A lot of the clients who come to me want to be able to renovate a place for under $1.5M. That’s not all that easy to find… The renovated places are usually over $1.5M, and then there are all the places with crappy renovations that are asking $1.1M or more. You MIGHT be able to improve one of those places and keep it under $1.5M, but to really do a nice renovation it’ll wind up costing more.

Yesterday I went through a place that I think fits the bill for people who want a great place for under $1.5M. In fact I think you might be able to do a really nice reno of it for around $1.3 to 1.4M total investment.

As you can see in the picture above, it needs work, but it’s got a lot of potential and it’s priced right. I’m not allowed to say which townhouse it is (that would be advertising another agent’s listing – which is prohibited), but I can say it’s not below 125th Street (which a lot of people want), but it is on a charming street in/near a prime neighborhood.

All in all it’s a very doable reno project. It’s got good bones and isn’t nearly as big of a project as our place was.

The one issue is that it does not have a Certificate of No Harassment, but it’s been vacant for years and you could ask that the CoNH be a condition of sale (it could be applied for while you’re working out all the other issues for your 203(k) rehab loan).

There’s another place nearby that looks worse, and might be a bit more work, but also has lots of potential. It’s priced about $1M below renovated comps nearby – so there’s room to do a renovation and still make some money.

If you’re interested in seeing either of these places, let me know…  jay@beatingupwind.com

UPDATE: A week after the first open house, there’s already a contract out on the house mentioned above. I knew it was a good deal

Yesterday I went through one of the Sylvan Terrace townhouses with a client. They’re some of the smallest, and hence most affordable, townhouses you’ll find – and they’re really charming…

Sylvan Terrace is comprised of 20 wood frame houses built in 1882. Today they’re all Landmarked and in good to great condition. The narrow cobblestone street makes you feel like you’re on the movie set for a period movie.

Honestly I don’t know quite how they came to be. They’re said to be carriage houses for the Jumel Mansion (which is at the end of the street), but that doesn’t quite make sense. The Jumel Mansion is Manhattan’s oldest building – built in 1765 – before the War For American Independence. Why would someone build carriage houses 116 years later at a time when the street grid was being established? (Sylvan Terrace is a bit off the grid.)

Whatever the history, they’re completely charming, but they are tiny… Most of the ones on the north side of the street are 1,500 sq. ft (20′ x 25′ x 3 stories), while most of the ones on the south side are 1425 sq. ft. (19.5′ x 25′ x 3 stories) including the walls and stairs. Useable square footage is smaller yet – I’d guess it’s about 1,200 sq. ft.

Essentially you have one large room on each of the two lower floors and two adequate size bedrooms on the top floor (though I saw one that carved a 3rd small, double decked, kids playroom out of the top floor). Ceilings are quite high – especially on the top floor in the front.

While they’re small, they have sales prices that match their small size. Here’s a rundown of what places on Sylvan Terrace have sold for…

#14 – 9/25/2003 – $700K

#16 – 10/24/2003 – $321,600

#19 – 3/30/2004 – $590K

#12 – 12/31/2004 – $610K

#13 – 4/7/2005 – $482K

#15 – 10/5/2005 – $725K

#13 – 10/5/2006 – $1.05M

#15 – 2/23/2007 – unknown price

#14 – 12/17/2007 – $970K

#16 – 12/27/2007 – $990K

#5 – 3/11/2008 – estate – transferred within family

#18 – 4/3/2008 – $437K

The take-away is that the max price for one of these places at the height of the market was $1.05M and there have been no sales since the crash.

I’m not allowed to discuss other agents’ active listings, but I can talk about inactive listings   #2 – a larger, apparently nicely renovated end unit with more windows and better light – went on the market in November 2009 for $1.1M. It was finally taken off the market a few months ago. It’s final asking price was $800K. So it’s fair to say that the current market value of a nicely renovated Sylvan Terrace townhouse is below $800K.

The other item which should be mentioned is that, unlike most of the townhouses I discuss here, these houses are mortgageable with conventional mortgages. Most are legal 1 families, a few are legal 2 families.

When you think about the price you’d pay for a 1,200 sq. ft. 2 bedroom condo or coop, Sylvan Terrace could be a good deal – and you get a proper house in a charming little neighborhood with a small back yard (for barbecuing, etc.), and from what I hear the neighbors are nice and fairly close-knit. There’s also a subway stop 1 block away (the C train).

Feel free to contact me if you think Sylvan Terrace might be right for you…

The other day we went through an SRO-restricted townhouse which did not have a certificate of no harassment. In talking to the broker afterwards the broker insisted financing SROs without certificates of no harassment wasn’t a problem – that they did it all the time. She even cited two that were closed this year including one that was uninhabitable. When I pressed the broker on details the answer was vague but insistent (and even a little condescending).

So I called someone I know who’s a bit of an expert on financing townhouses and SROs and we talked through what might be happening. His take on it is exactly what I expected…

An naïve buyer shows up at one of the broker’s open houses, they’re told the house a legal 1 to 4 family, and hence mortgageable. [The paperwork I was given when I went through the SRO said it was a legal single family, but the broker had conveniently "forgotten" to put their logo on the document so misinformation couldn't be traced back to them.] My mortgage expert and I suspect the following then happens… The buyer is gently guided through the process of buying the townhouse. The broker sends them to particular real estate lawyer, a particular architect, and a particular mortgage broker. The lawyer doesn’t tell the buyer the problems with the house or if he does he downplays them, the architect doesn’t mention potential problems with DOB, and the mortgage broker picks some unsuspecting bank in say the midwest who has no clue what an SRO is and what limitations that puts on the property. A 203(k) mortgage is then obtained, the sale is closed and everyone gets their commissions.

Unlike the loan we got, 203(k)s do not require approved plans at closing. After they’ve bought the place, the buyer goes to DOB to get their plans approved and is told they need a certificate of no harassment since their building is SRO restricted. The worst case scenario at that point is they have to wait 3 years to apply for the certificate, then construction takes another year. Meanwhile they have an uninhabitable building so they’re paying rent on top of say a $6,000 mortgage for a building they can’t use. They can’t afford the payments, so the bank forecloses and they lose the money they put into the building and their credit is ruined.

I’m not saying the worst case scenario is typical, but my mortgage expert friend has seen things like that happen. Banks who write a lot of rehab mortgages in the New York area insist on a certificate of no harassment to close the loan – they don’t want their loans going bad.

Unfortunately that’s typical of the dirty side of Harlem real estate and it doesn’t just hurt the buyers and the banks (and tax payers who’ve insured the loan). It hurts our neighborhoods since buildings don’t get fixed up – they sit there and deteriorate and reduce our quality of life and are a drag on our property values.

If you’re looking for a Harlem townhouse there are a few things you can do to protect yourself.

1. Work with a buyer’s broker who has experience in the Harlem market – like me
2. Deal directly with a local bank who has lots of experience doing rehab loans in Harlem. If you can’t get the loan past them, you may be exposing yourself to risk.
3. Get your own real estate lawyer and make sure they understand issues surrounding NYC SROs really well. Don’t do anything that your lawyer says you shouldn’t do.
4. Check the SRO status even if the building is 1 to 4 family. Check with both DOB and HPD.
5. Try to get approved plans before closing. At a minimum file the plans and see what DOB will require for approval.
6. If at all possible, buy the building in cash. At least then if you have to hold the building while you wait for a C of NH, you won’t be making mortgage payments (and you can get a loan that doesn’t require PMI).

For an all cash buyer it can still make sense to buy an SROs without certificates of no harassment IF they buyer understands what they’re getting into and they’re prepared to wait for the certificate. OR if they’re able to bring the building to an acceptable point under “repairs and maintenance” and they can do those repairs all cash. In fact all cash buyers are the only people who should be buying these buildings.

There’s a lot of gray area between the worse case scenario and the best case scenario. The building could be rentable and the rents could cover the mortgage while the owner waits for the certificate. Or the building could be habitable and the owner could pay a handsome mortgage to live humbly while they wait for the certificate. But sometimes the worst really does happen. Rehabbing a townhouse is hard enough – you don’t need to add to the stress by picking the wrong building.

Every now and then I encounter a buyer who is cavalierly working directly with every listing broker they can find. They don’t seem to understand that parts of Harlem real estate are a still a bit like the wild west and bad things can happen to good people (even people who think they know what they’re doing). Things are much better than they were back in the day, but when you’re looking to buy in Harlem it helps to have a team of people watching your back.

I went through another incredible townhouse the other day… It has such incredible potential, but it’s also an enormous wreck. On the plus side are tons of original detail including this wonderful stained glass window…

But the house was suffering from major water damage…

Luckily, despite how horrible the picture above is, the house isn’t too far gone provided someone renovates it in the next year or so… Fortunately it’s priced well and has a great location, so I’m pretty confident it will get a new owner in the not-too-distant future. If they do a historically-sensitive renovation it will be really incredible place.

Every now and then I come across a place that’s just special. This weekend I went through one of those places. I can’t mention the address or give too much detail, because as a licensed agent I’m not allowed to advertise other agents’ listings, but if you’re in the market for a great old house with no issues (other than being old), then contact me – jay@beatingupwind.com and I can tell you more about it.

This place is a nice, big, wide legal 3 family with a C of O from the 1940s. The use and configuration still conforms to the C of O since the same family has owned it for the past 60 years and they didn’t chop it up. It’s two floor through 2 bedroom apartments over a duplex. That means it is not an SRO and has no Certificate of No Harassment issues. It also seems to be clean from HPD’s perspective.The block is also completely charming and quiet with some architecturally interesting buildings.

On the downside the ground floor apparently needs a gut renovation (I wasn’t able to see it) and the two kitchens I saw appear to be from the 1970s. The bathrooms appear to be from the ’30s/’40s. Despite the age of the kitchens/bathrooms everything was in remarkably good condition… Just a bit “retro”.

The other potential downside is that it’s in a neighborhood that doesn’t have a lot of services. It’s not a hip/bustling area – it’s a sleepy bedroom community. That may actually be an advantage if you want a peaceful quiet place to live and don’t mind Fresh Direct. Not being in a hot neighborhood means the price is lower. The same townhouse in Mount Morris Park or South Harlem would probably go for 50% more money.

I think the owners are more or less being realistic on price (asking is $295/sq. ft.) – so it’s a place you could actually get. On top of that, being 3 family can be a huge help since the rental income makes it easier to qualify for the mortgage (assuming they let you count the rental income).

This past weekend I took a client through a new listing. It has a 1967 C of O as a church on the bottom two floors with an apartment (parsonage) on the top two floors. As we were meandering through the church part we saw something odd – a sink from a beauty parlor…

It took us a while to figure out why a church would have a beautician’s sink… I’ll give you a hint – it was right next to this big jacuzzi tub…

If you’re a WASP like me both of those images probably have you stumped. I mean what sort of church would have a 4+ person hot tub and a beautician’s sink just off the main gathering area? Spending time in a hot tub and getting your hair shampooed certainly weren’t part of any religious ritual I experienced as a kid (and I went to church 3 times a week and attended a Baptist/fundamentalist school).

Then it dawned on me… Both the jacuzzi and the beautician’s sink could be used for baptisms – one for complete immersion, the other for sprinkling water on the parishioner’s head.

So the next question is why is there a toilet in the baptismal room? I’m still trying to figure that one out… Anyone have an explanation?

Well, it’s now official… I’m now a fully licensed real estate agent. I passed all my tests a couple weeks ago and then I interviewed at a few firms and in the end chose Level Group.

New Business Model

Level Group is a part of a new breed of real estate companies that are challenging the traditional business model for real estate companies. These new companies are based on a virtual office business model where the agents are more independent and essentially run their own businesses. The agents find their own clients, pay for their own advertising, and pay their broker a monthly fee that gives them access to listing services, etc. In return the agents get to “keep their entire commission” – though if the monthly fee is low there are transaction fees, but those fees are far lower than the 40 to 60% that’s typically taken out of an agent’s commission by a traditional broker.

The independent, virtual business model was a good fit for me. I like running my own business – I’ve been doing it for the last 10 years now. There are two big players in NYC with this new business model and Level Group is one of them. In fact Level Group (under it’s old name Pari Passu) was the first New York brokerage to go with the new business model.

Level Group’s Advantages

In the end I picked Level Group for a couple reasons. First, they understand that a virtual office business model doesn’t work very well if you don’t have good technology behind it. The other firm didn’t seem to really understand the importance of technology. Second, Level Group’s principal broker and founder (a real estate lawyer) are both personally focused on commercial real estate. While some may see that as a negative I saw it as a positive since commercial real estate is largely rational and numbers oriented. While I had really great interaction with the other company, rational & numbers oriented management just seemed to be a better fit for me.

A Catch 22 That Almost Ended Everything

There was actually a little drama right after I signed up. The first thing I needed from the broker was clarification on how I should handle blog posts. They came back with an observation that nearly ended the entire real estate pursuit for me… Agents can’t advertise other agents’ listings without permission and blog posts about properties (even if negative) are seen as advertising. Websites like Curbed and Real Deal get away with it because they’re not licensed agents.

The Catch 22 was that as soon as I became a licensed agent I was essentially barred from doing frank and honest blog posts about other agents’ listings. The problem is that honest/frank blogging is my marketing strategy to get customers. So if I’m an agent I can’t blog, and without blogging I have no customers – which makes it pointless to be an agent.

Luckily we came up with a solution… When I blog about active listings I’ll be obscure and won’t identify the property. It will actually be a good thing since being obscure will encourage buyers to contact me to find out details.

The second part of the solution is that I’m going to be really conservative and require all the buyers I work with to sign what’s called a buyer’s agency agreement. By default all agents work for the seller, not the buyer – even when they’re working with the buyer looking at multiple properties. (They’re legally subagents of the seller’s broker.) A buyer’s agency agreement changes that – it means the agent works for the buyer. If all the buyers I work with sign buyer’s agency agreements then I’ll never have a fiduciary obligation to the sellers (except when I have listings).

After a property is sold I will be able to identify properties and talk frankly about them as comps – I just can’t do it for properties that are for sale.

Need An Agent?

If you or someone you know are looking for an uptown townhouse and want an agent who’s been through the process and will be frank and honest with you – call me or e-mail me and I’ll be happy to help you in your search – 917-447-2572 / jay@beatingupwind.com

If you’re a townhouse owner with a rental apartment or two you’ll be glad to hear that rents in Harlem are going up. The latest report from MNS Real Estate shows that over the past year rents in doorman buildings are going way up…

Studios – Up 27%
1 BR – Up 19%
2 BR – Up 34%

The doorman buildings tend to be newer and are far more likely to be market rate apartments. I’m sure some of that is new, high-end buildings coming onto the market for the first time, still – 30% is a BIG rent hike.

Non-doorman buildings haven’t done as well…

Studios – Up 5.5%
1 BR – Up 5.25%
2 BR – Down 2.4%

The non-doorman buildings are generally the older apartment buildings that make up the bulk of Harlem apartments. They tend to be somewhat run-down and have minimal maintenance. There’s a reason why the rents in them are far lower. Many of the studios and 1 bedrooms are probably largely rent stabilized, which would explain their low increases. It’s interesting that the rents for 2 bedrooms actually went down slightly.

I’ve always wondered what the market rate for our rental apartment will be. The MNS report doesn’t exactly answer the question. Technically we’ll be a non-doorman one bedroom which is currently $1,723, BUT it’ll be new construction and it’s got more space than many two bedrooms (about 1,050 sq. ft.) with in-unit private laundry room, tons of storage, a bright room in the cellar that can be used for a home office or a media room, plus use of a garden. All in all I think market rate is probably a bit less than for a doorman 2 bedroom ($3,147). But $3,000 is a long way from $1,723.

When we were looking in 2009 we saw one townhouse on 130th Street that had been renovated very nicely. It was 18 feet wide – so just wide enough for two small bedrooms side-by-side. Even with little bedrooms they were getting #2,800/mo for one of the floor-thrus, and $3,000/mo for the other one. So you can get good money for Harlem apartments if they’re good apartments.

Either way, the increase in rental prices is good for townhouse owners who have an income unit. It means more of your mortgage expenses can be supported by rental income. In rough terms you can get another $200,000 in mortgage for every $1,000 additional you pay per month in mortgage payments. That drops to about $160,000 when you add in things like insurance and taxes (which you’d pay anyway), and you need to allot for months when you don’t collect rent, and if you share any utilities with your tenant you have to subtract that as well. Still, your garden apartment may have gone from $2,000 to $2,600 over the past year. The extra $600 could support nearly $100,000 more of your mortgage. Not bad – though bumping up an existing tenant’s rent by $600 isn’t wise. Still, the trend is up, so next time you change tenants you’ll see a nice bump in rental income.

Our contractor took the week off this week (long story), so I figure I’d do a blog post I’ve been meaning to do for a while now… Whether really tall buildings are appropriate uptown.

Back in early May Quadriad proposed a set of 40(ish) story buildings for our old neighborhood – around 190 and Broadway. They’d literally tower over all the buildings around them. Here’s what they were proposing… Phase 1 would be three towers built on top of the 191 Street IRT station (the 1 line)…

Phase 2 would knock down a funeral home across the street and put up a 4th building that’s shorter…

We got into a bit of a discussion with a friend of ours who lives quite near where these buildings will be built. She thinks they’re a horrible idea, but Dan and I sorta like them. Our friend’s argument is that they’re inappropriate for the neighborhood. Nothing in Washington Heights is 40 stories. I think the highest is 20-some stories. She prefers the “as-of-right” option the developers have proposed, which looks like this…

To which Dan and I say “eh…” It’s just boring architecture.

Our friend’s other argument is that luxury condos (or luxury rentals) are a bad idea – that Washington Heights should remain largely affordable housing. The irony is that she’s one of those rare Manhattan Republicans. How a Republican can be opposed to the interests of developers beyond me – I thought that was one of the defining characteristics of Republicans in New York. The other thing is that the capitalist (Republican?) argument should be that more supply => demand is accommodated => lower prices. In other words, if you want Manhattan to still have affordable housing you need more units on the market to meet the demand since the more there is of something, the lower its price will be. Clearly there’s not much vacant land in Manhattan – that means you need to build up.

Plus, all major development projects these days include affordable housing units. The bigger the project, the more affordable housing units you’ll get. So if you want affordable housing in Manhattan you should be in favor of projects like this one.

I’ve also heard people say tall buildings uptown will overburden the transportation infrastructure. But the Quadriad site is literally on top of a subway stop and less than a 5 minute walk to another subway stop. We’ve got pretty good subway access uptown that’s no where close to capacity. They could easily double the number of trains if they needed to, or extend the C train to 207. Transportation isn’t really an issue.

So what this boils down to is aesthetics and zoning and perhaps historic preservation. I had an architectural design professor in college who said “if you break the rules you need to do something really special”. Yes, the 40 story towers break zoning rules, but Dan and I think they’re good enough to warrant the rules being broken.

That isn’t always the case. For example Graceline Court (the silver and pink building in the picture below) stands out on the Harlem skyline, but it’s just incredibly boring…

Harlem is generally zoned lower than Washington Heights, so this is potentially a bigger issue in Harlem than it is in Washington Heights. I’m actually very much in favor of tall buildings going up in Harlem – but I want them to be interesting to look at, and I don’t want (too many) historically interesting buildings torn down in the process. Graceline Court is just dull – I want something better than that. I’d love it if they build a 40+ story building on the empty lot at 125 & Lenox where the rumor mill says a Hyatt (?) may be built.

So I say Go Tall Uptown (and make it interesting)… What does everyone else thing?

My mother-in-law was trying to sell her house in Toronto earlier this year (it’s currently off the market). She’s Catholic and she heard that if you bury a statue of St. Joseph in your yard, your house will sell. So she went to the local Catholic paraphernalia store (or whatever they call it) and asked for a statue of St. Joseph. They asked her what kind she’d like and she said whatever was least expensive since she was just going to bury it in her yard. The store clerk indicated this was pretty common and got her the statue.

She goes home and buries the statue in the front garden and the next day the house next to her sells. She’s thinking, “wow, this really works but I had St. Joseph’s back to that house, so I should reposition it so St. Joseph’s back is to my house”. She re-buries the statue and a week later the house across the street from her sells.

She still hasn’t sold her house, but St. Joseph is 2 for 2… Maybe she should get a neighbor to bury the statue for her next time.

I thought this interview with Richard LeFrak had a lot of truth in it…

The take-aways are:

• There’s a glut of single-family homes across the nation. Values are still 10 to 15% higher than they should be and are likely to continue to decline.
• Rental properties are doing very well right now since people are afraid of being trapped in a bad investment if they buy, so they’re renting.
• A lot depends on the City. If the City has job growth its real estate market is fine (e.g. Washington D.C.)
• Commercial real may be going back into a bubble. Low interest rates are what’s spurring the investment.
• New York City is doing pretty well.

MAJOR CORRECTION: I’m going to sticky this post for a few days. Max loans aren’t going down nearly as much as I thought they were. So the situation isn’t all that dire. It’s worse, but not all that much worse… Essentially the limits on conforming loans are going down just 15% after September 30. I’ve stricken the parts that were wrong, and put corrections in italics.

The big news today was that it seems there’s bipartisan support for lowering the loan limits for Fannie and Freddie in high cost areas like New York. Assuming it happens, it could have a rather profound effect on places like New York – and it will particularly affect Harlem townhouse shells where many of us depend on the higher loan limits to make the numbers work and the banks avoid the risk of renovation loans.

Right now in NYC, you can borrow up to $729,750 for a 1 family home without having to get a “jumbo” mortgage – that will drop to $417,000 $625,500. For a 2 family you can currently borrow up to $934,200 – that will drop to $533,850 $800,775. For a 3 family you can currently borrow $1,129,250, but that will drop to $645,300 $967,950. (And so on…)

What that means is that fewer people will be able to buy townhouses since they won’t be able to qualify for federally insured mortgages that cover enough of the costs. They will have to try to get mortgages from banks that will require much larger down payments, higher incomes, and overall much less risk for the banks. There already is no such thing as a jumbo renovation loan – so renovation loans will really dry up are less likely to cover the cost of renovation come this fall. Somewhat less demand means real estate prices will could drop slightly (because of this). Properties like shells that are particularly risky will probably see the biggest drops are the most likely to be affected.

This is major will have real effects on Harlem townhouses…

Those of us who have already bought will could see the prices of our homes drop in value since there will be less competition among buyers slightly fewer buyers will be able to get the size of loans they need.

People who are buying will find it somewhat harder to get mortgages that cover all the expenses. A lot of people just won’t qualify. We wouldn’t qualify be able to do the renovation we want to do under the new rules. It doesn’t mean the buyers can’t afford the homes. Our place will actually be quite affordable once it’s all done. It’s just that the renovation process is a risk no bank wants to take on.

My advice to people who own shells that are on the market is SELL NOW! realize after September 30 the value of your place may go down even further. If you’re holding that property after September 30, you’re probably going to hold it for quite a while into the future and it will sell for substantially less money. Now is not the time to be greedy.

If you own a shell and haven’t closed on your rehab mortgage – do everything what you can to close the mortgage before September 30 - otherwise you may not be able to do as nice of a renovation.

If you’re in the market for a shell – that’s a tough one… After September 30 you may not be able to afford a townhouse at all. But closing on a rehab mortgage takes time. You need approved plans (which can take months to get), you need a contractor who’s ready to start, etc. And on top of it all it’s possible the place you buy could drop in value shortly after you buy it.

The same goes for renovated townhouses, but to a lesser degree – the situation won’t be quite as dire for livable places Renovated townhouse may not feel the hit much at all since jumbo mortgages will be available for them (just a little harder to get).

After September 30 cash will continue to be king (even more than it is now). You’ll need a large down payment PLUS pretty substantial income. It’s sorta sad really. The current crop of homeowners who are buying and renovating shells are often pretty regular Joes… A lot of them will just be priced out of the market.

I feel fortunate that we bought when we did and got our loan closed when we did. Yes, our place will most likely go down in value, but renovated places will fair better than shells since banks will be still be lending on regular, non-rehab mortgages. We’ve always taken a long-range view of the townhouse purchase. It will still be affordable for us after we get done. And I’m not sure any of this will matter in 15 or 20 years and we have every intention of living in our place for that long…

Hopefully something will happen to derail the support for these changes. It’s being implemented all wrong… They should take everyone down slowly. They way they’re proposing will hurt places like California and New York and not change anything for middle America. Hopefully common sense will prevail and none of this will come to reality. But from the sounds of it, it’s a done deal.

I was looking through The Real Deal the other day and they have an article on Manhattan townhouses…

Recession notwithstanding, the median sales price of a Manhattan townhouse jumped 13.2 percent between 2009 and 2010 … One reason for the jump is that, unlike condos, very few newly built townhouses have been added to the housing stock …

If you’re trying to choose between a condo and a townhouse the supply of each should be one of the things you take into consideration. Think twice about the fact that 1) it’s easy to find a condo or coop, but 2) difficult to find a townhouse. Limited supply = scarcity = higher prices. This will only become more true in the next 10 to 20 years as far more condos are built than townhouses.

The article goes on to explore why Manhattanites prefer new construction for their condos and old historic buildings for their townhouses…

In Manhattan, “new construction [townhouses are] not well received,” Miller concurred. “Gut rehabs are fine, but it’s got to have the bones and the façade.”

Failure to heed this preference can damage a house’s value.

“I’ve seen houses that had contemporary interiors linger on the market,” Desmond said. “One of the reasons people like houses is because they like the way they were built originally, with all the different kinds of woods for the floors and that kind of thing.”

When advising Manhattan homeowners who are renovating, he said, “I always tell people that you should keep as much of the original detail as you can … because that is what will sell the house.”

Well, we’re doing a contemporary interior inside a historic exterior – so not exactly following their advice. Then again we don’t have any original details and we don’t have the budget to recreate a high quality “original”(ish) look. I’d love to ask “Desmond” more details about his statement. Was the level of finish equivalent on the contemporary interiors? Were the contemporary interiors taste specific or dated in anyway?

One of my mantras in the design of our place was that the space not feel particularly dated in 10 years. We saw some (nice) townhouses on our search that were already feeling dated just 5 years after they were completed. There was on on 130th Street that had an “infinity” bathtub where the water came from the ceiling. A more classic bathtub with contemporary details wouldn’t have felt so dated.

There’s a difference between “dated” and “classic”. If you can manage to hit on something that becomes “classic” it won’t ever really feel “dated” – at least not in a negative way. Take Poliform / Varenna as an example. If you saw a kitchen they did 10 years ago, I’m guessing it would be difficult to tell it wasn’t done last year – they understand how to do a “classic minimalist” aesthetic.

The other way we looked at it was whether it’s easy to “freshen” up the space to make it more current. We wanted fixed elements to be classic and we’re OK with more replaceable elements being a bit more “on trend”. For example, I was worried about the design of our staircase until our architect proposed a staircase with removable panels. If the shape or materials we use become dated, we (or the new owner) can always replace them with something else without replacing the entire staircase. If the new owner doesn’t like the fact that we have open risers, they can fill in the space and have closed risers, etc. If the new owner doesn’t like our flush baseboards and lack of crown mouldings, they can add baseboards and crown mouldings over what we’ve done.

But I digress… The point of the article is that Manhattan is only so big and as the space in Manhattan becomes more valuable “extravagances” like townhouses will be come more and more rare. On top of that there’s a limited supply of historic townhouses in Manhattan and that leads to the prices of those townhouses increasing faster than other types of properties – especially when the interior feels historic as well as the exterior. Ergo, Manhattan townhouses are a good investment. I really do think Harlem will be the Manhattan neighborhood with the highest price increases over the next 20 years and I think the best investment within Harlem right now are townhouse shells. But that’s just my opinion – I’m a bit biased

A lot of the information about the age of older NYC buildings is just wrong. Case and point are Harlem Brownstones. What we see around Harlem was mostly built over just a few decades – starting in the 1870s and continuing to about 1910. But if you look on places like Property Shark you’ll see dates like 1910 and 1920 on pretty much everything – that’s just wrong.

Our new expediter pointed out the way to figure out the age of our place, but you have to know how to interpret what you’re seeing. First, go to the DOB’s BIS (Building Information System). Find your building and at the bottom of the page there will be a link to “Actions”. Not all buildings have “actions”, if you have actions they’ll look like this…

(Click pic to see it full size)

Notice the line with “New Building”. But also notice it says 1984. The BIS system apparently gets confused with dates in the 1800s, so it’s off by 100 years – the real date is 1884.

But even that doesn’t work sometimes… Notice what it says for our sister/twin townhouse down the street…

Notice the date on the New Building line is 1918, but then see the line has NB 997-1884 – so the date is in the code number. Notice also that because they were all put up at once our building has the same code as the other townhouse since it was one big project – only the code on ours just has 84, instead of 1884. So it’s the code in the “number” column that’s most important.

Not all buildings have New Building actions. So you may need to look at the records for all the ‘twin’ buildings that were built at the same time. Of the 7 townhouses identical to ours, only the two shown above have New Building actions.

One other thing of note is that townhouses with mansard roofs are generally a bit older than the standard Harlem brownstones. For example the 3 remaining townhouses with mansard roofs on our block were built in 1880 – 4 years before ours. What’s a little odd is that 1880 was 7 years after the heyday of mansard roofs.

Last night I started looking through ACRIS at our house’s history. I had looked at some of it before, but not really tried to fully understand it. It’s had a pretty rough life, though the records only go back to the mid-70s (when NYC was going bankrupt)…

1884 -Our house was built along with 6 others that are adjacent to it. We really don’t know anything about it’s early history.

1884 was also the year The Dakota was built at 72nd and CPW and about the same time that Thomas Crapper popularized the indoor flush toilet (we’re not sure whether our place had an indoor toilet initially or not). 1884 was also a mere 19 years after the end of the Civil War.

March 1966 – The building was given a vacate order because it had been vacant for over 6 months…

adm code above premises has been vacant and untenanted except for caretaker for 60 days or more, and cannot be reoccupied until a new certificate of occupancy has been obtained. premises has been vacant since aug 26 1965.

That vacate order still has not been cleared. What this means is that our building has been a troubled building for longer than I’ve been alive – pretty amazing, when you think about it…

April 1968 – Following the death of Martin Luther King, Jr., a race riot raged around our place with major disturbances along 125th Street in the vicinity of 8th Avenue (FDB), 7th Avenue (ACP) and Lenox Avenue. Mayor Lindsay was almost overtaken by an angry mob just a few blocks north of our place at 127th Street and 7th Avenue. Many stores were looted on 125th Street and Lenox Avenue. This riot was the last straw for many shop keepers who closed their stores permanently – deciding it wasn’t worth the risk to do business in Harlem. The next 10 to 20 years was the darkest time in Harlem’s history.

October 1975 – The City of New York went bankrupt. The fiscal problems that followed hit Harlem very hard.

November 1976 – Joseph Monroe (who lived in the apartment building next door) put a mechanic’s lien on the building.

July 1977 – Harlem was in chaos for two days during a city-wide blackout. While police protected most white neighborhoods, in Harlem there was widespread looting. Following the blackout Harlem looked like a bomb-out, war-torn city. More and more residents moved out of Harlem and landlords found it difficult to get enough rental income to maintain the buildings, which only made things worse. Ed Koch leveraged the blackout to get elected mayor a few months later. He put severe austerity measures into place that brought the City back to life fiscally, but those austerity measures cut vital programs in Harlem and made Harlem’s situation even worse.

July 1978 – Joesph Monroe wins his mechanic’s lien case and is given title to the building to settle the case. What’s most interesting is that it wasn’t clear at the time of the court order who owned the building. 4 owners were named (Kilroy Jones, Catherine Quillinan, Peter Quillinan, Percival E. Vasquez), but then there were a whole bunch of John and Jane Does listed. The fact that they didn’t quite know who owned the building says it was already a troubled building.

The tax photo from 1980 shows that the ground floor was in use as “The Happy Game Room” and the storefront had not been added yet. So apparently Joseph Monroe fixed up the building somewhat and had it operating reasonably well. It was a good thing the building had a caretaker during this time – considering how Harlem was hitting rock bottom during these years.

March 1988 – Joseph Monroe died and the building was sold by his estate to Zion Temple Church, Inc. for $40,000. What’s odd is the deed said $125,000 but someone crossed out $125K and wrote in $40K. How can you make an $85,000 adjustment to the price after you type up the paperwork for the sale? Something was off or shady about that transaction… [It's also worth noting that Zion Temple Church, Inc. was just incorporated a few months before - in December of '87. What legitimate church buys townhouses 3 months after coming into existence?]

This is when things start getting really interesting… In the mid to late 1990s, when the building was owned by Zion Temple Church, our building was a drug house. So clearly Zion Temple Church was at best neglectful, and at worse they were slumlords who were OK with the drug activity in the building.

March 1994 – The second vacate order was issued.

December 1997 – The third vacate order was issued. We guess it was around this time that a neglected child was found in one of the closets in our house. That alone would be grounds to get everyone out of the building.

July 1998 – The fourth vacate order was issued. We know there was a fire in the building around ’97/’98. We suspect this is when the fire happened and it was at this point that people stopped “living” (doing drugs) in the building.

What’s really sorta disgusting is that all of that happened while a church owned our building. Talk about “missions start at home” – if they were real Christians they should have started practicing their religion at the buildings they owned.

Curiously, one guy from down the block stopped by just after we bought the building and said he used to live in the building. Then he hesitated and said “well, I sorta lived there”. Given what “living” in our building meant back then – I’m just glad he’s alive and appears to be doing OK…

February 1999 – After owning the building for 11 years Zion Temple Church sells the property to “168 West 123rd St. Realty Corp” but the address is “c/o Maywood Capital” in Paramus, NJ. The sale was for $0. Maywood Capital was convicted for fraud in 2005… Quoting the Attorney General of NJ…

The defendants placed newspaper ads offering interests in “safe” mortgages. Joseph Greenblatt solicited investors in the states of California, Florida, Massachusetts, New Jersey and New York, among others, to invest in residential properties in New York City that were in need of repair. The ads claimed the investments were ideal for IRAs, Keoghs, pensions and personal portfolios.

Corporations formed by the individual defendants would allegedly purchase properties for renovation and/or resale through Maywood Capital. Investor funds were purportedly invested in the entity owning the property and secured by mortgage interests in the property. In reality, many of the properties controlled by the defendants were over-mortgaged and did not produce the unrealistic profits promised to investors. In many cases, investors’ mortgage interests were never recorded or were extinguished without their knowledge so that new investments could be secured by mortgages on the buildings in question. In certain cases, the defendants did not even own the properties that they mortgaged to investors.

There was $42M in fraud and our place was in the center of it all since it was one of the buildings Maywood was telling it’s investors it was fixing up.

The fact that Zion Temple Church owned a crack house and sold the property for $0 to someone who was engaged in fraud makes Zion Temple Church appear to be party to the fraud. But honestly I don’t know what their role was – I’d like to learn more…

August 2002 – While the Attorney General of NJ hadn’t won his case yet, other things were happening with the building legally. I don’t know the particulars, but there was a court order and somehow Beulah Church of God In Christ Jesus, Inc. got our building along with 12 others in similar condition. If I had to guess I’d say they must have invested in Maywood and they got some of the collateral in return for their lost investment in the fraudulent scheme. But again, I don’t know what happened. I do know that one of the lawyers going after Maywood (James E. Hurley) was their lawyer and he helped them sell the buildings a couple years later…

November 2004 – Clearly Beulah didn’t want to actually own the buildings, so they sold them pretty quickly. The buyer of our building was “148 West 121st Street Associates LLC” which was c/o Tahl Properties (a big Harlem landlord). As you might guess from the name of the buyer Beulah sold both our building and 148 W 121 at the same time. The purchase price for both buildings was $1,130,434. That means the value of our building at that time was roughly half that.

July 2005 – Tahl Propp actually bought all of Beulah Church of God in Christ Jesus’ townhouses – they just bought them in several small transactions. Once all the legal issues were resolved Tahl Propp transferred ownership of all of the buildings under one LLC – TPE Townhouses Harlem.

Tahl Propp took out big rehab mortgages, but as a big developer the money just went into their operating budget. They started getting plans done on some of the buildings (including ours). They even pulled permits in 2007 to convert our building to two family and add a floor to the building. They did demolition, then stopped.

Then the market crashed in 2008 and Tahl Propp put all but two of the townhouses on the market.

March 2010 – We bought the place.

Apparently 168 (our house number) is supposed to be a lucky number in Chinese, but so far our building hasn’t had much luck. Since Dan’s Chinese maybe it takes a Chinese person buying a place to make 168 give you good luck… Then again maybe not – in talking to an expediter yesterday she said it sounded like we had been “particularly unlucky” in our dealings with the DOB. I’m hoping the building’s luck will change in the near future…

Construction is starting today! Later this afternoon I’ll go down to see the new construction fence…