House of the Day: Lower Slope By Owner
We like to support the for-sale-by-owner crowd when we can, so we were pleased to see this attractive Lower Slope three-story brick on Craigslist yesterday. Currently configured as three full-floor market-rate rentals, the house generates $55,000 a year in income (not sure if that is before or after expenses). That makes the asking “yield” a…
We like to support the for-sale-by-owner crowd when we can, so we were pleased to see this attractive Lower Slope three-story brick on Craigslist yesterday. Currently configured as three full-floor market-rate rentals, the house generates $55,000 a year in income (not sure if that is before or after expenses). That makes the asking “yield” a fairly paltry 4.4%. The property is allegedly in very good condition, though, with a new roof and new heating system. If interested, you can call Valentino at 718-596-0261 until 10 pm.
106 15th Street [Craigslist]
the area really isn’t THAT bad. the grocery stores are only ok, but it’s fairly quiet and a family-oriented neighborhood.
When looking at a return on a building, factors such as financing costs, down payments, and tax bracket are not taken into consideration. The calculation is much simpler, if you purchased all cash what would the return be? While this isn’t a likely scenario it is one that evens the field to compare properties. So, 55k/1.25M * 100 (to make it a %) = 4.4%
If you had 1.25M to invest you would get a 4.4% return.
However, the return on this property is even less because expenses were not taken into consideration. Expenses would probably run around $15k on this property (heat, hot water, taxes, insurance, repairs, super, management, etc.) so the profit would be around $40k resulting in a 3.2% return.
With all that said, this particular property’s value shouldn’t be determined this way in the first place as it is under 5 families and therefore must be valued as an owner occupied residence rather than a pure investment. People are willing to pay much more for their home than they will for an investment so the valuation of this one should be determined by comparable sales. From a comp perspective, I think one would be hard pressed to find another property sold in this price range in this location, 15th st. btwn 3rd and 4th ave. is not the nicest block.
By any measure I think this property is overpriced and I’d be very surprised if it sells for anything near this, unless there is something else it has going for it that we are not aware of.