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11/29/2005

Rental unit (already) at 70 Washington

One not-so-savvy investor who bought in at 70 Washington has ostensibly closed on his purchase and decided to rent it out, possibly due to the gaudy entrance door?

This Elliman listing, on the K line, has one bedroom and 2 baths spread out across a spacious 1,560 square feet.

According to our estimates, this investor may hardly be making his carrying costs back by renting it for a paltry $5500 a month. The three units in this line that are still available are asking $1.145MM, $1.165MM, $1.185MM and $1.4MM for the top floor unit. Conservatively estimating that he got in early and paid $1.145MM, put 10% down and is financing the rest at 6%, his gross monthly costs are over $7,000 a month.


10 Comments:

At November 30, 2005 9:19 AM, Anonymous Anonymous said...

My guess is that he either 1) got in early and paid a bit less than what the current rates are, I'm sure the first and second rounds were a bit cheaper and/or 2) put significantly more than 10% down.

I think we will see a lot of this. There are people that are happy to get 5% on their money as a long term investment and hope for some appreciation down the line.

So if the investor paid just under a million, all cash, and can collect the $5,500 - common charges he may get a return that is similar or better than a long term bond and have the upside of appreciation.

 
At November 30, 2005 12:25 PM, Anonymous Anonymous said...

What if the buyer instead has an Interest Only mortgage??

$5500/month rent on a $1.145MM property values the 'rent roll' at 5.75%.

I/O loans were going for under 5%. On a monthly basis, its possible that the buyer could actually be cash flow positive.

There's still a little juice to squeeze out of this lemon.

IC

 
At November 30, 2005 1:00 PM, Anonymous Anonymous said...

Perhaps he is counting on the loss as an offset for his other income and wish for appreciation to make up the rest. We will see how deep his pocket is after a few months...

 
At November 30, 2005 1:04 PM, Anonymous Anonymous said...

What if the buyer instead has an Interest Only mortgage??

$5500/month rent on a $1.145MM property values the 'rent roll' at 5.75%.

I/O loans were going for under 5%. On a monthly basis, its possible that the buyer could actually be cash flow positive.

There's still a little juice to squeeze out of this lemon.

IC

 
At November 30, 2005 2:14 PM, Anonymous Anonymous said...

2 other 70 Washington listings:
http://www.elliman.com/MainSite/search/rentals.aspx
http://www.c21nyc.com/property/view_listing.aspx?webId=193678

 
At December 01, 2005 9:35 AM, Anonymous Anonymous said...

why do you seem to criticize the fact that there is a rental unit "already". There's nothing wrong with buying a unit for investment.

 
At December 01, 2005 9:41 AM, Blogger ltjbukem said...

no criticism here...just mentioning.

 
At December 06, 2005 11:47 PM, Blogger ltjbukem said...

he lowered the rent to $5300...hmmm, no biters.

 
At December 07, 2005 6:21 PM, Anonymous Anonymous said...

There is nothing wrong with an investment, when you are making money instead loosing money every month...

 
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