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September 10, 2007
When to sell???
So, my family is planning a big move out of the country..we're planning to open a small hotel, and so obviously will need as much capital as possible. We have two four family brownstones, one in crown heights, and one in bed-stuy. We are planning to move in Summer 2009 and are wondering when we should put them on the market...It will kill us to sell them as we've put so much work/sacrifice into buying/renovating them, but everything has its cost I guess... any insights appreciated! Thanks!
Comments
sounds like a fun move, good luck!
In terms of the best time to sell, I think you will need to consider how any decrease in value may impact your financial planning.
If you are creating a business plan based upon the value you can get for the properties today then it may be a good idea to sell them now and put that money into a safe short term investment such as a money market fund or CD. This way you will know exactly how much you will have when you start the business.
However, if you have a little wiggle room you can hold off and watch the market closely to determine the best time to sell.
My opinion is that the value of your properties is not going to drop 10+% overnight. I think if you have quality properties they will continue to increase in value even if the market gets a little rough which, by the way, it really hasn't gotten.
Furthermore, 4-families are an interesting property class as they appeal to both investors and owner occupants. If the income is strong this will also insulate you from any downwards risks.
If it were me I would hold onto them a bit longer but watch the market in your area very closely. You may also let people casually know that the properties will be for sale in the near future. This way if there is someone out there that really wants one of them now and is willing to pay the right price you won't lose out on a buyer. Just stay away from advertising them before you are ready to sell as this will give the impression of a stale listing or problem property when you want to put it on the market for real.
Posted by: guest at September 10, 2007 11:48 AM
I would also advise you to hold on to them and watch the market - especially since it is very difficult for people/investors to get loans with the sub-prime lenders crisis going on.
Posted by: guest at September 10, 2007 12:35 PM
As a broker, I think getting them on the market NOW would be wise. Listing the homes does not OBLIGATE you to sell the homes. This might be a good time to let an agent get the marketing started, and get some offers on the table. I also agree that there will be some slight reduction in values, but you will still get the best prices now. Who knows what will happen to interest rates in the coming months, and a change in rates will have a pos/neg effect on the value of each home, depending on which way rates go.
In any event, best wishes,
HOWARD
Posted by: howrealnyc at September 10, 2007 3:40 PM
Why not try to sell on your own? First get Howard and the other major brokers to give you their take on how much your place can sell for. Then list your place in the NY Times and welcome brokers by offering them 3% commission if they can close the deal.
As long as you don't overprice the place you should be able to sell on your own. If you get stuck - after a month or so you can offer it up to the brokers to do everything for you.
Inventory isn't that great out there. So you should be okay and if you did do a lot of work you might end up HOD and get a lot of buzz.
Posted by: guest at September 10, 2007 3:52 PM
Just keep in mind the AY factor... (Sorry, someone had to say it!)
Posted by: GHB at September 10, 2007 4:16 PM
sell them to me
Posted by: guest at September 10, 2007 4:38 PM
I aggree with 3:52 PM
"Why not try to sell on your own?"
We have sold our last two apartments ourselves with no broker.
A combination of:
- NY Times,Craigslist, with lots of high quality pictures and floor plans
-An aggressive/realistic price(Mr B. LOVES well priced FSBO's to get the comments going).
Do your homework on comps, talk to brokers and there is no reason you cant sell them youselves.
Posted by: guest at September 10, 2007 4:39 PM
ASAP. Prices in those areas will only be moving lower for the next year or two at least.
Posted by: guest at September 10, 2007 5:11 PM
Why sell them? they are in area's that are just beginning to take off. If you sell them now as 4 families you are going to loose a lot to taxes Aprox 30% between City, State & Fed.
I would Get them in excellent mechanical condition, put in separate heat & Hot units so tenants control & pay all their own. (thats 90% of managemet taken care of)
Refinance for as much as the rents will cover.
You will probably end up with more cash in hand for your hotel and keep great nest egg in your retirement plan.
If you still want to sell, list them with the best Broker (at least 10 years experience)that knows how investment tax deductions work for both buyer & seller. In the Spring, a few months of media cool down & they will get it that Brooklyn Real Estate is still selling very well.
If you sell in a couple of years from outside the Country you will avoid City & State Taxes.
Posted by: guest at September 10, 2007 6:55 PM
Have you thought about trying to convert them into individual condominiums? I'm not sure how much it would cost to change the C of O, but it might increase your profit.
Posted by: guest at September 10, 2007 7:19 PM
thanks everyone for your comments...we had thought about not selling them, and for lots of reasons that would be ideal. However, we bought our 4 family in crown heights, near the children's museum for 420k and now we think its probably worth upwards of 800k..but when we try and refinance most companies are only willing to go to 80% LTV, and then they give us an appraisal of 700k or so..so while we could get some additional money out -- maybe 200k max at a favorable interest rate, its probably not as much as we'd get for selling. I haven't thought about the whole tax situation nearly enough though...30% yikes! How long do you have to be out of the country to avoid city and state taxes..(I feel a little funny asking this, but it would make a lot of difference..)
thanks!
Posted by: fatcat at September 10, 2007 9:26 PM
I am a local broker and if you came to me as a client, or a friend, I would suggest for you to wait and not sell yet.
-Wait until the spring before you really need to liquidate because spring is the best season to sell. If you were to put your house on the market now (by owner or broker) you would get a lower selling price than if you put it on the market in March, April or May
-Both neighborhoods are terrific and becoming increasingly more desirable to people who don't already live in the area or even in Brooklyn already.
More desirable = higher selling price.
-Houses in Brooklyn are a very finite commodity. There is always, yes, always, going to be an individual or family who wants to own the land under their feet.
Wait. It will be worth it.
Posted by: Honey at September 11, 2007 12:49 AM
IMMEDIATELY! THIS DOWN MARKET WILL NOT REBOUND FOR ANOTHER 5 TO 10 YEARS. BY THEN, CLOSING PRICES WILL BE ABOUT 25% TO 50% DOWN. DON'T CHASE YOUR ASKING PRICES DOWN TO THAT LEVEL. THOSE BROWNSTONES ARE STILL SELLING BETWEEN $500K TO $1M. GET THAT PRICE RANGE WHILE YOU STILL CAN. BUT BE WILLING TO CUT YOUR LOSSES AND PRICE THEM ACCORDINGLY. YOU GOTTA UNDERCUT THOSE COMPS AND RESPECT THE BIDS YOU'RE GETTING. IF YOU'RE NOT CONVINCED ABOUT HOW LONG THIS DOWNTURN WILL BE, READ THIS...
IT'S MUCH WORSE OUT THERE THAN YOU THINK. THE 6:00 NEWS AND NY TIMES WILL NOT INFORM YOU OF HOW BAD IT IS UNTIL IT'S TOO LATE. REMEMBER? "NO BUBBLE", "NO SUB-PRIME CONTAGION". RECESSION IS COMING (IF WE'RE NOT ALREADY IN ONE - DATA REVISION). LAYOFFS, ARM ADJUSTMENTS, FORECLOSURES AND INVENTORY (ALTHOUGH NOT BROWNSTONE BUT STILL RELEVANT) ARE ON THE RISE. QUALIFIED BUYERS ARE DECREASING. BE CONSERVATIVE AND SELL NOW. A BIRD IN THE HAND...
Posted by: guest at September 11, 2007 11:12 AM
This is a little odd..."quest" has posted two very contradictory comments....hmm.....
Posted by: fatcat at September 11, 2007 12:03 PM
opps....the mysterious "quest" is "guest". at any rate, the 9/11 11:12 am poster has me a little nervous...!
Posted by: fatcat at September 11, 2007 12:14 PM
I say sell now, not because I think the NYC market is the exact same market as Florida, as 11:12 seems to believe. But because opening a hotel in another country is going to be hard enough without still owning and managing buildings in NYC, from long distance.
I have a friend who says wherever possible, simplify.
Apply that answer to this dilemma, and you'll see the answer clearly: Sell now.
Posted by: guest at September 11, 2007 12:51 PM
11:12 here. I don't believe "the NYC market is the EXACT same market as Florida" (NYC YOY drop = 3.4%, Miami YOY drop = 4.8% Source: http://tinyurl.com/2unbyr ). Florida is worse. But from my link you can see that prices here dropped 25% last time so that pretty much sets the lower loss limit. The previous boom was much bigger than that of the 80's. The bigger the boom, the bigger the bust. Prices are likely to go from 6X income to 3X income. Hence the 50% upper loss limit.
Florida will probably fare worse. Have you read about their boom/bust during the 20's BEFORE the Crash of 1929? Land prices made a round trip from $100K to $4M (Source: http://tinyurl.com/38yd4y )
Posted by: guest at September 11, 2007 2:34 PM
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