Market stand-off

Come on! Don’t tease us. Please post an example with 4 percent plus cap rate.

I didn't diligence whether the 5% is real, but this is not unheard of, particularly when there's some hair involved. My point is that the only stuff selling is reasonably well-priced. And I'm assuming it sold at ask, given the market time of about 90 days.

I rarely see listings with real cap rate in under $10 mm multifamily segment which factor in real routine maintenance cost, vacancy allowance, legal/credit loss cost, super cost, management cost, periodic maintenance (roof, facade repairs, windows etc) and even real insurance cost. Even the rent roll is performa rather than actual. 5% in most cases is 3.5% current in Brooklyn.

I'm seeing setups where people are just flat out lying about vacant units being "free market" on RRs. If you've got a 6 unit or more building built before 1971 all the units are RS/RC. And I don't care what renovations you did, what you can rent them for is based on the last registered rent. AFAIK the only way around it is combining units because then there's no rent history.

The reason a lot of multi-family, which are fully rented, stay on the market for a long time in a slow market is that the owners are still making positive carry and do not necessarily need to sell in a large percentage of situations. Owner occupied is a little different.

I'm seeing this stand-off across the spectrum - including (1) single family owner-occupied, (2) projects where the owners ran out of money around demolition, and (3) leased-up multifamily. With owner-occupied, there are two types of sellers: (1a) those who bought when Abe Beame was mayor and are sitting on an enormous gain so have no incentive to sell and still have peak pricing in mind, and (1b) those who bought in 2015 and are sitting on an enormous loss that they don't want to face up to. Segment 1a seems most likely to sell at this point, depending on how much they dislike the city with Abe Beam Jr as mayor today.

Stand-off is the perfect phrase to describe the 1A-ish situation that I've been brought into. Would be nice to sell, don't have to - but the storm clouds of higher taxes and diminishing QOL are on the horizon and may be the factors that get us to pull the trigger.

I think a decent amount of both are going to look back a regret not selling at the price they could have gotten today.

30 - I agree.

That depends on how long you can hold for. @30/Team M, Do you think prices are higher or lower in 7 years versus today? George, you didn't need to purchase during Abes admin, you did extremely well buying a multi/brownstone in many parts of Bk from 2009-2012. Look at where Brownstones were trading at in late 90's in Fort Greene, Crown Heights, PPH's, $400-$600K.

Keith, I think the answer will be property specific. I have seen many UWS fairly priced (within 10-15 percent range) townhouses without rent stabilization.

And most were clueless about where valuations would go, otherwise, we would all be basking in our real estate wealth! There were plenty of bears and naysayers in those markets. Look at the streeteasy threads from 2008-2009; very few saw this bull coming. The talk was all about further declines, "shadow inventory" (what happened to that phrase?), all the new development in the "pipeline" etc.

It's perfectly fine and free to speculate here on the boards. But I have found in both equity markets and real estate no one knows what or when things are going to happen. I do know for certain that markets are cyclical, things will fall and sometimes hard and then they will rise slowly or perhaps quickly....and if you have the time to weather these cycles out, you'll be just fine.

Heres a fact: The current NYC real estate market has weakened since 2014. When it stops? That I don't know. I will add that we have a relatively strong economy, low interest rates. What is propping all this up, that might be the ticking time-bomb and something of interest to discuss in regards to the next big leg down. Though it's interesting how very few of even the smartest folks figure this out, when you do, it makes a career and you'll be the flavor of the week quote from The WSJ to CNBC for cycles to come.

Keith Burkhardt
The Burkhardt Group

And most were clueless about where valuations would go, otherwise, we would all be basking in our real estate wealth! There were plenty of bears and naysayers in those markets. Look at the streeteasy threads from 2008-2009; very few saw this bull coming. The talk was all about further declines, "shadow inventory" (what happened to that phrase?), all the new development in the "pipeline" etc.

It's perfectly fine and free to speculate here on the boards. But I have found in both equity markets and real estate no one knows what or when things are going to happen. I do know for certain that markets are cyclical, things will fall and sometimes hard and then they will rise slowly or perhaps quickly....and if you have the time to weather these cycles out, you'll be just fine.

Heres a fact: The current NYC real estate market has weakened since 2014. When it stops? That I don't know. I will add that we have a relatively strong economy, low interest rates. What is propping all this up, that might be the ticking time-bomb and something of interest to discuss in regards to the next big leg down. Though it's interesting how very few of even the smartest folks figure this out, when you do, it makes a career and you'll be the flavor of the week quote from The WSJ to CNBC for cycles to come.

Keith Burkhardt
The Burkhardt Group