House of the Day: 74 Hicks Street
[nggallery id=”54117″ template=galleryview] The 25-foot-wide house at 74 Hicks Street just hit the market asking $6,500,000 and it’s a beauty. It’s clearly undergone a high-quality (and tasteful) renovation that preserved the old floorboards while spiffing up the kitchen and bathrooms. It’s currently configured as an owner’s triplex over a garden-level rental though with a price…
[nggallery id=”54117″ template=galleryview]
The 25-foot-wide house at 74 Hicks Street just hit the market asking $6,500,000 and it’s a beauty. It’s clearly undergone a high-quality (and tasteful) renovation that preserved the old floorboards while spiffing up the kitchen and bathrooms. It’s currently configured as an owner’s triplex over a garden-level rental though with a price tag like this it’s going to take more than a few thousand dollars of rental income to take the edge off that mortgage! As for the asking price, here’s where we stand: We’ve got absolutely no idea whether they’ll get it. Seems like a lot, but this is a fall-in-love-and-move-right-in situation so you never know.
74 Hicks Street [Douglas Elliman] GMAP P*Shark
This place looks like a Pottery Barn catalog, which is OK, but not $6.5M OK.
For that kind of money, I’d expect some more detail.
Yeah, mole, what are you talking about? Creating new apartments (esp at rents above $2000 each) would not come under rent control or rent stabilization. There is NO talk of putting such properties under that kind of regulation in the future. And many apartments are coming OFF rent stabilization. It is not a factor in ANY way regarding this building.
Sorry Dude but people borrowing 5.2 million are not getting 30yr fixed rates, almost always they are ARMS and in this region Interest Only. These types of loans first and foremost are not going to be 20% down. At least 30% “IF” you have a lot of $$$$ and going private banking, if not then at least 35% or more down and still ARM. Once you go above 2 million the 30yr fixed isn’t the flavor of choice.
What I’ve seen recently back in the market are pledged asset loans where you may be able to obtain the higher LTV’s. I have a product that would give you 50% of the deal with up to another 40% for a total of 90%. That 40% would have to be made of up pledged assets such as stock, bonds, non-retirement liquid assets etc… They would take that 40% and double it and securitize it.
So you would 5.85 million on a 5yr ARM @ 5% but of that 5.85 million you would have to pledge 5.2 million of your stock/bonds etc. You could trade your account and make money but you could not liquidate it to a certain balance and withdraw funds since they are collateral to the lender. You default on your loan and you use the 5.2 million plus your 10% down.
-Adam Dahill
WCS LENDING
adahill@wcslending.com
Hey give me some credit. I used my trusty HP 12C assuming 20% down and 6% interest – you aren’t going to get a lower rate on a $5.2mm residential loan. And for whomever it was that didn’t get the concept of opportunity cost, it is the $100K+ annual cash you are no longer earning on that $1.3mm down payment (from an investment with equivalent risk and leverage of course)
BKHts2, the $6.2 million house you mentioned is the 13 Cranberry Street house I mentioned. Lot is smaller, but the house is the same size. Frankly the lot size difference is meaningless. Who cares if you a 1300sf or 800sf backyard when you have a country or beach house. Anyway I think the former owner of 13 Cranberry was lucky – but off course, it takes just one buyer to close a deal.
The 2007 Willow Street sale @ $8M was a significantly bigger house (at least 20%). Next sales in 2007 (Willow Street or otherwise) were all in the $5 million range.
Not that I really think pre-Lehman sales have much relevance in the ultra luxury market.
mole — I have to disagree with you. There is not even a whisper of re-imposing rent control. As for rent stabilization, that would apply if the renovating owner seeks certain tax breaks but otherwise it shouldn’t apply. (Also, your $4k/floor implies that the rent would be above the $2,000 threshold anyway.)
Plus, this is a pretty small building for an 8-family. You’d more likely configure as an SRO with hall bathrooms to get 8 rooms in use.
In any event, do you think encouraging a lot of studio apartments is a good social policy? I haven’t reflected on that very much, although I guess it has the advantage of cultivating a lot of potential income earners with fewer children to eat into tax revenues.
Also, isn’t the tax rate for 3 families the same rate as 1-2 families? I am pretty sure it’s at the 4 family that you get the big jump from 6% to 45%. But yes, that’s a significant tax jump (alhtough if you were really pulling in 4,000 a floor, and the owner rented three floors, the rental income would still be $144K/year. Not enough to support a $6M sale, but good money.)
Fleshing out my thesis:
There are several basic set-ups for a four floor brownstone:
1 family
2 family 3 over 1
2 family 2 over 2 (best for coops)
3 family 2 over 1 over 1 or 1/1/2
4 family 1/1/1/1
6 family (split the top two floors)
8 family (split all floors)
Rent control, or the threat of rent control completely kills the last two — nobody is going to expose their 4 million dollar asset to the whims of the state legislature.
In any event, assuming 4k/floor, nobody should pay more than roughly 2.8 for this place, and that’s taking a fairly low cap rate.
For the 3-4 family case: The taxes will be roughly triple what they are in the 1-2 family case. In this case, the taxes would be something astronomical like 30-40k, meaning that the entire rental income (assuming an owner-operator) would go towards paying the increased taxes.
So we’re gradually seeing a conversion from 8-family to one or two family houses, and this reflects a social policy that is not using the city’s resources efficiently.
72 Hicks was also trying to sell at the height of the credit collapse FWIW.
Meanwhile, back in Brooklyn Heights…
The only comp that theoretically supports the asking price (and I’m sure what the broker/owner had in mind) is 13 Cranberry Street from last summer. It sold for $6.2 million after originally asking $8 million. Same size house, slightly smaller lot, similar newish renovation. It’s around the corner, 2 blocks away (closer to the promenade).
I think 13 Cranberry was an anomaly. Several other houses in the Heights of the same size that sold last year went for a million or more lower. Some of those were in very good shape.
If the strategy is to aim high to still achieve an offer in the high $4s/low $5s, good for them. Otherwise this house is going to sit until the price drops.
Also, revisiting 72 Hicks – besides the other comments mentioned above, that comp is almost 2 years old at this point.