A chance to buy now? Soliciting advice from all you real estate pros about a potential purchase: I recently got a chance to buy a doorman co-op apartment around 145th and Bradhurst through one of the city's homeownership programs. My first impressions have been is that it's a pretty good deal. It's a two-bedroom, high floor, corner apartment, with views overlooking Jackie Robinson park. It's about... [more]
A chance to buy now?
Soliciting advice from all you real estate pros about a potential purchase:
I recently got a chance to buy a doorman co-op apartment around 145th and Bradhurst through one of the city's homeownership programs.
My first impressions have been is that it's a pretty good deal. It's a two-bedroom, high floor, corner apartment, with views overlooking Jackie Robinson park. It's about 950 square feet for $250k.
The strings attached though, is that there are two mortgages on the property, which bring the maintenance up to a considerable $1200 a month. Since it's priced below market, the city also has tricky ownership restrictions:
- If you sell within 4 years of moving in, all of your profit is reclaimed by the city to pay the first mortgage.
- If you sell from 4-15 years, you keep 50%
- If you sell from 15-25 years, you keep 100% minus your share of the second, smaller mortgage
- No profit restriction after 25 years
- Subletting only two years at a time.
If this was a different market, I think I'd be jumping in with both feet. I'm still getting in slowly. But I guess this comes down to the eternal "state-of-the-market" question.
I'm wondering if in the next couple of years the market will turn down enough to make this less of a good buy. Will the area worsen? Would I be able to buy something further downtown for the same outlay?
I think I'd be willing to give up some of the perks of this offer -- sacrifice space, a full-service building, high floor, park views -- for something with a better location (ie further south) and with a lower maintenance.
At the moment, I still think it's a pretty good buy, since with the maintenance, my monthly outlay would come out to around $2000-$2500 -- a fair price for the apartment as a rental. A(I also know this depends on my needs at the time.)
What do you think?
[less]
Response by julia
over 17 years ago
Posts: 2841
Member since: Feb 2007
I'm not an expert but all the experts are saying now is not the time to buy (no matter how good the deal looks).
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Response by inoeverything
over 17 years ago
Posts: 159
Member since: Jan 2007
NOW is the time to BUY. The property will be double the price in 3 years. Laugh all the way to the bank, haha.
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Response by newaccount
over 17 years ago
Posts: 332
Member since: Jun 2008
You need to decide whether you want to live there long term. I'm not sure if $2k/mo is reasonable for that area (sounds expensive to me). You also need to condier being locked in for so many years.
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Response by alpine292
over 17 years ago
Posts: 2771
Member since: Jun 2008
I bought a house last year, it doubled in value esince then, and now I am laughing all the way to IndyMac Bank.
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Response by babsie02
over 17 years ago
Posts: 139
Member since: Mar 2008
If you are going to live somewhere for 25 years, you don't have to worry about the ebbs and flows of the RE market. Historically, over 25 years, you will make money on the place. If you think you may only live there for a few years, then you may want think about it. What are the comps in the area?
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Response by jrd
over 17 years ago
Posts: 130
Member since: Jun 2008
I found one 2BR of similar size with terrace for more than twice the price nearby. So it may be that the free market value is $500K (would require a bunch of research or an appraisal). Say you have to put down 20% of 250K, over 4 years you forgo 8K in interest at 5%. You will spend at 2500/mo a total of 120K over 4 years. If you assume the market value of the place is 550K and that the market in your area is net flat 4 years out, you sell for 500K, less 10% transaction costs yeilds net profit of 200K. Your 50% share of the profit less 15% cap gains leaves you with 85K. From a simple cash flow basis you have 85K less 120K less the 8K interest which leaves you short 43K or about $896/mo, which is far less than what you think is the market rental. So, it seems to be a good deal IF you stay in the place for at least 4 years AND the assumptions made are correct.
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Response by jrd
over 17 years ago
Posts: 130
Member since: Jun 2008
Oops. Since you are actually living in the unit you will get a 250K (per taxpayer) exclusion for the purposes of cap gains, so you will pay no cap gains on your share, leaving you net 28K short or $583/mo, which is $313 better than the previous calculation. You also will be throwing off a ton of potential interest deductions because the underlying mortgage interest on the building will be passed on to you in addition to the fact that the early years of a mortgage are almost all interest. How much these deductions are worth depends on your individual tax situation, but in many cases it is considerable.
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Response by Tony
over 17 years ago
Posts: 140
Member since: Feb 2008
Seems like a very good deal, particularly if you like the neighborhood. My understanding is that these home ownership opportunities are hard to come by.
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Response by semerun
over 17 years ago
Posts: 571
Member since: Feb 2008
I bought a couple of blocks north, and several blocks west- which is techincally a different neighborhood (145th and Bradhurst is the Harlem Heights section of Central Harlem- and I live in West Harlem's Hamilton Heights- the border between these neighborhoods is Edgecomb Ave).
You have to take into account the duration of your expected needs to live there which- obviously with these types of restrictions.
I can say the neighborhood in Hamilton Heights has been changing rather rapidly as a result of the Columbia expansion paired with Manhattan's middle class getting priced out below 96th street. Even if you take the priced out section out of the argument due to economic/real estate downturn, and real estate nationally (and even within Manhattan is effected) you can't discount the effect that the Columbia expansion will have over the long term. Since Bradhurst is on the fringe of Hamilton Heights, there will likely be some spillover in terms of changes.
$250k is an excellent price for the neighborhood with the restrictions- and typically maintence assuming no mortgage (or common charges + taxes if a condo)in this areas will range from $600-900 month for an apartment this size with a doorman and elevator (I am not entirely sure on these numbers, but I can reflect back on what I recall seeing). A building with a mortgage would obviously have higher maintence charges- so $1,200 does not seem unreasonable- just make sure that they are adequately accounting for the recent price inflation- it's been steep this year due to direct and indirect effect of energy prices.
Keep in mind while this section of the neighborhood is shiny and new with some beautiful 100+ year old townhouses mixed in- just a few blocks east (Lenox Ave)and seemlingly forever southward is housing project after housing project. This will limit the upward price effects of whatever gentfication changes are store. Also food for thought will be the new "Mall" in the Bronx coming next summer...just over the 145th street bridge. I believe BJ's, Target and at least one other big box store will be there alongside many other smaller retail.
Many new construction condo buildings in the area are commanding rental prices above the 2k marker- I am not sure about coops.
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Response by Baier
over 17 years ago
Posts: 41
Member since: Jul 2007
This is encouraging -- the pro side seems to have more support for their arguments. Thank you.
The naysayers, well, they don't have much to say!
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Response by reaper
over 17 years ago
Posts: 118
Member since: Oct 2007
"The naysayers, well, they don't have much to say!"
On these boards I think alone says A LOT..... If this were a really bad deal the naysayers would be dancing all over this...
BEST OF LUCK either way. IMO, if you're looking to live there for the long term and you already know and like the area, then it sounds pretty good - What can you really buy for 250,000 these days?
but what do I know ; )
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Response by Susanbnyc
over 17 years ago
Posts: 75
Member since: Mar 2007
I know I am late to the discussion.... but...is this an income restricted building?
I'm not an expert but all the experts are saying now is not the time to buy (no matter how good the deal looks).
NOW is the time to BUY. The property will be double the price in 3 years. Laugh all the way to the bank, haha.
You need to decide whether you want to live there long term. I'm not sure if $2k/mo is reasonable for that area (sounds expensive to me). You also need to condier being locked in for so many years.
I bought a house last year, it doubled in value esince then, and now I am laughing all the way to IndyMac Bank.
If you are going to live somewhere for 25 years, you don't have to worry about the ebbs and flows of the RE market. Historically, over 25 years, you will make money on the place. If you think you may only live there for a few years, then you may want think about it. What are the comps in the area?
I found one 2BR of similar size with terrace for more than twice the price nearby. So it may be that the free market value is $500K (would require a bunch of research or an appraisal). Say you have to put down 20% of 250K, over 4 years you forgo 8K in interest at 5%. You will spend at 2500/mo a total of 120K over 4 years. If you assume the market value of the place is 550K and that the market in your area is net flat 4 years out, you sell for 500K, less 10% transaction costs yeilds net profit of 200K. Your 50% share of the profit less 15% cap gains leaves you with 85K. From a simple cash flow basis you have 85K less 120K less the 8K interest which leaves you short 43K or about $896/mo, which is far less than what you think is the market rental. So, it seems to be a good deal IF you stay in the place for at least 4 years AND the assumptions made are correct.
Oops. Since you are actually living in the unit you will get a 250K (per taxpayer) exclusion for the purposes of cap gains, so you will pay no cap gains on your share, leaving you net 28K short or $583/mo, which is $313 better than the previous calculation. You also will be throwing off a ton of potential interest deductions because the underlying mortgage interest on the building will be passed on to you in addition to the fact that the early years of a mortgage are almost all interest. How much these deductions are worth depends on your individual tax situation, but in many cases it is considerable.
Seems like a very good deal, particularly if you like the neighborhood. My understanding is that these home ownership opportunities are hard to come by.
I bought a couple of blocks north, and several blocks west- which is techincally a different neighborhood (145th and Bradhurst is the Harlem Heights section of Central Harlem- and I live in West Harlem's Hamilton Heights- the border between these neighborhoods is Edgecomb Ave).
You have to take into account the duration of your expected needs to live there which- obviously with these types of restrictions.
I can say the neighborhood in Hamilton Heights has been changing rather rapidly as a result of the Columbia expansion paired with Manhattan's middle class getting priced out below 96th street. Even if you take the priced out section out of the argument due to economic/real estate downturn, and real estate nationally (and even within Manhattan is effected) you can't discount the effect that the Columbia expansion will have over the long term. Since Bradhurst is on the fringe of Hamilton Heights, there will likely be some spillover in terms of changes.
$250k is an excellent price for the neighborhood with the restrictions- and typically maintence assuming no mortgage (or common charges + taxes if a condo)in this areas will range from $600-900 month for an apartment this size with a doorman and elevator (I am not entirely sure on these numbers, but I can reflect back on what I recall seeing). A building with a mortgage would obviously have higher maintence charges- so $1,200 does not seem unreasonable- just make sure that they are adequately accounting for the recent price inflation- it's been steep this year due to direct and indirect effect of energy prices.
Keep in mind while this section of the neighborhood is shiny and new with some beautiful 100+ year old townhouses mixed in- just a few blocks east (Lenox Ave)and seemlingly forever southward is housing project after housing project. This will limit the upward price effects of whatever gentfication changes are store. Also food for thought will be the new "Mall" in the Bronx coming next summer...just over the 145th street bridge. I believe BJ's, Target and at least one other big box store will be there alongside many other smaller retail.
Many new construction condo buildings in the area are commanding rental prices above the 2k marker- I am not sure about coops.
This is encouraging -- the pro side seems to have more support for their arguments. Thank you.
The naysayers, well, they don't have much to say!
"The naysayers, well, they don't have much to say!"
On these boards I think alone says A LOT..... If this were a really bad deal the naysayers would be dancing all over this...
BEST OF LUCK either way. IMO, if you're looking to live there for the long term and you already know and like the area, then it sounds pretty good - What can you really buy for 250,000 these days?
but what do I know ; )
I know I am late to the discussion.... but...is this an income restricted building?