. The other is the new towers in Fort Greene. If there was a way to short the values in Fort Greene and Clinton Hill I would be all over it. This is a very nice brownstone, but the buyers did not get a deal at all.

Posted by: brickoven at April 1, 2009 12:39 PM

BRG, interesting story.
I bet if that property had been in Brooklyn rather than Manhattan, the holdout tenant would still be ensconced in her front apartment. The People's Republic of Brooklyn is a place apart.

Posted by: sam at April 1, 2009 12:46 PM

"However, last year I finished a renovation project (upper west side) for a client that bought a SRO with one rent stabilized tenant left in the front parlor floor (studio apt). He offered her a lot of cash AND a comparable apartment in the neighborhood for the same rent she was paying. She stupidly didn’t take the offer and insisted on fighting him."

"Yes, it’s doable to get a rent stabilized tenant out of an apartment. You have to have balls of steel, money and time."

Classic Covert Race/Class Warfare in it's purest form. I can't wait for the Greater Depression to begin..

The What

Someday this war is gonna end...

Posted by: Return of The What at April 1, 2009 12:49 PM

ROTW,

If you are referring to the "zestimate" -- you are right that is a silly number. But the comps listed there are real sales, just not always comparable -- you have to pick and choose based on reasonable criteria which are truly comparable. Every time I have used the site to find comps, I have found real homes, at real addresses, that really sold for the real prices that are indicated as the sales prices on zillow. I always double check on ACRIS. You can do teh same. Zillow just links to DOF like everything else -- propertyshark, etc. So, broker, go get some real comparable sales through whatever source you find reliable. Curious to see the data.

Posted by: slopefarm at April 1, 2009 12:51 PM

I don't understand why this is such a good deal. Don't buildings in Clinton Hill usually go for $800,000 to $1.3 million?

Posted by: mopar at April 1, 2009 12:59 PM

Holy cow, BRG. Any idea how much this guy spent on the renovation? Also, BTW, was it originally a single-family townhouse that had been converted into a 10-unit SRO?

Posted by: mopar at April 1, 2009 1:06 PM

Let's pretend there's no rent stablization issues here... let's set that aside.

How is $1.68 million a good business decision for a 4-unit rental property? (See my posts above)

Posted by: tybur6 at April 1, 2009 1:22 PM

Mopar...I was privy to the costs as Hubby and I were Architect/Designer.
Very very high end traditional renovation.
New EVERYTHING and also added an elevator from cellar to roof and a dumb waiter between two floors.....close to $2M just on construction. It is beautiful, if I do say so myself :-)

Posted by: bayridgegirl at April 1, 2009 1:30 PM

"How is $1.68 million a good business decision for a 4-unit rental property? (See my posts above)"

Please do not bring Logic and Math into this argument! Only Greedy and Delusional people! Stay out!

The What

Someday this war is gonna end...

Posted by: Return of The What at April 1, 2009 1:35 PM

Speaking of logic, I am still waiting to see your comps for this building at $1.1 mil, what. I have no stake in this one way or the other. But you made an assertion and I am curious to see you back it up with data, which you know how to get.

Posted by: slopefarm at April 1, 2009 2:08 PM

No mopar, they don't, unless in need of a complete overhall and on an unattractive block, and even then they're still expensive. In bubble times, without the rent control issues, this place would likely go for over 2MM.

Posted by: 1842 at April 1, 2009 3:20 PM

1842, thanks. I must admit I'm perplexed.

BRG, I realize you probably don't want to move to Bushwick, but just FYI if anyone's looking for a place to completely re-do, you can buy a 2400-sf two family in Bushwick for $250,000 now. With original details. It's crazy.

Posted by: mopar at April 1, 2009 5:12 PM

Well, that's a whole new side of you, brg...you enabled this client? Sort of like a lawyer who takes on a client who's obviously guilty, but needs a good defense.

I'm sorry, any ??? who takes a 6 (SIX!) story townhouse in Manhattan to make it a single family has no sympathy in my book. I sincerely hope he got taken to the cleaners, or at least paid through the nose for his excess.

Posted by: cmu at April 1, 2009 8:47 PM

I work in Brooklyn housing court, and believe me, rent stabilized tenants get evicted every single day for not paying rent. Personal use holdovers work too, though you have to do it right and they usually take 6-9 months. Again, I see those cases every day. In my office, we actually think manhattan judges are more tenant friendly thatn the brooklyn bunch.

Posted by: kaylas at April 1, 2009 9:40 PM

kaylas,
really??
I am surprised.
You evict renters every day?
Is this a new Brooklyn?

Posted by: sam at April 1, 2009 9:47 PM

« From the Ashes of the Associated Comes Concord Market Hotel Le Bushwick On Tap »

April 1, 2009

306 Washington Sells for 26 Percent Below Initial Ask

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