Beating Upwind

Early last week we went to Ikea in Paramus. We were having fantasies that we’d like high end of Ikea well enough to live with it for 5-10 years before we replaced it with what we really wanted - a high-end European modular system. But we didn’t see any Ikea kitchens we’d want to live with (we should have known that would be the case). We did find a great one for the rental unit, but nothing for us. On the way home from there we were driving past Poggenpohl so we stopped in. We know we can’t afford a high end modular Euorpean kitchen, but we wondered if we could afford a basic one. All the stuff we liked at Poggenpohl was at the upper end of their price range and the rest of it didn’t really resonate with us.

On Good Friday we headed over to the A&D building to do two things - 1) try to get inspiration and ideas for what we can and should be doing in terms of finishing details, and 2) to understand the price points. We started at Poliform since our old kitchen had been a Poliform kitchen. The Poliform showroom is now massive - takes up a whole floor - but everything was being ripped out and redone in preparation for a May relaunch of their showroom just before ICFF. Long story short Poliform blew us off and told us a few days later that they weren’t going to bother to do a proposal for us because they expected prices to fluctuate before we would be buying (a completely lame excuse, IMHO).

We stopped at a number of other kitchen places but our favorite was Eggersmann - a German company that’s only just started selling in the US. Their stuff was INCREDIBLE (take a look at their website), and the sales person who was helping us was not only nice and helpful, but she also knew her product backwards and forwards and so she was extremely informative. And kudos to them for being the first ones to get back to us with a proposal. And the proposal wasn’t just a sales sheet - there was a whole 3D mockup… These guys are GOOD!

Here’s what they came up with - realize this is just a first draft…

The ceiling height is wrong - it’s 10 1/2 feet and they don’t show the stairs and the doors will have glass panels in them, but it’s great first shot…

As they should, the renderings got us wondering about the layout of our kitchen. For starters, notice the similarity of the layout with our old kitchen…

Both have a tall vertical (the fridge) to the left, then the range in the center and the sink off to the left. As much as we loved our old kitchen, we want something new… To that end we’re thinking the sink or possibly a cooktop could go in the island to change things up.

The first rendering also made us realize that we don’t really want the closet right inside the front door. It makes the space too narrow. So we’re going to move it down where it’s opposite the stairs and then put a long bench across from the kitchen and narrow the island and remove the stools. That will give a wider walkway with a lot more shoulder room, but we’ll still have a place to sit to put on and take off  our shoes and a place guests can hang out while Dan’s making dinner.

Unfortunately, while we love Eggersmann, we may not be able to afford them. The price they came back with was double what we paid for our Poliform kitchen 5 years ago. Even if we cut back on how much they do (not do the entry closet, etc.) their price may still not fit into our budget - we’ll see… But if you’re doing a renovation and like a modernist aesthetic, we highly recommend them - their stuff is possibly the best we’ve seen.

We’re also having Siematic spec a “lower end” kitchen (by their standards). If that doesn’t come in at a price we can afford and we can’t afford Eggermann then we’ll probably give up doing a European modular system and go with a “custom kitchen”. The problem is local craftsman don’t have the same abilities as the European factories. That means we have to be careful to design the kitchen in a way they can execute properly. That’s a lot more work for us, but it is what it is…

Harlem Bespoke just pointed out that 11 West 119th Street sold recently - for $400,000! That might seem like a low price, but actually it’s a surprisingly high price. The building is 14′ x 38′ on a shallow 65′ lot. 14′ x 38′ x 4 stories = approx. 2,128 sq. ft. So the cost per square foot was $188/sq. ft. By contrast we bought ours a few blocks away for $118/sq. ft. If 11 West 119th had sold for our price per square foot the price would have been $250,000. The final asking price was $450K. I’m not sure why the buyer only got $50K off final asking when most people buying similar properties tend to get $150-200K off asking. (For example, we got $265K off what they were asking when we started bidding).

During our search we went through the one 2 doors down - 7 West 119th Street. It was fully renovated with some high end finishes (Sub Zero fridge, but just “better than rental” cabinetry). It wound up selling for $1.0983M. It’s hard to figure out the square footage of #7. Officially it’s 2,794 sq. ft. so it officially sold for $393/sq. ft. However, the City has it’s length at 47′ when all it’s sibling neighbors are officially 38′. I don’t remember it being pushed out in the back and the permit they pulled said no enlargement was proposed. It’s on a lot with a diagonal back line - one side it’s 54′ deep, the other it’s 58′ deep. I remember the back yard basically being a small deck, but it the short side was definitely more than 7′ feet long. So I really think the square footage of #7 is smaller and more inline with it’s neighbors. On top of everything else they did a double height living room so it was probably under 2,000 of real square feet. If it were 2,000 sq. ft. then the price per square foot would have been $549/sq. ft. which is way over what the other comps support. By comparison the incredible one on Strivers’ Row went for $505/sq. ft.

11 West 119th is a SMALL townhouse that shouldn’t be made into more than a single family home (#7 was made into a 2 family with a tiny studio apartment and I think it was a mistake). It’s not not in a historic district (though it is literally adjacent to a one). It’s steps from East Harlem where values are somewhat lower. It’s across the street from (relatively nice) public housing. So I’m not seeing how the property commanded $188/sq. ft. But with both #7 and #11 selling way over what the comps support — apparently they’re smoking really good over at that end of West 119th Street! 

No matter - this is a great comp for those of us who own townhouses. Be happy! And for the new owners of #7 and #11 West 119th Street - the values will go up in the coming years and they’ll still make money when they sell.

But honestly - if you’re looking to buy a Harlem townhouse shell - get a damn good real estate broker and a subscription to Property Shark that includes comps and really get to know what things are actually selling for (as opposed to what they’re listed for). A Property Shark membership is WAY cheaper than overpaying for real estate.

I’m going to start doing quick blog posts on different things that need to be budgeted for construction/renovation. First up is tile. We went into a few tile stores to figure out price points we should be using for budgeting. Some were completely unhelpful when they heard we were just budgeting and not ready to buy, but others were great and told us what we should be thinking in terms of cost per square foot.

Studium in the A& D Building, and Kaleidoscope Tile in Chelsea were both extremely helpful and I’d recommend visiting both. Studium is pretty high end but has some surprising bargains. When we told the sales person we were on a budget his face dropped, there was an awkward pause for about 2 seconds, and then he picked right back up enthusiastically and showed us options that were perfect for people on a budget. Kaleidoscope Tile feels lower end, has good prices, and has some tiles that can deliver a very elegant look.

• Low-end “builder’s grade” - about $4/sq. ft.
  • e.g. 4″ x 4″ glazed tiles (the ones you see in bathrooms from the ’50s and ’60s)
• Nice, inexpensive tile - about $7-8/sq. ft.
  • Great for walls, may or may not be not be suitable for floors
  • e.g. large format porcelain tiles (12″ x 24″)
  • e.g. 12″ x 12″ stone tiles (common stone, nothing exotic)
  • e.g. 1″ x 3″ carrera marble (if you can find someone who handles them in high volume)
• Better quality tile for floors, etc. - $15-20/sq. ft.
  • e.g. better stone in simple patterns
• High quality for accents, trim, etc. - $30-35/sq. ft.
  • e.g. sheets of staggered thin strips of carrera marble
  • 1″ x 1″ ceramic tiles for floors
• Crazy expensive stuff if you have way too much money - $80-100/sq. ft.
  • e.g. architectural glass

(Prices do not include tax, etc.)

Here are some of the price points we’re using:

Rental unit bathroom

• Wall tile - $7/sq. ft.
• Floor tile - $13/sq. ft.

Rental unit kitchen

• Floor tile - $15/sq. ft.
• Backsplash - $15/sq. ft.

Our kitchen

• Backsplash - $33/sq. ft.

Parlor floor half bath

• Wall tile - $15/sq. ft.
• Floor tile - $35/sq. ft.

Master bath

• Accent wall - $35/sq. ft.
• Other wall tile - $13/sq. ft.
• Floor tile - $35/sq. ft.

2nd full bathroom

• Small accent area - $35/sq. ft.
• Other wall tile - $9/sq. ft.
• Floor tile - $33/sq. ft.

Of course, we’ll go under on some and over on others, but those prices should give us a realistic amount of money to work with. Of course it helps that our bathrooms will be relatively small - so less tile will be required, keeping costs down and letting us spend more per square foot.

After we took the first look at the place we wound up buying, we noticed 243 West 120th Street and had our broker get us in even though it wasn’t officially on the market. I really liked this building. We bid on it, but our bid wasn’t accepted. It’s now officially back on the market and the price has been reduced to $795K. If you’re looking for a shell I think it’s one of the most interesting townhouses on the market - and possibly one of the best investment properties - if you can get it for the right price.

There are two big things the building has going for it. First, location - it’s practically in the heart of all the redevelopment and buzz that’s happening in South Harlem. Walk across St. Nicholas Avenue and you’re in the middle of everything that’s hot and trendy in Harlem - Nectar wine bar, Moca Lounge, etc. And it’s also close to the A,B,C and D trains at 125 - so it’s just 1 stop from 59th Street.

The second thing the building has going for it are its development possibilities. You can (and probably should) invest a $1 million in this building, and when you’re done it’ll be worth more than you put into it (if you’re smart about how you spend the money). Because most of the lot is within 100 feet of St. Nicholas Ave, it has a FAR just under 6 (which means you can expand the building far bigger than you can other townhouses that have a 3.44 FAR), and it’s got a C1-4 commercial overlay, so you can have the option of a commercial tenant on the ground floor (but it has to be one that services the immediate neighborhood).

It’s currently a 4 story building. If I were buying the building I’d push the back wall back to maximize square footage and add two partial floors on top. I’d configure it with three units. Because the building is only 17 feet wide you don’t really want to make it more than 3 family. The basement would be one unit with the possibility of a commercial tenant. The parlor floor could be a two bedroom apartment, and the top two existing floors plus the two floors I’d add would be a large quadraplex. You could step back each of the additional floors and allow for outdoor terraces making the quadraplex an incredible space with tremendous outdoor space…

In the picture above you can see that there is an alley along the west side of the building. There are a number of existing windows in that wall. The rules about lot line windows apply, but it’s a great to have windows in your bathrooms and a wall you can exhaust vents out of.

As you can see the façade and the stoop need a lot of work. But as you move inside the original floors and a some original details are still intact…

(click on any image to see a bigger version of it)

I have to say going through the building was a bit unsettling. There were clothes and sleeping bags left over from when homeless used to live in the building. The staircase was a bit rickety, and there was a dead cat in the basement. But all of those things are easy to fix.

While you can buy this building and not expand it beyond it’s current 3,400 sq. ft. it’s best if you plan on making the building substantially larger. The construction will be pretty expensive given that you’ll want to add two floors and push the rear wall back, and you may need to reinforce the foundation to support the additional floors and you might want to lower the floor in the cellar - none of which comes cheap. But given the area, you can spend the money and have it come back to you.

In terms of price it’s currently at $795K. Townhouses typically sell for around $200K off their asking prices, so I’d guess it’ll sell for around $600K, maybe a bit higher. $600K would be $176/sq. ft. which is high for a shell, but the location and development possibilities explain why it’s at the high end for a shell. Even if you spent $200/sq. ft. renovating it (no expansion) you’d still be under $400/sq. ft. which is supported by the comps. If you want to expand the building I think you’ll find that cost effective as well.

I should also say something about the tax situation. The taxes are quite high - $9,664/year. Most townhouses pay about 1/3rd that amount. The current owner sorta messed up. He should have pulled a permit to convert it to 2-3 family, started construction, and gotten Department of Finance to reclassify the building and bring the taxes down. This is actually a good example of what I was talking about in the previous post - you don’t want to convert this building to 4 (+) family because the taxes will remain high and the additional rental income may not cover the higher taxes. 2 or 3 family makes a lot more sense in this case. If you can get it reclassified as 2 or 3 family, then the assessed value will drop to $10,200 (6% of the market value of $170K), which is far lower than the current transitional assessed value of $72,990. The taxes on $10,200 would be $1,745 - nearly $8K less than what’s being paid now. DOF will up the market value because you’re doing work on the building, but you’ll still pay substantially less than what’s being paid now.

It’s probably worth mentioning that we bid $575K on it back in November 2009 and it was rejected - we were told we weren’t even close. I would have gone up to $600K and possibly a bit higher if we had access to the money, but the ‘no’ was so resounding we never went back with another bid. It wouldn’t surprise me if the owner currently feels a bit firm at $795K, so it could take some negotiation to get the price you want…

Whether you get this building or another I recommend you have a real estate broker who’s an aggressive negotiator. Norman Horowitz (the listing agent) is a good guy, but I wouldn’t go to him directly since you will be wanting to negotiate a significant amount off the asking price. If you’re looking for a tough negotiator who really works for her clients, we recommend Maria McCallister of Barak Realty - she’s proven herself to us in both the sale of our apartment and the purchase of our townhouse.

Friday we were around the house to talk to contractors and toward the end of the day we had a friend come by to see our place before going out for dinner, etc. We were doing a quick walking tour of the neighborhood and were over on Mount Morris Park West when a guy approached us and asked us if we lived in the area. We explained we just bought a shell nearby but didn’t live there yet. He said he was a photographer doing work for the Observer in the UK and they were doing a piece on the changes in Harlem and asked if he could take our picture. We walked him over to our place, showed him the inside and then he took some pictures of us on our stoop.

Well, the article came out, and thank god our picture wasn’t used… The article is titled “There Goes The Neighborhood…” and then continues to complain about the demographic changes that are going on in Harlem.  It makes it sound like white people are taking over Harlem, when we’re actually just 15% of the population (in Central Harlem). The article in the NY Times earlier this year was far more balanced and objective. White people aren’t taking over Harlem, if anyone is taking over Harlem, it’s Latinos and Asians.

Here’s one snippet from the Observer article that gives you an idea of where it’s coming from…

It is no surprise that the changes in Harlem anger some. Tarik Haskins, 61, makes a living by selling CDs from a stall on 125th Street … He is furious at the changes he sees around him. “It is a threat to the indigenous people. We do not have the same salaries as these new people. Our choices are more limited,” he said. What is the answer? “We have to organise,” replied Haskins, who proudly wears a Black Panther badge.

The “indigenous people” comment is laughable. Harlem was built for white people and initially occupied by white people. One of our (white) neighbors found out that her grandmother was born in Mount Morris Hospital which used to be down the street from where we are. When she gets snide comments about her not belonging she loves to bring up her grandmother and tell the person she has as much right to be there as they do.

The other problem with that statement is that if you go over to “SoHa” (centered around Frederick Douglass Boulevard south of 125th Street), where the gentrification is most dramatic, you’ll see the bars and restaurants are filled with “buppies” - hard working, educated, successful BLACK 30-somethings. Sure there are some high-income white people buying places, but the far bigger trend has little to do with race and everything to do with economic class. Harlem is gentrifying and getting more expensive. That’s going to change things, but it’s more likely that a higher-income Black or Latino will be displacing the lower-income Black, than a white person. Most of the white people I’ve met in Harlem bought (and often renovated) long-vacant townhouses and displaced no one in the process.

Personally, Dan and I aren’t displacing any poor black people - our house has been vacant for at least a decade and, by New York standards, we’re hardly rich. While we’re not black, we are an interracial couple, and being gay we’re both minorities. I’m sure some people might resent me moving into Harlem, but I’ve got nothing to apologize for and in time they’ll get used to it.

That said, I do completely understand that systemic and deep poverty are still real problems in Harlem and that the poverty is strongly correlated with race. You’d be hard pressed to find many New Yorkers who don’t understand that. But leaving Harlem a run down ghetto is hardly the way to fix the poverty problem.

One of the things I learned early on about New York is to never complain too much about change. Change is a constant in NY and the City would stagnate and die if it didn’t change. Change is usually good.  It’s a good thing, not a bad thing, to see Harlem get cleaned up, vacant, burned out buildings get rebuilt, and fancy new condos go in.

We still need to take care of those who are less fortunate and to that end our back yard abuts the back yard of some brownstones that are being turned into affordable housing, and catty corner across Adam Clayton Powell Jr. Blvd is an 11 story housing project. The Harlem of the future can and should accommodate the needs of a diverse group of people - black, white, Latino and Asian; rich, middle class, and poor. People shouldn’t be scared of diversity - hell, that’s what makes New York a special place.