Rent stabilized buildings worthless?

George, Rent stabilized building NOI is still positive assuming no mortgage. The properties will have to be in need for major repairs first for the values to go negative and that may happen for selected properties. Landlords (reluctant landlord lenders) will indeed handover the keys to the govt or the Govt will come up with some type of programs when that happens to either pay for repairs or set up some public entity to take over and manage.

Most likely it will a little more that trivial sum in the current market. $4mm value building in 2018 could be at $500k-$1mm for example depending on how much major maintence issues issues were deferred to juice the cash flow before the lender take over.

"Or would that never happen bc someone would try to make some $$ off the building and pay the bank at least a trivial sum."

George, the building from the article “sold” for $1000 to the lender because the lender required other bidders to pay an amount covering the loan, missed payments, etc.

But my take is basically what 300 said. I think these buildings were being bought at 3% cap rates back in the day. Let’s call it $300K NOI for a property bought for $10M. I’m guessing you’d pay $1 for said building so long as it took less than $3M to address deferred maintenance.

There have been estimates in the press of fall in value of rent-stabilized buildings by 30-50% some of which surely includes some deferred maintenance and also a reflection of higher rates since 2019. So the buildings being foreclosed rather than loan workout leading to no change in the ownership will probably have 50%+ decline due to additional deferred maintenance vs the building where the ownership is not changing.

Classic buddy comedy scene: “The buildings don’t go away… “ “But the owners do.”

https://m.youtube.com/watch?v=PZFh8wq9uGA

Note:

At 2107 Fredrick Douglass Blvd the building was purchased for $3.8 million, yet effectively sold to the bank for $4.4 yielding a profit of $600,000.

Note:

At 2107 Fredrick Douglass Blvd the building was purchased for $3.8 million, yet effectively sold to the bank for $4.4 yielding a profit of $600,000.

@30yrs - Was the seller's debt to the bank $4.4 million and wipes out by the foreclosure? (i.e., non - recourse loan underlying the building?). If so, I see your point, particularly as it ties into the clip Nada posted. I would be interested in Nada's (or any of the other finance gurus on here) take.

>> At 2107 Fredrick Douglass Blvd the building was purchased for $3.8 million, yet effectively sold to the bank for $4.4 yielding a profit of $600,000.

LOL

MCR, my guess is that it was non-recourse.

On RE generally, I think the clip from the buddy comedy duo sums it up rather well. These guys sound like they’re speaking off the cuff and shooting the shit, but what they’re saying is a pithy summarization of the important points two very wise & successful investors have learned after intensive study, despite not being RE investors.

This rent regulated apartment situation is quite amazing:
https://www.nytimes.com/2024/09/02/realestate/soho-artist-iria-leino-paintings.html?

@rinette What a strange life

And this may be the record for rent regulated family tenancy: 86 years. (Times writer loves pointing out that they never charged rent to their tenants).

https://www.nytimes.com/2024/09/09/realestate/renters-manhattan-morningside-heights.html?unlocked_article_code=1.JU4.ti9t.GWccYismcdU_&smid=url-share

nice