House of the Day: 15 Lefferts Place
Hey, this whole FSBO thing seems to be catching on! We were sent the link to the site for 15 Lefferts Place, a lovely four-story brownstone just East of Grand Avenue. The house, which is configured as a owner’s triplex over a rental simplex, appears to have a decent amount of detail. There are some…
Hey, this whole FSBO thing seems to be catching on! We were sent the link to the site for 15 Lefferts Place, a lovely four-story brownstone just East of Grand Avenue. The house, which is configured as a owner’s triplex over a rental simplex, appears to have a decent amount of detail. There are some more modern elements, including the kitchen, which appears to be very nice, and some new doors that are trying to look old but not cutting it (a little pet peeve of ours). The rental apartment has some charming original floorboards and the skylight at the top of the stairwell is one of those beautiful oval babies. The front parlor, with pier mirror and floor-to-ceiling wood windows looks like a winner. The price–$1.495 million–is exactly what we would have expected and we bet they’ll come pretty darn close to getting it.
Brownstone FSBO [15 Lefferts Place] GMAP P*Shark
To partly answer your question, I purchased a 4-story townhouse in Park Slope about 3 years ago similar in all-in cost to the one under discussion. Purchase price was $1MM, but it also required $500K of renovation to turn it into a mint condition home, with owner triplex and garden-level rental.
The DP was $200K, and the mortgage $800K.
The DP and funds for reno (total $700K) came from a combo of $350K proceeds from sale of co-op purch’d in mid-90’s(much of which was gains), and $350K from savings.
My mortgage is an $800K 7/1 ARM at 4.75% (I refi’d shortly after closing). Still have a few yrs before the rate starts adjusting.
Mortgage payments are $4200/month, plus figure another $1000/month for r.e. taxes and insurance.
Rental income from 1BR floor-thru provides $1800/month ($21,600/yr). And by applying deductions to rental income, this income is essentially void of income tax.
So, let’s look at our $5200/month total housing costs, less $1800/month rent income, equals net cost of $3400. Plus, I haven’t even discussed the benefit of mortgage interest and r.e. tax deductions against personal income.
These are probably worth about $1000/month tax savings for someone in a very high marginal tax bracket, bringing net cost down to $2400/month.
Are you beginning to get the picture yet? Granted, it does take quite a bit of money to maintain a 4-story building, even one in mint condition. Figure about $5K – $10K a year in repairs and capital improvements.
I’m not suggesting that anyone or even the majority of the population can “afford” to do this. You asked “who”, and I’m just providing some insight.
Now, I am sure someone will ask what happens when my ARM starts to adjust in a few years in a high rate environment. I am prepared for that possibility, both income-wise and savings-wise. A sufficient paydown of the mortgage principal will allow me to maintain the same level payment, even in a high rate environ.
My initial $1.5MM purchase is now worth about $2.5MM. Though I am certainly happy with the gain, I realize markets come and go in cycles. Bottom-line, I wanted a home 1st and an investment 2nd. And the fact that ownership acts as a hedge against rising housing costs is a big factor to me. If I didn’t think I could be in the house for at least 10 years, I would not have purchased it. Having now become very long in r.e., I have now turned my attention to diversification in other markets.
ebomb, whose to say these houses aren’t LOW in the grand scheme of things- i think that’s the whole point-and of course a matter of opinion and obviously a matter of discussion as seen here…
Anon at 5.16 pm: I am someone who worked 7 hard years to save up the downpayment for a Clinton Hill townhouse (10% down), no gifts from parents or sales of previous apartments, just a good salary and ability to endure law firm life (and pay off that expensive JD). I have plenty of friends in a similar financial situation, though most would rather own an apartment in Manhattan and don’t have the desire to be a landlord. You do not need to have $800K in the bank – that’s what tenants (two apartments in my case) are for, and also tax deductions. And BrownBomber, I agree with everything you’ve said (including my lust to take over the top two floors over time), but note that more than a few of my friends are saddled with “husbands” (not only “wives”) and kids!! As mentioned by others, it’s your appetite for risk and desire to be a homeowner versus an apartment dweller. No comparison between the two in my book.
Anon 6:03 – Dead On! I don’t care how much money you make, you always feel broke!!!!
Anyone know of any big shitholes for sale cheap in Brooklyn? Condition doesn’t matter, just location.
I want shit and I want cheap.
I don’t know anyone on 400k who isn’t living bonus check to bonus check. After they subtract the hot girl, the fast car, the expensive restaurants, the holiday rental in the hamptons, the ego boat, the trip to st barts, and the tax man, the credit card finance chages etc, they are left with pocket change.
So 400k after 5 years (and that is just the few who make it, who don’t burn out or implode) is not sufficient to save up a million bucks for downpayment on a big house that also comes with 30 years of interest on another mil lent them.
Most people chasing this market further up have been riding the asset inflation boom of the last 6 years. Sure some may have incomes now to support big mortgages, but unless they are playing a high risk game, they didn’t EARN their downpayment, they got it by asset (or stock) inflation.
People got rich off etrade, off houses and condos that have appreciated 300% in five years. It is pass the over-valued parcel.
I agree Linus. Folks with real money and high income are flocking to Brooklyn in very high numbers. It’s not just the recent seller flushed with cash from a recent home sale, though that segment of the population is indeed substantial. I gave one example of a purchaser who may have the large down payment but perhaps not the high income. On the other hand, there are others who have enough disposable income to carry single family homes that cost north of $3mm in Brooklyn and they do so without the slightest hesitation. It’s all relative. Do you want an apartment or do you want a house? Do you want large house or something smaller and more manageable? Do you want to be a landlord (not all it’s cracked up to be) or not?
With respect to the statement, “the city is not minting many people each year with stable incomes that support 1 million plus mortgages.” That is not accurate. NYC is the financial capital of the world and every year the city welcomes thousands of high salaried professional transplants and newly minted BAs, MBAs and JDs who make $100k plus straight out of school and 400k in less than five years. Not to mention all of the individuals who are making director, managing director and partner at investment banks, hedge funds, private equity shops, law firms and consulting firms on a yearly basis. Obviously some folks move out to the suburbs, but an increasingly larger number of the “well to do” are staying put in the city and moving to Brooklyn in particular.
Brooklyn just makes so much sense. If you own a $1.3M small two bdrm apartment in Manhattan and are suddenly saddled with a wife and two kids but can’t afford a larger 3bdrm apartment in the city, then Brooklyn becomes a viable and attractive option. If you can afford the Manhattan apartment soly on your income, clearly you can afford a townhouse triplex with garden rental in most Brooklyn nabes.
With that being said, it’s a matter of supply and demand and perhaps at some point it will stop making economic sense. But as long as Manhattan real estate prices continue to be at a premium, Brooklyn will always be an afforable alternative for those looking to live in a village type environment with ever improving services. IMO, I think prices will level off for nano second (just like after 9/11) and then take off again into the stratosphere.
Yes, the only thing you will get from walking the length of 7th Avenue is a pair of bruised knees from all the strollers you bump into!
I don’t know…I go to these open houses, tell myself the prices are too high and yet there’s always one person who pays the asking. Except in PLG. That appears to me to be the first casualty of the boom. Maybe there’s a lesson we can take from that? (not sure what it is, just asking!)
“I think there’s a kernel of truth to this, but you’re stretching with “many if not most.” The woman I sold to when I traded up was a first-time buyer with a big income and big $$$ for downpayment — as was the case with pretty much everyone I knew who sold a house to trade up. ”
nothing wrong with trading up of course! but if the trading up builds a nest egg on the basis of capital appreciation that far outstrips inflation then it is unsustainable, lucky for the recipients — and the mechanism has already failed I think, unless your crystal ball predicts to-be-gentrified areas ahead of anyone elses.
As for first time buyers with big $$s in the bank – your stats are as random as mine but I feel that these people (first time buyers of full town houses) are very rare. They may have got lucky in other ways like the stock market bubble, or daddies/mommies help, I doubt many got together 800k from wearing a suit and saving hard. saved 1.5m before tax to get 800k in the bank? purely from salaries and yearly bonuses socked away for 5-10 years? You can probably walk the length of 7th avenue in park slope and not meet a single person like that.
So that leaves lucky people (recent stock or house booms, inheritance, crime or the inventor of vitamin water, or the 5th employee of yahoo) chasing a small amount of housing stock while the rest of us watch from the cheap seats.