Question from a different point of view

How much is your "friend's" mortgage payments and taxes, what's the size of the apartment, how close to the Lincoln Tunnel, etc.?

His total monthly costs on the apartment are under $3,000. It is not close to the tunnel, a few block away. I'm not sure exactly of the size, I would guess 650-700 sf. One bathroom, no terrace.

New construction? What amenities?

Not enough information. Tax-abated? Exactly how close (or not) to the tunnel? 10th where in the 40's?

I'm not sure how old the building is, I believe less than 10 years. It has big pool, fitness room/gym, lounge/party room with kitchen, full-service doorman, I'm not sure what else. I don't know if it has a tax abatement, let's assume it doesn't.

Address?

We're getting into too much detail, let's just ballpark it. What would be your minimum price to sell?

OP, since you know the details, I suggest you do a search on streeteasy to find out what comps are listing for.

Other things to consider, views, what floor, ceiling hight, recent rennovations, layout. These impact the value. You can find most of these things through your search, and get a better answer rather than by asking on this board.

Can't do comps without enough information, and even with those details it would depend on the particular apartment in question.

I'd buy it for a dollar

steve, what would your rent-ratio analysis tell you?

Friends don't let friends move their new babies to toxic brownfields -- so I hope they're relocating to a safer place. I sincerely do.

"what would your rent-ratio analysis tell you?"

It would say 12x the annual rent, or $432,000. But you knew that already.

Which is reverting to 2003 prices, which is what is happening everywhere in the country.

From nybits, however, $3k does seem to be a reasonable rent for that area for a 1-bedroom.

steve, if it were your place, would you accept an offer of $432,000? Would you accept $500,000? Of course not. I would estimate a fair price right now at $700,000-$750,000.

Take the cash flow and DCF it...

So, 2400 - mortgage payments and such. Make sure its at least an 8% return, given there is work and risk...

If its anywhere near that, sell quickly...

"I would estimate a fair price right now at $700,000-$750,000."

I don't know about "fair," but "market" would seem to be right.

"if it were your place, would you accept an offer of $432,000? Would you accept $500,000? Of course not."

EXACTLY my point, LICC. Real estate is highly illiquid, there is a psychology issue that sellers don't want to recognize that prices aren't going up 20% per year anymore, and that they're actually going down. Which is why they take a long time to deflate (years) and they stay down for a long time (years).

I'm not arguing about that. I appreciate that. I also appreciate that I sold an apartment in South Beach for $1 million to a woman who was going to "flip it" in 2 years. Well, alas, the one 3 floors above mine is STILL for sale (3 years later), now for $697,000. The one 2 floors above mine is (still) for sale at $699,999, and the one directly above mine (still) for sale at $839,000.

What kind of pricing is that? One person can't sell at $697,000, and another person wants $839,000 for the same unit on a lower floor?

It is irrational pricing, that's what it is.

As it happens, my apartment was listed for $1.1 million; the apartment for sale now at $839,000 was listed at $1.15 million. They wouldn't accept the (last ever) offer of $1 million that I did, and now they're stuck with it for 3 years, it's empty, not rented, and they're still carrying it losing money, trying to "save" their investment.

And it's not only Miami, or Florida. It's all across the country. A friend of mine tried to sell a McMansion in San Diego 3 years ago for something like $1.8 million. He had an offer but the buyer wanted a discount and he wouldn't give it to them.

Well, that was the last offer he ever got. He now rents the place out at a loss, and will likely sell it at a loss.

So this "theory" of yours, LICC, like all your others breaks down under the pressure of market forces. Inventories will rise, no one will buy, and your mythical "seller" who today won't take $500,000, will tomorrow be forced to.

It is inevitable.

You think this is a "mythical" person . . . okay . . . (steve is being weird)

well Real estate is Something where we Can invest for Long term for Better Result

My guess is that a lot of people are going to discover that over the next 8 quarters.