Curbed: UES Townhouse Foreclosed ...

Nice

50% off prediction not a stretch. Eh?

"it went into foreclosure, where a buyer put it out of its misery for a whopping $500. The new owner took another stab at finding some warm bodies to fill the place, this time asking $9.45 million. That price was right...almost. Buyers picked up the property for $8.75 million in a sale recorded late yesterday"

Who paid $500? The Bank? How were they able to get the property for $500?

Hypo Real Estate assigned the mortgage to an LLC (whose address = c/o Hypo Real Estate's office) that bought the property for $500 and later sold it to the new owner. The recorded sale for $500 just means that no other bidder thought the property was worth more than the debt amount, so the holder of the mortgage could take title by bidding/paying nominal consideration.

Thanx, sideline, that's what I thought. So, the $500 was minimal consideration, there were no successful bidders & the lender took it back.
Wonder if it was a recourse loan.

"Nearly a year ago, the place hit the market as an $18,000/month rental, and then, failing to find a tenant or a stash of cash under the couch cushions, it went into foreclosure, where a buyer put it out of its misery for a whopping $500.... Buyers picked up the property for $8.75 million in a sale recorded late yesterday, one that we're presuming was an all-cash transaction given the tight timeline on the documents."

Gotta love price vs. rent at the high end. That which could not be rented for $216K a month sold in distress for $8.75M. A price-to-rent of 40x even with those numbers. Holy guacamole!

Let me translate for the non-wealthy amongst us. There's a studio that no one is willing to rent at $1800 a month. After foreclosing, the bank sells it for $875K.

No bubble here, carry on...

"A price-to-rent of 40x even with those numbers. "

yeah, I know. WTF??!???!!

Seller got 40xs rent & this economy, this nation, da world is sinking into depression/recession. This scenario scares me cuz it's so f'ing outta wack. So, what's it mean? What's it indicate?

This is just another example of how the luxury end of the property market may be more vulnerable than some like to admit.

It means somewhere, somewhen, somehow, one side or both of the equation has to come into balance, or at least closer to a balance.

Take your pick which and how.

I have no idea of the merits of the end price, but at 6200 square feet with 20,000 ft of air rights it does not seem crazy. And, I do not think this is a good candidate to compare price to rent because it was not configured for a townhouse rental. It is a 2 bedroom, with a home depot grade kitchen, and two floors of exhibition space. And looks like there are only two full (very small) baths.

This TH is NICE!

I hear you PMG, but the ability to wait things out and aversion to loss is very strong at this segment of the market. The all-cash buyer at $8.75M who no longer needs the place will rent it out for 15 years with an annual positive carry of $150K and then sell it for $9M. They "made" $2.5M on their $8.75M, or 28.5% overall.

Now, never mind that there's $1M in transaction costs, cutting their gain to 17.1%. And most certainly pay no attention to the fact that it works out to a 1% annual gain on an asset that would cost 6% annually to finance.

Good catch, nyc_sport. Those air rights are probably worth in the neighborhood of $2.5M? Puts things closer to 30x price-to-rent, which is more typical at this price range.

Yeah but all the neighboring buildings are 10 stories plus taller.
That's a lot of air rights.
Assuming it has these air rights, 10 stories times 2000 sq ft per floor times....what....$150 per sq ft equals $3 mil.

Ha, sport beat me to it

And we both came up with 20,000 feet!
I guess yuo googled map and street viewed it like I did and counted stories on the either side buildings with no windows. :)

Damn, truthskr, that's dedication!

The lazy ones (like me) just looked on Curbed for info about the building;

http://ny.curbed.com/tags/1110-park-avenue

"And now the house is officially on the market, asking $9.45 million for 6,230 square feet and 20,000 more worth of air rights."

Ouch! In spite of my occasional prowess in detective work, my reading comprehension needs more attention. :)

don't tell alpo...

It's actually pretty small, as townhouses go, and the ground floor is rented out to a store, apparently.

How do they get to 6,230 sf? They must be counting both the ground floor rental and the basement.

It looks to me as if the living space (upper three floors) would be more in the vicinity of 2,000 sf. And the top floor, I'm guessing, has low ceiling heights (going by the picture of the building exterior).

Also, the numbers are sort of meaningless if you don't know the value of the ground-floor lease.