Sale at 315 West 29th Street

Just looking to understand the buyer's calculations even at $1mm discount to the list price.

It appears that the building sold for $4.5MM in 2013, so the price likely is aspirational. An investor in a small walk up in this decidedly not prime Manhattan neighborhood would probably be looking for a cap rate of at least 3% (probably more), which means minimum net cash flow of $180K at $6MM purchase price, or $200K at $6.5MM. Hard to make those numbers work. Add in $67K in taxes, and the annual rent roll net of maintenance and expenses (including vacancy costs) needs to exceed $250K or $270K to get 3%. Even assuming these are all market rate units (and not sure why that would be), does not make a lot of sense to me unless there are development rights or opportunities, or you think you can achieve +/-$30K/month in rent for these (in some cases partially underground) apartments. Perhaps I am mistaken and FIT students line up to rent these units with prepaid rent from wealthy parents.

Thank you. That is my thought. I can see someone paying $5mm to utilize air rights and build up assuming it is free market. Price appreciation likely taken away by higher taxes in the last few years with rents remaining the same. That will require large changes as in elevator etc.

BTW, we may live within a couple of blocks of each other if not closer if you ever want to meet and talk real estate.

I would love to see a pro forma on this deal. Building next door gets rents around $1,800 per studio unit. Asking price of over $1,300 psf would almost certainly exceed total condo sellout value. Check out some of the buzz-words used like "long-term hold", "viable for a 1031 tax exchange", "overseas or hands-off investor", "well suited for a condominium conversion", and you can get a sense of how aspirational this price is.

That is exactly why I am asking the question. Taxes are not low. Seem fair. Probably worth $1000 per Sq ft max as converting to single family will be very expensive.

That is exactly why I am asking the question. Taxes are not low. Seem fair. Probably worth $1000 per Sq ft max as converting to single family will be very expensive.

Strictly a cash flow play as far as I can see. Student or admin housing for FIT. Student housing projects typically have high occupancy rates but also high maintenance costs and of course high turnover. Guessing cap rate would be a little lower than trad resi.

It's ironic how I just made a post yesterday about how hard it used to be to sell anything on this block.

I don't think it would be too hard for someone to convince themselves that the RR could be $330K (not including vacancy costs), though.

DO any of you live in Manhattan? have you ever owned anything here.... or are you just a bunch of renters who have no clue about what things are worth in this city.... A property is worth whatever someone is willing to pay for it. As someone who has owned many properties in this city, I have been surprised at what things have gone for... I have played the same numbers game you have played.. only not to buy something only to be bought by someone else... and then 5 years later they sell it for twice the price... I myself have sold something for twice what I bought it when everyone thought i was an idiot for buying it...

Bunch of complainers who don't purchase anything are just parasites on these sites.

Tony,

All posters on this thread are experienced owners and investors in Manhattan. I realize it is different for a property used as a residence as there are lot of rich people in Manhattan and if they like to live in a property they do not think of cap rate. However, this is just a commercial property.

Perhaps as a more experienced investor you can help us improve our understanding by answering the original question. What cap rate is someone buying for this property and what value add (with estimated $ amount) they could possibly do to enhance the cap rate? I am just trying to understand how a buyer will price it and what financing rate will they get (within +/-50bps).

30, I am only able to get to $4 per sq ft per month. So $300k rent roll. With $300k (30k per unit) updates to the apartments, perhaps $330k. Even a rich 20 GRM will only get to $6mm.

I must say that it is surprising to me that someone who is trying to sell an investment property isn't showing the current RR and expenses.

They probably are probably below $300k in gross rent. Expenses you can not trust anyway unless you ask for actual financials. It is the same as people not stating a condo square footage in the listing.

30, I see how you can get to $300k+ rent roll as the smallish 500 sq ft 1 bed rooms walkup are going for $2500 - similar in price in $ per sq ft to nice doorman building larger 2 bed room apartments. This makes sense as there has been very little supply of 1 bed rooms and many 1 bed rooms have been combined to make larger apartments.

Tony,

If your logic/reason for buying is "well, 5 years ago.." Then anything on the market should be a buy.
Why would banks even do appraisels or even worry about purchase price ? because "...5 years ago..."

300,
Plus you also have 4 duplexes which would obviously go for more like $3500.

Thanks. I noticed that too.