While it’s been a rough week with the two robberies and having to sleep at the house in the freezing cold to prevent more robberies, one thing did get completed this week and it looks great – the cornice.

As you can see, we went with black. Also, the portion of the top floor to the right has been painted – that’s the final version – it looks good, and the color Dan picked goes well with the window color. But we need to get the Bird-X spikes up there quickly before it’s covered in bird droppings.

It wasn’t easy for the guys to fix the cornice. Everything they touched just seemed to disintegrate when the touched it. Here’s what it looked like before…

In the end it doesn’t look new – there are imperfections in it. But we like the imperfections – it looks like an original cornice that’s in decent shape, which is exactly how it should look…

There’s warm weather this coming week, so hopefully the façade will get done in the next few days. The stoop is getting a scratch and resurface rather than a painting. I think the goal is to get the scratch coat on this week.

UPDATE:

Dan pointed out to me that the cornice isn’t actually black – it’s a dark bronze color that’s so dark it’s almost black. Here you can see it in comparison to the true black cornice two doors down.

I sorta like the almost black, but not quite, quality of it. You can see the difference a bit better in person – but even then it can fool you, like it did me the first time I saw it.

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.

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).

Less than a month ago I was a little worried about the lack of high end sales in Mount Morris Park. Well, there’s no longer a need to worry… 30 West 120th (across the street from Marcus Garvey Park) sold on August 29th for $2.5 million. That breaks just about all the sales records since the downturn in the economy 3 years ago.

The house is “just” 18 feet wide (narrow for a house selling over $2M), but it’s roughly 60 feet deep so it has approximately 4,400 sq. ft. That means the new owner paid about $568/sq. ft. – so not only was the $2M barrier broken, but the $500/sq. ft. barrier was broken as well.

Curiously, for such a high price, there’s a rental building on one side of the house and a shell on the other side. And with all the 5th Avenue traffic going around the park it’s not a particularly quiet location. This is good news for some of the 20 and 25 footers on more the coveted blocks just off the park – they should be able to go for even higher prices.

However, the house does have a rather good provenance… It was purchased by Kareem Abdul-Jabbar in 2002 for $525K. Between 2005 (the filing date) and 2009 (the sign off date) he did a gut renovation. The estimated cost of the renovation was $375K + $7,500 for sprinklers, but that was the estimated cost – the actual cost may have been substantially higher. Given that he was renovating at the height of the market it could very well have been a $1M+ renovation.

You can see from the pictures below that the renovation was pretty conservative – no daring architectural features or anything, but still quite nice. They say townhouse buyers like original detail. There isn’t all that much original detail left in the house, but the traditional nature of the renovation must have resonated with the buyer…

Another thing to note is that the house was single family. That means the owner was buying a degree of luxury – a 4,400 sq. ft. home. We’ll also have a quadraplex when our renovations are done, but it will only be about 3,200 sq. ft. – definitely a nice size, but not nearly as luxurious as 30 West 120. I’ve seen this in the comps before – single and two family homes often sell for substantially more than 3+ family homes.

This sale should solidify the top end of the market and hopefully it will get hesitant buyers to pay a bit more. I’ve always thought Harlem townhouses were undervalued in comparison with Brownstone Brooklyn – let’s hope that changes

After I finished this post I started thinking about the effect on shells (like the one next door). If 30 West 120 can sell for $560/sq. ft. subtract $250/sq. ft. for a nice gut renovation, then subtract say $100/sq. ft. to reimburse the new owner for the trouble of going through renovation and you still have a value of $200/sq. ft. – and that would be if it were a total shell (like ours was). The shell next door doesn’t seem like a total shell, so it could go for even more.

Of course one comp doesn’t make a trend, and rehab mortgages are getting harder and harder to come by, but as the high end prices go up so too will the prices of shells – and the changes on the low end will seem even more dramatic since renovations are a somewhat fixed cost. $200/sq. ft. is about 50% higher than the $125 to $140/sq. ft. I would have thought was an average shell value in the past (for a shell needing a total gut including structural work). 50% is a big jump.

We knew our back yard was a bit of a mess. It was clear that when they were renovating the building adjacent to ours that they had just dumped a bunch of garbage in our back yard. We figured there was about a foot of garbage back there…

On top of that when a friend of ours (who does gardening for a living) saw the garden he said the plants that were going in it were rather insidious – that we should kill them with RoundUp and then put black plastic over the entire garden for a summer to try to kill them.

There’s so little in our place there aren’t many surprises, but it seems like every time there could be a surprise we’ve got one. The back yard isn’t going the way we thought it would… They’ve started removing the garbage – and surprise! There’s concrete under everything…

You can’t quite tell, but the retaining wall on the side has about 2 1/2 cinder blocks in it – so it’s about 20″ high (plus the cap stone). And most of the “debris” is actually mostly dirt and rocks. I still don’t know how we have so many river rocks in the middle of Harlem, but there they are.

Our plans just call for removing the debris. It doesn’t mention anything about removing concrete – so we’ll have to work that out with the contractor since we don’t want a concrete back yard! That said, we don’t have to worry about insidious plants growing in a concrete back yard…

The other question is how do we integrate those huge rocks into our landscape design? I was really thinking of going a different direction… But we’ll figure something out. Dan says we should look at Japanese garden designs.

The roof, while far from done, got put up Friday – well enough to stand on at least…

The next thing we have to figure out is whether the slope of the roof will be uncomfortable as a deck. It changes by about 7 inches every 10 feet. We could do three level areas with one step between each, or we could live with the slope. We went to Home Depot this afternoon and got some plastic lawn chairs and plan on sitting up there this weekend to see whether it bothers us. (Anyone want to join us for a beer on the roof?) If we want to do three level areas we’ll need to raise the railings a bit to compensate for the additional height.

The roof lets us get a peek at our view. While we’ve stood on the roof of the apartment building next door, we’ve never actually seen the view from our own roof until today. It’s a story lower than the apartment building, and the view isn’t quite as good – it’s a bit obstructed…

(Click picture to see bigger version).

We can see midtown a bit. Citicorp is visible, and from the right angle the top of Empire State is visible, but much of the Midtown view is obstructed by the apartment buildings on Adam Clayton Powell Jr. Blvd. And being Harlem it’s off in the distance anyway. Here’s a blow up of the best part of the view…

(Click for bigger version).

I gotta say though… The fact that our view is so precarious makes me want the boundaries of the Mount Morris Park Landmark District expanded so our neighbors to the south can’t build up and block our view. Thing is, even if they’re landmarked they could still build up a little and block things for us – by adding a bulkhead like we’re doing…

Honestly though, the most interesting thing on the horizon we see when we turn around and look across and down the block a bit at The Greater Metropolitan Baptist Church (originally a German Lutheran church)…

The nicest part of the roof deck is that it’s less of a fish bowl than the back yard. There’s a bit more privacy than the back yard ’cause it can be seen by fewer windows…

One interesting detail we’ve seen in a number of Harlem townhouses that have exposed brick walls are old, original, bricked up doorways between the townhouses (see photo on right).

The old buildings you see in Harlem were built by speculative developers during a real estate boom (yes, that concept is nothing new). Developers would buy a parcel of land and sub-divide it by putting a number of townhouses up at once. Generally all of them would be identical, or just differ in minor ways.

Because they were building several buildings at once they’d put in passageways so the workers could go from one house to the next quickly. Then towards the end of the project all the doorsways would be all bricked up before the walls were plastered.

We have one of these on every floor. The lintels are in a variety of conditions. Originally they were wood. Some are in good condition, others are rotten and need to be replaced. One of them had the wood pulled out and brick put in (because it was in a kitchenette – which was a good thing since that’s where a major fire started).

Our doorways will still be visible when we’re done since we’re leaving the party wall as exposed brick. The old doorways will give the brick walls a little more character and may even prompt a question or two from observant guests.

Apparently ConEd had told our contractor that they wanted to put the meters on the outside of the building so they could be easily read. Our contractor didn’t bring the issue up with us and ConEd only made a passing comment to me at one point.

When it really sunk in that they were putting the electrical meters on the front of the building we got a bit upset. I mean gas and electric meters on the front of a townhouse can be incredibly ugly (see pic below). I talked it over with Dan and with our architect and we decided to be firm that the meters must go in the cellar, as per plans.

Luckily we now have documentation that the National Park Service considers our building historically significant, so we were able to simply refuse on the basis that visible meters would alter the historic character of the building. At least ConEd understands that historic preservation trumps their needs/desires.

The really ridiculous part is that the technology exists to remotely read meters, but apparently it’s not being used because of the strength of the meter readers’ union.

As the floors have been going in we we’ve seen that there’s some pretty cool graffiti on the top floor. Well, the top floor is in, so we can finally get a good picture of it…

I’m not sure if the guy was named Scavenger or if he’s just identifying himself as a scavenger. And I don’t know whether it was some person or crew that went through abandoned buildings and salvaged original details or whether it was someone scavenging to support a drug habit (consistent with our house’s reputation back in the day). Either way, as graffiti goes – it’s pretty good.

I’d like to think some of the original details made their way to some place like Demolition Depot or into other Harlem townhouses rather than just being destroyed.

Unfortunately, we can’t save the graffiti – that wall is being insulated and sheetrocked. And honestly, it’s cool to see now, but I wouldn’t want to live with it.

Now that we’re up to the top floor, the next item on the agenda is taking off the roof. They were supposed to do it yesterday, but the weather was really bad. I can’t wait to take photos with no roof. But even more I can’t wait until I can get up to the roof. I want to see if we have a clear view of midtown Manhattan from what will be our roof deck.

Speaking of the roof… It’s amazing it’s still even still there. It was pretty badly burned in a fire in the late ’90s…

And here’s are some more gratuitous renovation shots…

This was two days ago as they were putting in the top floor…

And this is from this morning – I like the pattern of light on the wall from the old skylight opening…

It’s actually a bit spooky looking down all those flights of stairs to the parlor floor – and it will be even more so as the stairs go up to the roof – it’s over 40 feet down from the roof level to the parlor level. I got a little winded walking up to the top floor today – the house is going to keep me in shape

This past Saturday we had architecture students from CityTech come see the house. Dan’s a (web design) professor at CityTech and one of the architecture professors (Ken Conzelmann) took the photo below. I think it’s pretty cool – with the light streaming through the joists it’s quite beautiful…

I love the height of everything, but of course that will go away with the renovation since floors will go in.

The “hole” in the wall is an old fireplace. The previous owner (a developer/landlord) had pretty much ripped it out. We’ll fill the hole back in with brick to make the wall stronger.

You can also see that we’re raising the floor between the cellar and basement to give a full 8′ clearance in the cellar. The joists used to rest on top of the foundation – now they’re a few inches higher.

For those of you who are looking for what it really costs to renovate a townhouse – Julia Angwin, an editor at the Wall Street Journal, has been blogging the renovation of her brownstone that’s an avenue and a half from ours – just down 123rd Street, west of Manhattan Avenue. Well, she’s “done” and has moved in…

Her blog is one of the few that discusses cost. She and her husband bought the place for $800K in February of 2010 – just a month before we bought our place. Their townhouse is 16′ x 60′ x 4 stories – so 3,840 sq. ft. That means she paid $208/sq. ft. That may seem a little high, but theirs was not a shell – just a place in need of major renovation.

Their renovations were estimated to cost $350K, but wound up costing $420K ($109/sq. ft.) They went 20% over budget in part because they jumped right into renovations with very little planning. They hadn’t planned on replacing the roof (only patching it). They hadn’t planned for a back deck, etc.

So they say they spent $1.22M in total. Let’s call it $1.25M since I’m sure there were at least some costs that weren’t reported. That means their total investment was $325/sq. ft. which is very close to what I estimate our cost will be when we’re done – the difference is they’re moving in after 13 months and we’ll move in after 21 months (if things go smoothly).

One thing that should be noted is that they’re not really done yet. They still need to get a new C of O. Without a new C of O they can’t legally rent the basement apartment. Apparently, the process of getting a C of O can be a bit tortuous. I wish them the best, but there are things I don’t quite understand about what I see online concerning their renovations. For example, I’m a little confused about their sprinkler situation. Their Alt-1 filing says there were no sprinklers in the building, but I see them in the “before” pictures – so not sure what the story is with that. I think I see flush sprinkler heads in some of the after pictures – but I’m not 100% sure whether they’re there or not. The Alt-1 doesn’t mention sprinkler work. I’m guessing because they were spending less than half the value of the building on renovations they got in under more lenient rules. I just hope they don’t encounter major problems with their C of O inspection.

Anyway, here are some before and after pictures… I love the picture of the stairs (above and right)… I actually really love the blue wallpaper and how it combines with the maroon and green in the picture. Not sure I’d want to live with it, but it photographs beautifully. There were actually quite a few interesting colors in the house before renovation. On other blogs people have criticized her for stripping the soul out of the place. Personally, I think it just needs a little color – most everything is now white. Here’s an after shot of the stairs. Unfortunately (IMHO) they removed the wainscoting…

Here’s some of the rooms before renovations… Some of them make me want to shoot an art film… The rooms are beautiful in some respects, though I wouldn’t want to live in them – just pretty in pictures…

Here’s the future kitchen before…

And the kitchen after…

And another before shot…

Here’s what will be the ground floor rental (looking forward)…

And the rental after renovation (looking back)…

The fireplaces were something they took a lot of heat for in blog comments. They were concerned their kids would get lead poisoning from them, so they took all of them out and only left one in their master bedroom.

The master bath was another problem area. The glass hasn’t been installed around the shower so it looks a little bare right now, but the problem was the bathtub. The contractor didn’t leave enough space for the deep soaking tub they wanted, so they got a shallow tub which is useless – it’s not much good as a bathtub and they don’t need two showers in one bathroom.

So that’s the type of renovation you can pull off in 13 months with a total investment of $1.25M. That gives you a 2,600 sq. ft., 4 bedroom owners triplex and an 870 sq. ft., 1(+) bedroom rental unit (minus space for stairs).

And as far as the payoff… CONSERVATIVELY her place is now worth $1.6M ($417/sq. ft.) so with $1.25M invested they just netted $350K (on paper), but it could very well be worth more – they’ve got an excellent location – very close to express trains and to Columbia University.

At our mortgage closing the other day our loan officer made an interesting comment – “there are no jumbo rehab loans”. Jumbo loans are really big mortgages that are bigger than Fannie Mae or Freddy Mac are willing to insure. They’re purely a bank product. People can still get regular jumbo mortgages, but jumbo rehab loans simply don’t exist – the banks think they’re too risky. The line between “conforming” and “jumbo” is determined by Fannie Mae and Freddy Mac. Currently conforming loans in New York max out at $729,75o for a one family, $934,200 for a two family, and $1,129,250 for a three family. Where this comes into play vis-à-vis Harlem townhouse shells is that it limits who can buy and renovate shells and how the townhouses are configured. Let’s take a few examples and see how this plays out…

Harlem’s little townhouses – 12.5′ x 53 x 4 stories

Dotted all around Harlem are 12 1/2 foot townhouses where the original developer fit two homes on one 25 foot lot. These have 2,650 sq. ft. including the walls, 2,350 sq. ft. inside the walls (586 per floor).

If we assume $165/sq. ft. for an average shell, that puts the purchase price around $450K. Then add $530K ($200/sq. ft.) for a nice renovation and the total cost will be just under $1M.

Owners are probably going to want the entire house for themselves – 2,350 sq. ft. isn’t that much when you subtract the space taken by the staircases, etc. Since only $730K can be financed with a conforming mortgage that means the potential buyer needs nearly $300K in cash to make it work.

If the buyer converts it to two family then only about $100,000 of cash is needed, but then the buyer gets a pretty small space and won’t get much rental income since the unit will be pretty small.

The standard “smaller” Harlem townhouse – 16′ x 50′ x 4 stories

All over Harlem you see 16 footers that are roughly 16′ x 50′ x 4 stories (3200 sq. ft. total, 2880 sq. ft. internal sq. ft. internal, 720 sq. ft. per floor). These will probably cost $525K to purchase (plus or minus depending on condition and location), and cost $650K to renovate – so $1.175M in total investment.

Chances are the buyer will want to configure it as a two family – so they’ll need about $250,000 in cash to put down (minimum).

If they configure it as 3 family their unit will be less than 1,500 sq. ft. and they’ll lose the back yard and only have a roof deck (much less desirable for the owner). But then they only need about $50K down and they can go with low-money down FHA-backed 203(k) loan.

The popular 18 footers – 18′ x 55′ x 4 stories

18 footers are popular because they’re wide enough to have floor through rentals which are popular with developers. But putting developers into the equation ups the prices. They have about 3,950 sq. ft. (3,600 interior, 900 per floor). With developers in the picture I’d expect the cost to be around $710K for the building and $790K for the renovation – so $1.5M total investment.

Configured as a two family the owner would get 2,700 sq. ft. but would need $575K in cash to make it happen.

Configured as three family the owner gets 1,800 sq. ft., but loses the back yard and still needs $375K in cash to pull it off.

While a developer might make it 4 family, there’s really no point. The increased taxes on 4 family (compared to 3 family) and having just a small apartment make it not worth while to the owner.

The coveted 25 footers – 25′ x 52′ x 4 stories

25 footers are just elegant. The space in them is incredible – 5,200 sq. ft. total (4,800 internal, 1,200 per floor). Typically 25 footers have 12+ foot ceilings on the parlor floor so they just feel cavernous. They’re wonderful houses. But with that space comes higher cost… Probably $900K for the building, plus $1M for renovation for a total cost of about $1.9M.

The most spectacular configuration is an owner’s triplex over a ground floor rental. That would give the owner a 3,600 sq. ft., 6 bedroom house with substantial rental income from a legal two bedroom apartment. But they would need $1M in cash since the 2 family rehab loan maxes out at $935K.

The other configuration is two floor-thru tenants over an owner’s duplex. But with that configuration the owner still needs to come up with $775K in cash.

5 story townhouses

In each of the scenarios above it’s possible you could buy a 5 story townhouse instead of the more common 4 story. In some cases it makes adding a unit easier and more desirable since the owner’s unit will have an additional floor. But it ups purchase and renovation costs.

The bottom line

The bottom line is that the lack of jumbo rehab mortgages means that potential buyers either need a lot of cash or they need to be OK with not having a very big owner’s unit. That severely limits the pool of people who realistically are suited for rehabbing buildings. The other thing to note is that this is a bigger problem for bigger townhouses since the costs go up and there aren’t jumbo mortgages to offset the increased costs. Even the little townhouses can easily exceed the max amounts for conforming mortgages.

If you look at some of the posts I’ve had on what things are selling for you’ll notice the gap between shells and livable townhouses is bigger than you might think. I think part of that spread is due to what I just described above – the potential buyers for shells are limited because the loan amounts for rehab mortgages are limited.

But it gets worse…

The problem looming on the horizon is that politicians want to scale back Fannie Mae and Freddy Mac. If that happens it means no more Fannie and Freddy mortgages. There are proposals to make this happen over the next two to ten years. NYC already has increased loan amounts because we’re in a high cost area. As Fannie and Freddie get scaled back all of that will just go away. In fact people think 30 year fixed rate mortgages will go away if Fannie and Freddie are eliminated or severely scaled back.

The politicians who are advocating getting rid of Fannie and Freddie aren’t thinking about what it will mean to neighborhoods with blighted buildings – but it will have a huge effect. They understandably want to  stop the federal government from taking on such big risks, but rehabbing blighted neighborhoods is a risk I think it’s appropriate for governments to take on since even if the mortgages default the community benefits. If Fanny and Freddy go away it’s possible next to nothing will get rehabbed in Harlem – or the rehabs will only be done by developers – not by homeowners who are investing themselves in the community. I’m not saying Fannie and Freddie are perfect, but very few Harlem townhouse shells would get rehabbed without them.

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…