Neighborhoods going through gentrification?

[ironmike9110]

the houses that are cheapest & closest to manhattan seem to be bed-stuy and bushwick. Now obviously theres a reason for that, but in 5 years will these neighborhoods still be as bad as they are now?

What im saying is, in 5 years will these neighborhoods houses go from being 200k-300k for a nice size to 500k-600k?

I talk to alot of people about how to become successful with buying houses and a couple of people have said that when they were younger they bought houses for cheap in the "ghetto" or "bad neighborhoods". Then 5-10 years later they sold the house for 2-3 times the amount they bought it for when the neighborhood became "nicer".

[lofter1]

If you buy into a changing neighborhood with the intention of living in the building you're renovating -- and you're a good neighbor and decent human being and put good locks on your doors -- chances are you will do just fine.

Gotta have some street smarts, though.

[Stern]

If you have enough money to buy a house at age 20, my advice would be to buy it. As for growing up in the suburbs I don't think thats a detriment, you're either street smart or your not.

[clubBR]

New York City is a world within a world. Street smarts is basically knowing that everyone is from everywhere and so to keep your manners but stay on your toes. The city is always unpredictable and after a year, you'll most probably experience very memorable events, both good and bad. But the cool thing about New Yorkers is, we get used to it.

[LadyJay114]

And the houses that are cheapest & closest to manhattan seem to be bed-stuy and bushwick. Now obviously theres a reason for that, but in 5 years will these neighborhoods still be as bad as they are now?

What im saying is, in 5 years will these neighborhoods houses go from being 200k-300k for a nice size to 500k-600k?

I guess a bigger question would be, could a kid (lets say 24 or so) from the suburbs (me ;) ) be able to make it in a rough neighborhood after buying a cheap house or is my veiw of the suburbs too harsh being as i see everyone living in them is a p*ssy/soft and even though i hate it believing that just because i grew up in the suburbs i might not be able to do well in the city because it wasnt "rough" growing up?

who said bed-stuy was "bad". that nabe has totally transformed. there are still a couple of rough spots in Bushwick, but that's diminishing as artisans/students are getting priced out of Williamsburgh and they're moving east - to Bushwick!

[ironmike9110]

who said bed-stuy was "bad". that nabe has totally transformed. there are still a couple of rough spots in Bushwick, but that's diminishing as artisans/students are getting priced out of Williamsburgh and they're moving east - to Bushwick!

by the time im ready to buy, the houses will be overpriced. :(

[Stern]

I don't think there's a place in NYC that isn't overpriced anymore. Even in the hood places start at around $200,000, the difference is there prices don't start at $800,000. Long gone are the days when you could buy a brownstone in Harlem for $1.

[Schadenfrau]

Buy a co-op, not a house.

[ironmike9110]

Buy a co-op, not a house.

u gotta pay maintnance fees for a co-op

[Schadenfrau]

And you have to pay taxes on a house, right? It doesn't sound to me like you're in any position to be looking at houses, so you might as well be more realistic. Even a co-op is more than a stretch at this point.

[clubBR]

isnt there ANYWHERE in nyc you can buy an affordable house in a decent neighborhood?? whats going on with this world:cool:

[Schadenfrau]

There have never been many houses in NYC, especially single-family homes.

[Ninjahedge]

And you have to pay taxes on a house, right? It doesn't sound to me like you're in any position to be looking at houses, so you might as well be more realistic. Even a co-op is more than a stretch at this point.

Taxes are tax deductable and depending on where you are, less than your standard Manhattan/Brooklyn/Queens "maintainance" fee.

After seeing an 800SF co-op in 2003 for $350K and a MAINTAINANCE fee of $1000 a month, I had to ask them why.

The Corcoran agent just shrugged and said "that's what it is".

There should be better answers than that.

[Schadenfrau]

The answers usually come in the form of a good look at the financials of the building. If you can't find them there, don't bother with the co-op.

I still think a co-op is a much better idea for a first-time buyer than a house. Think about all of the money that needs to be spent on general home costs- boilers, heat, oil, etc. And that's not even starting with how much effort someone would have to put into, say, shoveling the walk outside of a home within hours after a snowfall.

Plus, how many houses are actually available in the neighborhoods IronMike mentioned? This isn't Philadelphia.

[Front_Porch]

is four things:

1) Your share of the building's property taxes (in a condo, you pay your share of property taxes separately -- that's the line advertised as RET -- but in a co-op, it's rolled into maintenance);

2) Your share of the building's underlying mortgage (some buildings have rental income from stores that helps defray these payments, but a building can't take in too high a proportion of rental income, or it starts to have problems with its co-op status;

3) Labor costs (for doormen, porter, super, etc.)

4) Maintenance of the building's physical plant (boiler replacement, roof work, hallway renovation, repointing to meet the demands of Local Law 11).

That's it -- if you look at a building's financials, it's not that hard to determine what your maintenance is paying for and why.

ali r.
{downtown broker}

[ironmike9110]

so if you own a co-op you dont pay taxes...its all put into maintnance?

and lets say you want to knock out a wall or something, can you do that in a co-op or do you not completly own the actual space you are living in.

[Schadenfrau]

You don't directly pay taxes on a co-op, but like Front Porch said, you pay them through your monthly fees.

The amount of construction you're allowed to do depends on the particular co-op. As long as the wall in question isn't a structural wall, many co-ops will allow you to knock it out.

You're looking to be a cop, right, IronMike? Unless you've got another source of finances, grand renovations will be out of the question for the long-term future.

[ironmike9110]

deleted

[Schadenfrau]

You would still have trouble affording a house in NYC on the salary offered by any of those organizations.

I think this is a case of you really putting the cart before the horse. You're 18 and in college- focus on school, not what you might be able to afford in a neighborhood you've never seen almost ten years from now.

[lofter1]

Informative post and comments from curbed (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php) regarding maintence costs ...

Ask Curbed: Can Building Hold the Repairs Until I Sell?

http://www.curbed.com/2007_02_Bricks%20and%20Dollar.jpg

Tuesday, February 13, 2007, by Robert

Into our Ask Curbed Inbox (tips@curbed.com) comes a question about an issue that strikes fear in the heart of many an owner:
Probably half of the 12 units in my prewar brownstone are experiencing some sort of masonry/window leak and we've landed on the "Sorry!" square that says we're ready for some ubiquitous Repointing.The debate currently in mid-rage was mainly fueled by some information [mis-information?] that one of the opposing board members got stating that for every $100 increase in monthly maintenance charges, the value of the apartment decreases something like $30K. The thinking is that maybe we don't have to do the windows... yet.Our current maintenance works out to be about $.73 a square foot. I'm told the average in the city is about $1.21 (but we don't have a doorman or pool or any "extra" amenities – unless you consider a live-in super lavish). The raise in maintenance would bring us up to about a buck a square foot, I think.Anybody have any idea where does that stat come from and why or any other comments?Your reasoned answers in the comments section.

***

Reader Comments (18 extant)


1. wow, so my 280 SF studio with $415 main. = $1.48/SF is freaking expensive. and i don't have a doorman or an elevator! anything i can do about this??

By me at February 13, 2007 1:34 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265788)


2. THe maintenance/sq. ft. is always going to be higher for smaller apartments as not all costs escalate in proportion to square footage.
The Miller Samuel appraisal that I got when I bought by Village loft two years ago said that purchase prices would be ajusted $30 for each $1 differential in monthly maintenance. So, the uber-cheap maintenance (about $0.15 per square foot on my 4,000 square feet but not including any heat/hot water, etc.) supposedly meant little +/- in the value of my apartment.

By Anonymous at February 13, 2007 1:42 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265801)


3. how much you think will reduce your price/equity when potential buyers see obvious lack of maint. to building?

By Anonymous at February 13, 2007 2:13 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265833)


4. The interest on a $20k loan at 6% comes out to $100/month so I guess you can say that an increase of the maint of $100 a month could relate to a decrease of $20k +/- if one only looks at total carrying cost.

However, a savvy buyer will look at a low maint. such as yours and see that money isn't being put into a reserve fund for long term repairs such as repointing. They will see that this needs to be done, that the boiler is about to go, that the roof will need to be replace, etc. and that each time something like this goes wrong there will be an assessment. So in the end they will discount the price of the unit anyway.

It's better to show that the maint charged covers both current operating expenses as well as funds a reserve for these larger expenses that come up only every 10, 15, or 20+ years. If it's clear that it doesn't the low maint won't add any value and can actually take away value since a buyer sees that the coop is not being managed properly.

By Anonymous at February 13, 2007 2:16 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265837)


5. It depends folks. Often times a low maintenance is a sign of deferred maintenance which is exactly what you describe. It also depends on the location of your building. $1 a square ft in Manhattan is nothing. Your building could also just do a one-time special assessment.

By Anonymous at February 13, 2007 2:21 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265853)


6. There is no lack of maintenance at all. I am the president of the board, and we attend quickly to everything. The maintenance is very low for two reasons. One, is that all of the units have their own heat/hot water, so the building does not have the monthly gas bill that likely would run $2,000+ per month in the winter for 7 floors. Two, the building has about $45,000 annual income from advertising.

By Anonymous at February 13, 2007 2:23 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265855)


7. Disagree. many bldgs have low maint and nice funds. you need to look further to know that. many bldgs with high maint. fees are high because of bad mgmt or a bad morgage

By Anonymous at February 13, 2007 2:23 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265858)


8. Exactly. Low maintenance can mean a building is well established, well run, or lucky (e.g., opportunity for lots of advertising revenue).

By Some Guy at February 13, 2007 2:32 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265874)


9. Just be glad you don't live in the Financial District where you'll have to pay $1300+ monthly for a 1BR.

By Bing at February 13, 2007 2:36 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265878)


10. $100/mo = $1200/year
$1200/year divided by 5% cap rate = $24000 (equivalent to 7.5% cap rate after tax deduction) divided by 4% = $30000 (equivalent to 6% cap rate after tax deduction)

By Anonymous at February 13, 2007 2:38 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265882)


11. Depends what's in the maint as well, i.e. are you paying for lots of staff.

By Anonymous at February 13, 2007 3:33 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265931)


12. Wouldn't you also see a decrease in heating and cooling costs by improving your windows?

By Ian (http://www.ianmacallen.com/) at February 13, 2007 3:34 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265934)


13. If you sell, you will be required to show potential buyers the minutes from recent board meetings. Since it sounds like your board has already discussed the necessity of re-pointing the building, they will be able to read about the needed repairs and the dues raising debate. Of course you could just do a general assessment and avoid the dues hike. Like #4 said, any smart buyer will do the math and figure out that they're going to pay one way or another, either through an assessment or dues.

By Jason at February 13, 2007 3:53 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#265976)


14. come on, people. this is such a stupid question, although it does show just how ridiculous some folks are when it comes to resale value. how do you intend to sell a place with leaky windows? restrict open houses to sunny days? it's really penny wise and pound foolish not to take care of this problem now, before more rain makes the problem worse. plus, any new shareholders who buy a unit with leaky windows is going to pester the board unmercifully to get them fixed...not to mention, if you (or the board) don't disclose the leaky windows prior to sale, you're just setting yourself up for a lawsuit.

20 years ago, my parents foolishly gut-reno'd their bathroom to include a jacuzzi for "resale value." they never used the jacuzzi, nor would they let either of us kids use the jacuzzi. the jacuzzi and my parents are still in the house, and i doubt a 20-year-old jacuzzi's going to help their resale value now.

By Anonymous at February 13, 2007 4:06 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#266000)


15. How about a one-time assessment to cover the repointing, if there isn't enough in reserve. That is how we fund it in my condo building.

By chickenmadness at February 13, 2007 4:41 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#266049)


16. #9, why are maintenance fees so high in the financial district?
I noticed a recent listing in FiDi that had monthly fees for a 1 br at some astronomical rate.

By blahblahblah at February 14, 2007 10:38 AM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#267361)


17. #4 and #10 are showing you the correct way to figure the decrease in value. Average maintenance cost per square foot in NYC is meaningless!!!

Hello, for co-ops "maintenance" includes taxes but for condos it doesn't. So the average per square foot varies widely, even before you get into such matters as doormen, heat, etc. You can figure out exactly how much your value will go down if you raise the maintenance via method #4 or 10. SO - never raise the maintenance. Always much much cheaper to have an assessment pay for the windows. Either way, the buyer should be alerted to the window problem by his/her inspector (if your unit is affected) or by reading the notes from the board meetings. So you may be forced to fix the problem before you leave or give the buyer a credit at closing.

By Suzanne at February 14, 2007 1:29 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#267716)


18. While the maintenance will affect the estimated monthlies that are typically shown on the flyers given out on open houses, I think the issue is more complicated than deducting a straight $30K off the purchase price for every $100 increase.

For example, if your maintenance is quite low compared to other apartments in your area, you might have more leeway to make small increases, particularly if the health/appearance etc. of the building and its reserve fund will be improved.

By eeeck at February 14, 2007 4:43 PM (http://www.curbed.com/archives/2007/02/13/ask_curbed_can_building_hold_the_repairs_until_i_s ell.php#268115)

[tdp]

I think this is a case of you really putting the cart before the horse. You're 18 and in college- focus on school, not what you might be able to afford in a neighborhood you've never seen almost ten years from now.

Wise words - but it's good to see some ambition also.

Thus speaks a father with an 18-year-old (daughter) who majors in 'drifting aimlessly'!

Stick at it - and Good Luck Iron Mike.