Beating Upwind

After a VERY VERY long time waiting, we finally closed on 168 West 123rd Street in Harlem.

We’ve been looking at townhouses in Harlem for about a year now and saw at least 30 different places (not including drive-bys). At first I was only interested in Hamilton Heights and Sugar Hill (aka “West Harlem”) which would have had us near the A, B, C, and D trains at 145th Street. Being two stops from 59th Street (on the A and D) seemed like it would be great. The nice part about Hamilton Heights / Sugar Hill is how stable the area encompassed by the historic district is. It really is lovely, but once you get outside of the historic district it’s hit-or-miss. The bottom line was that there was  nothing available in our price range on a block we wanted to live on. I’ll be doing blog posts in the near future on the various places we looked at and the reasons why they didn’t work out…

I really didn’t know that much about Central Harlem, but as Hamilton Heights & Sugar Hill started drying up we started looking at places further south and east. Strivers’ Row is stunning, but it wasn’t quite in our price range and the subway access was a bit bleak. Strivers’ Row townhouses do have garages, but that doesn’t help the people we want to visit us and work for us. The other issue in Central Harlem were the rather large and ugly housing projects that were built in the 1950s. I just refused to live in a place where I’d have to walk past something like that all the time. Other places were on the 2/3 train and while that was OK, it wasn’t as good as being on the A, B, C, D.

In early October our (wonderful) broker, Maria McCallister of Barak Realty, suggested we look at 168 West 123rd Street. Up to that point I had found most of the places we looked at. I’m not quite sure why I kept skipping over that particular listing, but (obviously) I’m quite happy she suggested it. As I went over the details of the property I realized the location was pretty incredible. It wasn’t near any big housing projects and it was within easy walking distance of the 2, 3, A, B, C and D trains. And since this was Central Harlem it was just 1 stop from 59th Street on the A & D trains. And the 2/3 gives us great access to the Upper West Side.

The building had the critical “certificate of no harassment” that you need to convert the building to 2 family. There is public housing close to our place, but it’s the type of building that you don’t know is public housing unless someone tells you or you’re particularly well-versed in the tell-tale signs. I knew the townhouse was one of a group of townhouses that were all being sold by the same owner - TPE Townhouses Harlem. At the time I didn’t know much about TPE or the story behind those particular townhouses. In the coming months I’d learn a lot more about them than I ever wanted to…

When we looked at the building we realized it was a total shell. There were no floors, no windows, not much of anything - just 4 walls, a leaky roof, and some rotting floor joists. It was sorta cool - you walked down into the cellar and looked up 60 feet to the roof. It was somehow very peaceful and had a strange beauty about it. Here’s a picture of the interior - it’s the view looking up. The timber you see are old floor joists (they happen to be some of the better, less rotted ones)…

As you can see, there are no “original details” to preserve. In other places there may be plaster walls, or original tile work, or old fireplaces. While we would have been game to take on a project with original details, they do create a bit of a problem since you have to do the construction somewhat surgically in order to preserve them, which will increase cost somewhat. None of that is necessary here. It also gives us a completely blank slate to construct whatever we want (and can afford).

The good part is that people with total shells are more realistic about the value of their place than other people are. Finding realistic sellers was one of the many problems we encountered in our search. Most owners just didn’t (want to) realize how far the values of their places had fallen since the height two years before. The reason we bought was because values were down about 65% from their high in 2007. That’s a hard pill to swallow for owners. Estates were some of the only people who were being realistic.

Another seller that was being pretty realistic was TPE Townhouses Harlem. They had purchased 11 townhouse shells in 2004 - 2005. They were all townhouses that had been involved in mortgage fraud starting in the early ’90s. Unbelievably the mortgage fraud was perpetuated by churches who typically would buy townhouses at inflated prices from accomplices and then take out the maximum federally-insured mortgages which they would promptly never pay. The church involved in the TPE Townhouses was Beulah Church Of God In Christ Jesus. I do not know the particular details of the Beulah case - just how it turned out. Based on how it turned out there’s a very good chance Beulah didn’t actually commit the fraud, but again - I don’t know. In some of the cases people would forge documents pretending to be the churches so the churches were involved but not guilty of any wrong doing. I do know there was a court decision in 2002 that determined that Beulah was the actual owner of the properties. TPE bought our particular townhouse from Beulah in 2004 for $1.13M.

TPE then seems to have wasted the next three years of opportunity. They could have developed and sold the properties at the height of the market in 2007 for a huge profit. In 2005 they took out a blanket mortgage on 11 townhouses for a total of $14.3M. They’ve developed the two most valuable buildings that are over on Frederick Douglass Blvd (8th Avenue) in the heart of “SoHa” (South Harlem - the new and upcoming area in Harlem that’s been recently gentrified), but they only did that development recently. The other 9 townhouses they decided to sell just before the market crashed.

TPE put our place on the market in July of 2008 for $1.1M. In November they lowered it to $995K. In March of 2009 they lowered it to $895K and a week later reduced it again to $795K where it stayed for quite a while. We saw the place for the first time on 10/15 and put in an admittedly low-ball offer of $450K the next day. It was rejected and we were told our offer “needed to start with a 5″. Almost 3 weeks later, on 11/5, we came back with an offer of $500K. We then continued to take our time negotiating the price because some other properties came up that we were interested in. On 11/13 they reduced the price $100K to $695K most likely trying to see if anyone else would come in with a higher bid. At this point we gave our broker a ceiling price that we couldn’t go over and told her to see what she could do. By this point in our relationship with Maria we knew she was very good at negotiating price and we trusted her. After a few rounds of negotiation, the day after Thanksgiving (11/27) we got the call that the seller accepted a price of $530K. (That’s less than half what they paid for it in 2004 and what they listed it for a year an a half before).

We were thinking that since it was technically an all cash deal we might close before the end of the year. Boy, were we wrong! First things were slowed down by TPE telling their lawyers to put as little time into the closing as possible to reduce costs. I should mention that TPE is Tahl Propp Equities which is a big Harlem landlord that seems to own over 100 buildings in Harlem alone as well as some fairly large office buildings in Midtown. Tahl comes from a well-established NY real estate family. Propp was one of Donald Trump’s lawyers at one point. This sale was pretty insignificant to their overall operations.

Then we hit a wall with title issues. Given the sordid legal history of the building our lawyer insisted in using his own title agent and insurance company - not the one TPE was insisting we use. In fact, they wouldn’t even go into contract unless we either settled the title insurance issue or used their title company. So we waited. In a hotter market not being in contract would have been dangerous. But in this particular case we were pretty safe. It wasn’t in the best interest of the seller or the seller’s broker to get another offer on the place. They still have about a half dozen similar properties to sell. It’s much better that they make two sales than one at a slightly higher price.

It wasn’t until early February that the title issues got settled. The seller’s title company was actually a pretty good company so now we have two big, solid title companies that think the building is OK, which will help when we go to sell. We signed the contract during the (first) big snowstorm on 2/10 and the seller’s signed a week later on 2/18 and we closed yesterday, 3/3.

The closing was actually a bit up in the air there for a little while. Apparently the seller’s bank was giving them difficulty about it. Remember, they initially had a $14.3M mortgage covering 11 buildings. They’ve developed two of the buildings, and sold maybe half the others ones. It makes me wonder how well that loan is collateralized these days… I know our final payment went 100% to the bank (The Community Preservation Corp). I’m guessing a fair amount of the deposit went to the bank as well.

So now we’re working on plans with our architect. More on that soon…

Just some basic info on the building - It’s 15 feet wide, 5 stories tall (most are 4 stories). The usable interior space will be about 13 feet in width. It’s longer than most townhouses - 58 feet. That means we can have decent sized bedrooms of 200+ sq. ft. The ground floor and part of the cellar will be a rental unit (residential or commercial) which will help offset the cost of the mortgage.

Here are some pictures of the front and back of the building. The big window on the parlor level is nearly 8 feet tall and 4 feet wide! The front of the building faces north. You can see in the picture how there’s an alleyway between us and the apartment building to the right. This will be helpful since we can punch holes in the wall and have windows in the bathrooms, and vents for the kitchen range hoods.

The back of the building will be incredibly sunny since it faces south. Some of the windows you see are about 7 feet high and 3 feet wide - so the rooms on the back of the building will be incredibly sunny. Obviously the entire back wall has to be resurfaced and the brick repointed.

It’s a huge project, but it’ll be fun and the end result will be pretty spectacular. And no, we’re not doing the work ourselves. Everyone seems to ask that but it’s an absurd question… Just monitoring the work and choosing finishing materials will require an incredible amount of time.

The other day I figured I’d see what the online astrology sites said about me. The results are sorta comical. I’ve highlighted things they got right in green and things they got completely wrong in red.

Name: Jay
December 8 1967
2:00 AM Time Zone is EST
Washington, DC

 
Rising Sign is in 11 Degrees Libra
Very attractive and popular, your charm helps you to get your own way and prevents others from getting angry with you. “Peace and harmony at all costs” is your battle cry. You always try to ameliorate or to cosmetically hide any physical ugliness or any angry feelings between people. Flashy, but not gaudy, you prefer to dress elegantly. You generally have good taste in music, art and literature. Beware of the tendency to compromise yourself in your attempt to be agreeable at all times. A bit of a social butterfly, at times you can be vain and lazy. For the most part, however, you are gracious and affectionate, and your refined and aristocratic demeanor serves as a role model to others.

 
Sun is in 15 Degrees Sagittarius.
Very fun-loving, spirited and energetic, you have a huge reservoir of physical energy within you that needs to be released. As such, exercise or sports are very important to you. Quite gregarious, you enjoy being with other people, but you tend to avoid emotionally restrictive or intimate relationships. Constantly curious about the broader issues of life, you may at times be quite careless and sloppy about details — you tend to leap to conclusions before all the facts are in. An avid reader, you are totally enthusiastic about any given subject should it interest you. You are known for being idealistic, generous, sociable, cheerful and very positive!

 
Moon is in 10 Degrees Pisces.
You have strong feelings and are extremely sensitive. It would help if you had a thicker skin — you tend to react emotionally to every situation you come across. Kind, gentle and considerate of the feelings of others, you are good at taking care of the sick, wounded and helpless. But you tend to absorb the energy of others — so avoid those who are always negative. You have a rich, creative and lively imagination, but you should be careful not to spend all your time daydreaming. Very intuitive, you have good ESP and may be quite clairvoyant or psychic. Remember that you too have the right to get what you want from life. If you are always defensive and kowtowing to others, people will take advantage of you and exploit you.

 
Mercury is in 04 Degrees Sagittarius.
Your mind is very curious and inquisitive, always seeking information on a wide variety of topics. The broader the subject matter (philosophy, science, religion, metaphysics), the more it will appeal to you. You prefer to deal with abstractions — the small but important details associated with any subject tend to slip your grasp. You are known for being blunt, honest and truthful.

 
Venus is in 01 Degrees Scorpio.
Your feelings about others are deep, powerful, intense and complex. When you like someone, you do so totally and obsessively if you do not like someone, they do not exist. Your faithfulness and loyalty to your lover is unquestioned, indeed at times it is too much so — you get so possessive that you almost smother your partner. At times, your feelings are kept deep within you and, because they are so complex and intense, they frighten you — this is the way that you try to ignore them. But the more you try to do this, the more explosive things get when you eventually do express them.

 
Mars is in 04 Degrees Aquarius.
Your ideas and opinions are usually inventive and original, but sometimes they are merely eccentric and offbeat. You are altruistic — you will work hard for the attainment of group goals, as long as they meet your high standards. You tend to resent traditional authority figures because you think that your ideas are better thought out and more valuable than theirs. Very idealistic, you are a rebel WITH a cause!

 
Jupiter is in 05 Degrees Virgo.
You feel most expansive and at ease with yourself when you are doing something that you consider to be practical or useful. You enjoy being dutiful and carrying out responsibilities. You gladly take on the little tasks that others seem to want to avoid. At times, you carry things to extremes and feel guilty anytime you do something that you consider to be self-indulgent. While it is appropriate for you to demand little for yourself in life, try to loosen up once in a while — go out on a fling and enjoy yourself!

 
Saturn is in 05 Degrees Aries.
You are aloof, independent and standoffish. This is mainly due to your fear that others might inhibit or restrict you and, quite frankly, you feel that you can govern your life by your own standards. Be careful not to associate with those who are overly critical of you or you will withdraw so deeply into your shell that you will become very lonely. You have the ability to stand on your own two feet and to make up your own mind — albeit very carefully and cautiously. But you are known for your circumspection and therefore are respected and admired.

 
Uranus is in 28 Degrees Virgo.
You, and all your peers, will be known for the degree of intensity with which you dislike normal everyday routines and chores. You will go out of your way to invent innovative, unique and timesaving ways to perform the various mundane routines and duties of living. You will be attracted to all manner of practical and useful gadgets — anything that will make your daily life more exciting.

 
Neptune is in 24 Degrees Scorpio.
You, and your entire generation, are extremely interested in anything deep and mysterious. You will explore and idealize the benefits that can accrue from the study of the occult, healing and psychology. You are willing to experiment with substances like drugs in order to push your understanding of your inner being to the extreme.

 
Pluto is in 22 Degrees Virgo.
For your entire generation, this will be a time when profound changes in society’s attitude toward work, duty and responsibility will be initiated. Radical changes in attitudes toward personal health and general nutrition will be promulgated and gain wide acceptance and practice.

 
N. Node is in 26 Degrees Aries.
You’re at your most comfortable when involved in group activities outside of your immediate family circle. You delight in getting involved with others in neighborhood civic or political activities, especially if you can be a part of the leadership of the group. Your zeal and overabundant energy bring out your real creativity when you can work toward tangible results — things that will immediately benefit those around you. You have a real gift for getting the most out of charity drives and community benefits. Take time out between projects though, because you tire out easily and your effectiveness becomes greatly diminished when your energy is depleted. Also, don’t even think of trying to get involved at a peripheral level — you need a total commitment to feel personally fulfilled. Let others bake the cookies and set up the chairs — you should be the one to tell everyone what to do and when to do it!

They got a few things right, but they got way more wrong than they got right. Needless to say, I won’t be paying $25 for the more detailed report!

We’re in the process of buying a townhouse. I’ll have more about that in a few days. But we’ve been going over plans and thinking a lot about staircases. I found an excellent site a while back called Stair Porn (definitely SAFE for work), which has been a great help and inspiration, but then I came across this image in Google Images and it made me think back to my childhood…

Children have wonderfully creative minds and I can just see me envisioning a stair case / slide combo like that as a kid and thinking it would be great fun. One vivid memory from when I was young was wanting a place that was a big empty loft that was so big I could roller skate around in it.

Times change, needs change, and practicalities rear their ugly heads. But part of me thinks that a combo spiral staircase and slide would make a great fire escape on the back of a townhouse :)  But then I worry about what it would cost and the budget…

[The chevron pattern you see in the wood floor in that picture is another detail we've been thinking about incorporating. So there's more in that photo than you might think.]

Another blog has done their list of the “20 weirdest apartments” around the world. Thing is, I wouldn’t call them weird at all. Most of them are pretty wonderful. They’ve got apartments done by top notch architects on the list - Antoni Gaudi and Frank Gehry to name just two. How they can call great architecture “wierd” is beyond me. I mean these are types of buildings you study in Architectural History courses (I know, ’cause I remember at least one of them from the one Architectural History course I took many moons ago).

So what do you think? Weird or Wonderful?

To me the question is which one would I most want to live in? I think my favorite would be the Urban Cactus high rise apartments in Amsterdam (see pic to the left). It’s wonderful - huge terraces, great foliage… Who wouldn’t want to live there?

Too much of architecture is just dull and boring. I’m fine with preserving the character of some neighborhoods by doing “predictable” buildings, but too often those buildings aren’t all that well done and they just fail to make the neighborhood a better place. The apartment buildings on the 20 weirdest list are pretty much all ones that capture the imagination and give back to the community. That should be applauded, not laughed at…

I really don’t get real estate brokers sometimes. They get listings and just never try to understand them. In this case a broker for Sotheby’s is telling our broker that 259 West 139th Street (in Harlem’s prestigious Strivers’ Row) is a 2 family home when it’s actually an SRO (a Single Room Occupancy boarding house). In fact they even state the lie inaccurate information clearly on their own website (click the quote below to see an image of the full page it comes from)…

If you know anything about townhouses in New York that statement looks very suspicious… A two-family “currently configured as a rooming house”? Rooming houses are never “zoned” two family. And zoning has nothing to do with the number of families anyway - zoning has to do with the height, bulk and general use of the building.

So what exactly is 259 West 139th?

Let’s start with what the NYC Department of Buildings says… The DOB’s property profile for the building says it is “SRO Restricted”. If you follow the link on that page to see the certificate of occupancy for the building you see there is a C of O for the garage that was issued in January 1950, but no C of O for the main building (which is typical of older townhouses). There is one other C of O linked to that property, but it’s an error - a temporary C of O for a completely different building.

Next, let’s look at what the Department of Housing, Preservation and Development (HPD) says…

The key thing to notice there is 0 “A Units”, 14 “B Units”. “A Units” are normal apartments, “B Units” are rooming house rooms. So 259 West 139th Street has no legal apartments and instead has 14 rooming house units. That means Sothebys is suggesting a illegal use of the space - you can’t rent an apartment that isn’t registered in some way with the City and DOB and HPD are the two ways to make an apartment legal.

So both DOB and HPD say the place is an SRO, ergo it’s an SRO.

When you head over to the Department of Finance you see a different story. There you see it’s building class C3 which stands for a 5-6 family home.

Now, it’s typical for Department of Finance to get it wrong and in this particular situation it doesn’t make much of a difference since 5-6 family homes and SROs pay the same amount in taxes. But the point is if it were a 2 family home the owner would have it classified correctly with DOF since 4+ family homes pay 7 times the property tax as 1-3 family homes. That’s not an error you’d let slide for very long.

I am SO tired of real estate agents giving false and inaccurate information on their listings. It’s really not that hard to find out the truth. But it’s common for real estate agents to answer the question “Is there a certificate of no harassment in place?” with “the building can be delivered vacant”.

If you’re outside New York you’ll be excused for not knowing the absurdity of that answer but in the 1980s New York City went through a real estate boom and low income people were being evicted from their apartments and becoming homeless. Rooming houses are where the poorest people in New York live. If you lose your place at a rooming house there just aren’t any cheaper options and you wind up homeless. So in 1985 a moratorium was placed on conversions of rooming houses (SROs). A year or two later that was reworked so landlords who wanted to do an SRO conversion were required to get a “certificate of no harassment” where the City verified that the landlord didn’t force out or intimidate any tenants in the prior 3 years. You could also be turned down if there was an open violation for an illegal conversion.

Certificates of no harassment are vital for anyone buying an SRO and wanting to use it for something other than an SRO. It really doesn’t matter if it’s vacant and any licensed broker selling a townhouse should know that. And lying and saying it has a C of O that it clearly doesn’t have is completely inexcusable.

Thank god Property Shark and the City of New York put all the info online and make it easy to tell brokers they’re lying. It’s amazing how quickly their story changes when you say you’ve looked up the property up on Property Shark. Still, it’s a huge hassle that is completely avoidable. I feel sorry for the poor buyers who don’t understand how to find the information and learn the truth. If you don’t do your due diligence and you have a crappy lawyer who doesn’t do it either, it can devastate you financially.