House of the Day: Vinegar Hill Four Family
Despite the proximity to the Farragut Houses, we have a soft spot for the small number of brick townhouses that populate the historic district of Vinegar Hill and always keep an eye out for ones hitting the market. Corcoran’s got a recent listing for a 4-story 1829 house at 73 Gold Street, just a few…
Despite the proximity to the Farragut Houses, we have a soft spot for the small number of brick townhouses that populate the historic district of Vinegar Hill and always keep an eye out for ones hitting the market. Corcoran’s got a recent listing for a 4-story 1829 house at 73 Gold Street, just a few lots over from another recent HOTD. We’re initially a little suspicious of the lack of interior photos and the emphasis given to scenic neighborhood shots. Plus, if the interior were in good shape, we’d imagine the price would be quite a bit higher, so maybe it’s a good fixer-upper opportunity. But what do we know. The curious can take a look this Sunday and next from 12 to 2 at the open house.
73 Gold Street [Corcoran] GMAP
I just realized in the numbers I showed before, I forgot to include the forced “savings” that you do by paying off the mortgage. Although your mortgage payment would be about $4950, initially only about $4150 would go towards interest. $800 of it would be paid off principal. So you would be in effect making an additional $7200 in the first year in income. Additionally, that number goes up a little bit every year. This makes your returns more like 5% for the first year, 6% for the second, 7% for the third, and so on.
Additionally, you get the tax benefits of depreciation.
Most importantly, in 30 years the house is totally paid for, and you start making some REAL income.
The income on this property is decent. You could probably find better income on some other properties, but not any other properties that have the appreciation potential that this one has, being in a nice townhouse in a very desirable location.
I am not saying that this investment is for everyone. I am saying that some investor is going to realize this is a fantastic deal and will buy it. If I had $355,000 lying around, I would definately consider this house.
I think Vinegar Hill is a cool, evocative neighborhood, but it is no West Village. It is a big schelp to the subway, it is usually quite deserted, there are no businesses unless you walk to “greater Dumbo”. If the residential conversions and some new construction fill in between the Two Trees between-the-bridges stuff and Vinegar Hill, and services improve, then the prices people are asking for today won’t seem like reaching. But will that happen? That said, it makes me sad that all the weird, sleepy corners of Brooklyn are becoming un-sleepy!
Hillbilly, have you ever owned rental property? Your other expenses/repairs category may be correct for some where else, but it’s not any where in the ball park for New York City.
Try calling a plumber in the middle of night to repair a leak and see what he charges you.
The floorplan on these apartments is (are?) terrible. Some don’t have a living room. People will not pay $1900 for these apartments.
For starters the closing costs on the house would be much closer to $40,000. The insurance would be much closer to $300 a month. And $60,000 is a very very small renovation. Furthermore if you put that $375,000 into a good mutual fund you would be getting a $37,500 return on your money in the first year. This is far from a good deal. Like most realestate these days it is only worth it if you love the house and the neighborhood and it will make you happy to live there.
I knew Veggie was a broker!! LOL! 🙂
Sometimes landlords have friends and old tenants in the building that they undercharge to be nice. Other times landlords don’t realize that they are undercharging when they are.
A quick search at Craigslist shows 13 listings in Vinegar Hill that range in price from $1800 to $3800.
My estimates of $1900-$2200 are very much on the low end of this range. I think that if anything, I am being conservative with these estimates.
The rents on the 4 units are currently around $900, to assume that the owner could EASILY get $1900 is silly, if he could, he would. When buying rental properties it is best to assume that the rent that you will get is close to the rent that is being paid. If it would be so easy to raise the rents then the current owner should do so before he decideds to sell – you think he does not want an extra $4k a month?
That being said, if this house was $750k, it would have been sold yesterday.
Anyway, the layouts stink, except the top floor which is ok.
Just noticing that in the above scenario, if you raise rents an average of $75 annually, your annual return goes up about 1% every year. So you get 3% return the first year, 4% the second, 5% the 3rd and so on. In a few years your annual return gets HUGE, assuming you don’t sell the building first. Which, as I stated above, might be tempting if prices in that nabe continue to rise (as I suspect they will).