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December 21, 2009

House of the Day: 275 12th Street

This house on 12th Street in the South Slope has been on the market for more than three months but we didn't hit it until now because the listing doesn't reveal the address. But through the magic of Property Shark we were able to deduce that the address is 275 12th Street. Aspects of the house are attractive, but we're not so keen on the kitchen, the yard or that weird awning thingy out front. The asking price was—and still is—$1,385,000. Does that sound reasonable to you?
275 12th Street [Douglas Elliman] GMAP P*Shark

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I was hoping for some nice properties to look at before Christmas. I though Fiberama was only in Queens?

Posted by: daveinbedstuy at December 21, 2009 1:22 PM

I'm torn between wondering how one has the gall to price a house at 1.385 with a kitchen like that and just thinking that at least you don't have to feel guilty about ripping out some ugly recently-done kitchen that you hate and going ahead and putting in one you like. The best thing that could happen to that kitchen in its current state is a lit match and liberal amounts of gasoline.

And why no floorplan?

Posted by: InsertSnappyNameHere at December 21, 2009 1:24 PM

Why use brokers if they are going to do such a lousy job presenting your property?

Posted by: spqrxxi at December 21, 2009 1:34 PM

Why no floorplan?
Good question, InsertSnappyName.

From the look of the exterior, and from the description on the brokers site, I'm guessing that the bottom level is an uninhabitible cellar above which there are 3 floors.
No garden level.
This would make it awkward to turn into an owner's duplex with a rental.
Where would the rental be?
Anywhere you put it would not be so nice for the owner.

Am I the only one who hates it when there is no garden level?

Posted by: Pigeon at December 21, 2009 1:57 PM

Pigeon - i agree about the garden level. price seems high but its not my hood so who knows.

Posted by: bkny at December 21, 2009 2:09 PM

Amy be no garden level cuz it can get a bit wet down there, that is, down by 4th ave

Posted by: denton at December 21, 2009 2:13 PM

why does everyone value a rental? the proposition is terrible from an investment perspective (i would not consider this house to be an interesting investment as is). isn't the more natural setup a single family? wouldn't you rather own a 3-story single family than a 4-story set up as a triplex and a rental. the *missing* rent is more than offset by a more than proportionately reduced basis/mortgage and you don't have any of the tenant headaches or privacy issues.

Posted by: antidope at December 21, 2009 2:14 PM

Antidope - I think a lot of people dream of keeping the rental until such time as they do not need the income and can convert to a 4 story single family. I am not saying this is rational, but it definitely plays into it.

Posted by: Brokedeveloper at December 21, 2009 2:17 PM

At least it is not shoehorned in between the Prospect Expressway and Fourth Avenue like several prior "South Slope" properties. The location here is OK for what it is, peripheral Slope. The facade is attractive, minus the little awning thingie which should be unclipped from whatever it is clipped to. The kitchen is circa 1989. the backyard is workable. The price seems unrealistic for the location and condition. This is an under million dollar sale.

Posted by: Minard Lafever at December 21, 2009 2:18 PM

I think that is my very least favorite of the 'stock' cabinets. That white formica with cheap wood grips look...always has peeling strips of material coming off of them. Hate.

Posted by: Nokilissa at December 21, 2009 2:22 PM

dont some families turn the rental unit into "in-law suites" for when their parents get the dementias and cant live on their own anymore?

*rob*

Posted by: Butterfly at December 21, 2009 2:24 PM

If a parent has dementia or even mild dementia, you do not want them in a separate apartment. You want them right there with you or with an attendant 24/7.

Posted by: Minard Lafever at December 21, 2009 2:32 PM

also by the time this house actually sells, that kitchen will totally be back in fashion again! win/win situation. why would the owners waste their money renovating a kitchen when stupid kitchen style is so fickle anyway? as long as there's a hole to wash dishes and a hole to poop, let the new owners deal with how they wanna decorate those pipe holes.

*rob*

Posted by: Butterfly at December 21, 2009 2:33 PM

Denton,
Good point about the area perhaps getting too wet for a garden apartment.

Posted by: Pigeon at December 21, 2009 2:34 PM

What if the children get dementia first???

Posted by: daveinbedstuy at December 21, 2009 2:35 PM

"Why does everyone value a rental? the proposition is terrible from an investment perspective... wouldn't you rather own a 3-story single family than a 4-story set up as a triplex and a rental? the *missing* rent is more than offset by a more than proportionately reduced basis/mortgage and you don't have any of the tenant headaches or privacy issues."

Posted by: antidope at December 21, 2009 2:14 PM

In the short term, I agree with your view that paying more for a 4-story with a tenant, rather than paying less for a 3-story with not tenant, is a poor investment. But in the long term, it will probably be a good investment. After you pay off your mortgage, for instance, you will have a tenant to provide income. (And the rent you collect will, of course, increase over time.)

But it will take many years to reap the reawards of paying for that extra floor. No?

I haven't actually done the math, but does this not make sense?

Posted by: Pigeon at December 21, 2009 2:43 PM

im not talking full blown alzheimer's, jeez. im talking about the typical older parent dementia where they're all clingy and stuff. you know what i mean. i feel so bad for straight married people sometimes who have to go thru that kinda thing.

*rob*

Posted by: Butterfly at December 21, 2009 2:46 PM

There are also very few two-storey brownstones. I'm single and can make-do with two stories and have a tenant on the ground floor.

What I did not want from both an aesthetic and a privacy perspective were any tenants above me, limiting my usage of the parlour and top floor staircase. I think that's just a ridiculous inconvenience.

Posted by: daveinbedstuy at December 21, 2009 2:48 PM

pigeon, the hypothesis is framed correctly but if you do the math you might not like the results. as some around here will occasionally remind you, real estate prices are still very high versus rents and unless you are an unrepetant bull buying ahead of the next boom, it will take you a loooong time to make that extra floor work to your advantage rather than being a negative carry.

Posted by: antidope at December 21, 2009 2:51 PM

DIBS,
I agree.
It is against the laws of nature to have a tenant above your head.

Posted by: Pigeon at December 21, 2009 3:05 PM

Underground railroad, 'dope (sneaky transition)? Bearish comment.

Yeah, I'd prefer the 3 floor. I wish there were more of them. Such a waste to occupy a whole brownstone.

***Bid half off peak comps***

Posted by: Brownstones Half Off at December 21, 2009 3:06 PM

Antidope,

I'm not convinced by what you say.
Let's take a simplified hypothetical.
Lets say you pay an extra $200,000 for an extra floor that you will rent out.
Lets say you rent it for $2,000 per month.
At $2,000 per month, you would get $240,000 after 10 years ($2,000 times 12 months times ten years equals $240,000)
So, afer 10 years you've more than recouped your money.
In fact, you've made $40,000.
And every year thereafter, you will earn $24,000 from your tenant.

(This is, of course very simplified and ignores factors such as expenses associated with having a tenant, other increased expenses to the owner, etc. It also ignores rent increases.)

Am I missing something?

Posted by: Pigeon at December 21, 2009 3:12 PM

I'm surprised Stoner hasn't posted the recent poll that found that New Yorkers are the least happy people in the country. Did you hear about that? I would like to know more about that because it may have some relation to future home prices here in the land of the miserable.

Posted by: Minard Lafever at December 21, 2009 3:22 PM

It seems to me that three things drive residential real estate:
location, condition (great renovation or original detail), price.

When you find any two together it gets interesting, all three is next to impossible.

From what we can see here this house has none of the three. Location is fair, condition is nothing special, price assumes the other two are spot on. Next.

Posted by: raphael9 at December 21, 2009 3:25 PM

It’s a 20’ x 45’ with 3 floors + cellar. It has a nice looking façade. Inside is blah and needs a substantial Reno. Block is not that great. I say it goes for ~$1.1 million if there aren’t any structural issues. This would make a nice single family home (2,700s/f above, 900s/f below + ~900s/f yard). All ya’ll clustered around $900k and below are dreaming.

Also, this type of building (3 above a cellar) has nothing to do with its location further “down the hill’ … it’s just a building style like any other. The classic damp Park Slope cellar has more to do with lack of improvements (ThorSeal, Sump Pumps, Check Valves) than location.

Posted by: Mr Joist at December 21, 2009 3:39 PM

anti - i completely agree with you. i would much rather have a 3 story single family, which i do. we had a 4 story with tenants and moved to a smaller brownstone to live in a single family. the tenant income used to be great - it covered our entire mortgage but i'm much happier not having to deal with tenants at all.

Posted by: bkny at December 21, 2009 3:41 PM

"Lets say you pay an extra $200,000 for an extra floor that you will rent out."

"Am I missing something?"

Maybe. It's been a long time since you could buy a floor of one of these peripherally located conditionally challenged houses for 200. Not even in 2001-02 could you get under 250 per floor for one in need of a gut job.

There are things about the numbers that do often make it work though, as the rental is a leveraged investment, provides some tax advantages, and often returns a decent return on invested cash. You really have to feed all the numbers into a model that you know works and isn't based on unrealistic assumptions. Sometimes the results are surprising. At one time there was a three story three family and a four story four family on the same block for sale. The three family looked like the better deal, but when you ran the numbers the fourth floor of the four family was carrying more weight than you would think, and made the difference between break even and positive cash flow.

Posted by: raphael9 at December 21, 2009 3:43 PM

quote:
I'm surprised Stoner hasn't posted the recent poll that found that New Yorkers are the least happy people in the country. Did you hear about that? I would like to know more about that because it may have some relation to future home prices here in the land of the miserable.

it's because we are a WELFARE STATE! so is NJ and they are #49th most happy in the poll! just one state happier than us who are in LAST place! also did like taxes totally go up? i just got my paycheck today and i think they went up!

*rob*

Posted by: Butterfly at December 21, 2009 3:45 PM

Mr. Joist is spot on here. This is a slightly larger than average 3 story building just off 5th Avenue in what I always traditionally considered the "South Slope" (i.e., 9th Street to 15th Street - or maybe the Prospect Expressway if you wanted to really push it). Although it doesn't have a formal stoop, it has a nice little one. I actually like the brick wall next to the east side of the garden. The kitchen is a downer, but that is cosemtic. As someone else pointed out, at least they won't try to negotiate based on a kitchen reno that stinks.

Unless there are structural issues there is no way this is going for less than a million.

Posted by: Boerumresident at December 21, 2009 4:01 PM

rob, do you think people may be depressed in NY because it costs over a million dollars to buy a little old house in the outskirts of park slope that will require a lot of time and money to fix up after they buy it? I for one think that it may have a lot to do with it.

Posted by: Minard Lafever at December 21, 2009 4:22 PM

"Do you think people may be depressed in NY because it costs over a million dollars to buy a little old house..."

Nah … it’s more about being taxed at a 50%+ all-in marginal tax rate to fund back room deals in Albany and the US Senate.

Why isn’t it unconstitutional to tax based on an “all-encompassing nominal graduated tax bracket” when the cost of living here is 3x what it is in some tiny town in Louisiana?!

The Feds say you’re rich if you make over $200k. What does that get you in New York? What does that get you in West Texas? And both are paying the same federal tax rate.

Posted by: Mr Joist at December 21, 2009 4:28 PM

Pigeon,

A few points:

1. That $200K investment will likely have a cost of capital (i.e. it will be borrowed). At 5% interest, it will cost $10K to get that $24K of annual rental income.

2. Landlording can be work. In your analysis, all the time spent leasing + arranging for repairs etc. is provided free by the owner.

Posted by: Boerum Hill at December 21, 2009 4:34 PM

I think someone would need to pay me more than $200k to live in west texas.

Posted by: Petebklyn at December 21, 2009 4:58 PM

i totally agree with you minard. the cost of living here really is intense. and home ownership is out of the question for most. especially single people.

*rob*

Posted by: Butterfly at December 21, 2009 5:10 PM

Boerum Hill,
You make good points.

Posted by: Pigeon at December 21, 2009 5:17 PM

Regarding New Yorkers being unhappy, in his film Manhattan, Woody Allen postulates that people choose to live in NYC because they WANT to be unhappy.

Posted by: Pigeon at December 21, 2009 5:19 PM

Hmmmm people unhappy in New York. Maybe it's the constant hassle of the crowds, noise, pressure, jostling, lack of greenery, lack of fresh air, expense, traffic, noise, size of the city, difficulty of doing daily errands, impossibility of getting into a restaurant, etc. I used to go visit DH when he lived in North Carolina and just being in the area is incredibly relaxing.

Posted by: mopar at December 21, 2009 6:38 PM

If I were a human, I'd live in the woods near a lake and going fishing all day.

Posted by: Pigeon at December 21, 2009 6:58 PM

It's always amusing to read a NY resident say stuff like "constant hassle of the crowds, noise, pressure, jostling, lack of greenery, lack of fresh air, expense, traffic, noise, size of the city..." etc ... why then live here? That's what makes it great (well, lack of greenery is rubbish unless you close your eyes to those two magnificent parks).

I'd rather be dead than (a)live in those "incredibly relaxing" suburbs or exurbs. Oh...but how would one tell the difference?

Posted by: cmu at December 21, 2009 7:27 PM

"You really have to feed all the numbers into a model that you know works and isn't based on unrealistic assumptions. Sometimes the results are surprising. At one time there was a three story three family and a four story four family on the same block for sale. The three family looked like the better deal, but when you ran the numbers the fourth floor of the four family was carrying more weight than you would think, and made the difference between break even and positive cash flow."

Posted by: raphael9 at December 21, 2009 3:43 PM

Interesting, Raphael9.
What do you mean by "feed all the numbers into a model that you know works"? What are all the numbers? It seems like there would be a large amount of factors involved. Could you give more explanation?

Posted by: Pigeon at December 21, 2009 9:30 PM

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December 21, 2009

House of the Day: 275 12th Street

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