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Flipping units at 70 Washington in DUMBO

A studio plus home office with 1217 square feet of space is being flipped by a buyer at 70 Washington in Dumbo. Elliman has the listing here.

All the J line units on the 70 Washington site have been sold, so we have no basis on how much this buyer may be making if he gets his asking price of $1.499MM. We can surmise that he possibly paid $900K to $1.1MM on it depending on when he purchased it, so he could be walking away with a few hundred thousand dollars after all is said and done.



At December 14, 2005 11:13 AM, Anonymous Anonymous said...

The right level of investor flipping is actually very healthy for the development market.

Too much can be a problem because it puts too many units on the market and there aren't enough people to actually live in them. With too many investors the demand is artificially inflated.

Too little makes it much more difficult for developers to get their projects done which keeps supply always lagging behind demand.

This investor is essentially a development partner, they put their money up early and got a discount for doing so. This spreads the risk from one entity to multiple entities and limits the downside risk to the developer and the bank that is funding the project. This in turn allows them to do more projects with more confidence.

We're going to see a lot more of this as these project come online. As long as the ratio of investors to end users is in line, it will continue to be good for the market.

At December 15, 2005 10:46 AM, Anonymous Anonymous said...

In a RISING market, flippers are healthly for market development. Their impact on artificially inflating project demand is enourmous and should not be minimized.

What happens to flippers in a DECLINING market? In a rising market, flippers and developers are essentially partners. However, in a falling market, this partnership quickly turns into an adversarial relationship. The developer and the flipper will be competing against each other for sales and rentals. Eventhough the flipper got in early at a discounted price, he/she still has a much higher cost basis than the developer. The developer can sell below the flippers cost and still turn a profit. With partners like these, who needs enemies.

Meanwhile, flippers are renting out the apartments at negative cash flow rents. Is that really an indication that end user demand is in line with investors expectations?

At December 15, 2005 1:23 PM, Anonymous Anonymous said...

the price on this apartment was changed to $1,150,000


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