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…
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
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?
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***
DIBS,
I agree.
It is against the laws of nature to have a tenant above your head.
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.
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.
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*
“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?
What if the children get dementia first???
Denton,
Good point about the area perhaps getting too wet for a garden apartment.