Open House Picks
Park Slope 108 Berkeley Place Corcoran Sunday 12:30-2 $2,650,000 GMAP P*Shark Windsor Terrace 1604 10th Avenue Turner Structures Sunday 1-3 $1,775,000 GMAP P*Shark Windsor Terrace 247 Windsor Place Brooklyn Properties Sunday 12-2 $1,250,000 GMAP P*Shark East Flatbush 3325 Farragut Road Fillmore Sunday 1-3 $559,000 GMAP P*Shark
Park Slope
108 Berkeley Place
Corcoran
Sunday 12:30-2
$2,650,000
GMAP P*Shark
Windsor Terrace
1604 10th Avenue
Turner Structures
Sunday 1-3
$1,775,000
GMAP P*Shark
Windsor Terrace
247 Windsor Place
Brooklyn Properties
Sunday 12-2
$1,250,000
GMAP P*Shark
East Flatbush
3325 Farragut Road
Fillmore
Sunday 1-3
$559,000
GMAP P*Shark
247 Windsor is tiny (not >1700sq ft.) and the pricing is simply laughable.I know WT is a nice hood but come on people this owner is delusional. Berkeley place is a steal compared to this bland tiny house.
Finance Guy — I couldnt’ agree more that this is a silly price. Not to say that someone won’t pay it this year, of course. Our numbers are slightly different but the point is the same.
This is all about frame of reference. People are now used to seeing prices up to the $2 million range. People have have short memories. So they think $2.65 million is “cheap.” Oh well, I won’t be buying this so it’s not my problem.
Oh, I see lechacal got here first, with essentially the same calculation as mine. The house needs to drop by half to be comparable to a rental.
FatLenny — you seem to have forgotten taxes/insurance/heat/repairs. Add in that stuff and your 6k goes to 8k.
Then, there are no 7% jumbo loans, so add something more for the 2.12m loan, if you can get it. Say another 1%, so you are up to 9k.
Then add 7% opportunity cost on your downpayment, which could have been in long term bonds or the stock market making that much. That’s another 2500, so we are at $11500.
This assumes that real estate values don’t drop. If they do, you need to add in whatever equity you lose. If it’s a highly optimistic 10% over the next year, that’s another 22k/mo.
And all of this assumes that you are happy to be a landlord for free.
This house is wildly overpriced.
1. If you think you can get a 7% interest only loan of that size right now, good luck. The mortgage market is pretty opaque right now, but best guess for a 30-year fixed rate amortizing non-conforming jumbo mortgage is 7.5% (if you want a real lender that can actually show up at the closing table with the money), and that’s if you have great credit.
2. I don’t think most buyers would be looking at an IO loan. If you are using the IO to see pure cost (no amortization payments included, which aren’t a real cost), then we would need to look at the opportunity cost of the rather substantial down payment, which could be a few grand a month. The numbers end up basically at the same place. I used the monthly payment on an amortizing loan just as a back-of-the-envelope way of getting to the same place.
– Opportunity cost of 20% down payment, using a pretty conservative 6% after tax expected return: $2,650 per month
– Interest portion of monthly payment on 7.5% amortizing 30-year loan in early periods: around $13,000
– Monthly taxes: $500 (guesstimate based on the ridiculously low tax rates for brownstones in brooklyn)
– After-tax cost of interest and tax payments (not even counting insurance, maintentenance, etc. etc.) at 33% bracket: $9,045
So the after-tax “cost” of the down payment plus the after-tax cost of interest and taxes is right around $12,000. Then add maintenance…and tenant headaches…you get the point.
You would if you lived there. They are good things to have around.
I like WT but I wouldn’t count a butcher shop and a theater with no air conditioning among its charms.
Sam that’s so weird, because last time I checked WT was actually just one subway stop past Park Slope. There is a butcher (sorry Park Slope) and a movie theater (sorry Park Slope) and both of these houses are within 2 blocks of the park (sorry 5th Ave).
lechacal, I don’t see how you’re getting your numbers. 7% IO loan on $2,120,000 is $12,366/month. Subtract $4,500 and your out of pocket expense is $7,866/mo. Your deduction for the first $1 Million at a 33% tax bracket is $1,925/mo, so your net monthly cost is $5,941/mo. Granted, that’s a lot of dough to live in a 2-BR duplex but it ain’t $12K–it’s half.