Units at the new dormy rental building at 189 Avenue C hit the market just about three years ago…
Now the whole building can be yours. Per the new Massey Knakal listing:
The building consists of a 2,225 SF (approx.) commercial unit on the ground floor, a 627 SF (approx.) community facility unit on the ground floor towards the East 12th Street entrance and 35 luxury apartments on the upper floors consisting of 37,310 SF (approx). Of the 35 apartments, 5 are studios, 13 are 1-bedrooms, 9 are 2-bedrooms and 8 are 3-bedrooms of which 2 have terraces. The building benefits from 2 elevators, a usable rooftop for the tenants, a fully functioning gym, 24/7 security and washer/dryer units in each apartment.
The building has a temporary certificate of 421-a. Therefore the units are all Rent Stabilized and renting at less than 70% of market. The building’s gross annual income is approximately $1,580,000 with a Net Operating Income of approximately $1,285,000. Ownership is currently appealing the current taxes considering the NYC Department of Finance is billing based on the building being 55,000 SF. The department should provide clarity by late May.
Price: $33 million.
The commercial space is currently on the market.
My buddy lives here and pays $3,450 for a small 2BR. This ad says that's 70% less than market and rent stabilized? Huh?
ReplyDeleteI'm not a real estate math wizard, so can someone enlighten me as to whether this makes sense, because it seems odd to me.
ReplyDeleteBuilding is $33M, brings in $1.3M p.a. but units are rent stabilized. Maybe if I'm an asshole I can get all of those up to market, but that only brings me to $2M a year (tops) and my taxes and other expenses will increase.
So I can generate a max of $2M a year on a $33M building, but that building will cost me $1.85M a year in mortgage payments (5% down, 4.3% p.a.)
What am I missing? or is this whole RE process just a giant tax scam for already wealthy people?
The retail is good for at least another $250k/yr
ReplyDeleteWhen looking at commercial real estate, one looks at the free capitalization rate. It's a measure of the rate of return on investment.
Assuming a $1.5MM net operating income and a $33MM purchase price, that works out to a 4.55% CAP rate, which is pretty middle of the road nowadays. 65 used to be the target for most investors. Times have changed, (and may have changed more - I've been out of the biz for a few years) Anything over 4% is viable.
@anon 10:43 - Congratulations, you win a locally sourced artisian wad of used chewing gum.
ReplyDeleteRoughly speaking, all of the real-estate deals are tax scams - that's the prime way that the landlords make money. It's also the reason that they have fought so strenuously, and successfully, to keep their books off limits to the public. Of course, they can deduct not only their mortgage interest and real-estate taxes (if they have any at all; they often get waivers), but also their operating expenses, and whatever losses they can put on their book are then swapped with properties that show profits; again, a tax scam (which can sprawl over many years).
All the rules, and the secrecy, may seem unfair to us, but that just tells you who makes the rules.