Top Rents, Incredibly Low Taxes, and Amazing Garden
Easy Owner’s Garden Triplex or
Perfect 1031 Investment with Excellent Cap Rate
Saturday July 11th, 2020 | from 12:30 pm to 2:00 pm
Tuesday July 14th, 2020 | from 12:30 pm to 2:00 pm
* By Appointment Only*
Built by legendary architecture firm McKim, Mead, & White, 169 West 83rd Street is a New York City townhouse gem. The Beaux Arts masters created this five-story, 18.5-foot wide Romanesque townhouse in 1885, and it has been thoughtfully updated and maintained by the current owner. It is turnkey with tip-top renovations and all rentals are 100% Free Market.
The configuration features floor-through units that include an owner’s duplex, which boasts an impressive rear garden, and additional four rental units. These existing rentals achieve top prices with room for continued growth and are in high demand due to the location and integrity of the townhouse.
In addition to the tremendous quality, space, and utility offered, the taxes are astoundingly low for this type of building, at $36,000. Compare these numbers to any condo, and this townhouse proves an incredible value. In fact, these taxes are approximately half of what you might find on another comparable townhouse. This annual savings of $36,000 could pay for an additional $690,000 at 3.25% amortized over 30 years. In addition, there are 2,022 square feet of available development rights that can be built in the back, or roof top, subject to the appropriate agency approvals.
Three potential financial scenarios are outlined on the following pages including opportunities for Easy Transformation into Owner’s Triplex, Live and Invest Owner’s Duplex with Rental Income, and a Pure Investment.
Garden Level of Owner’s Unit Duplex (Future Triplex):
Magnificent design elements abound when stepping into the vestibule and entrance hall of this historic townhouse including a peek at original marble floors flanked by lovely solid slab granite wainscotting, a coffered oak ceiling, solid oak door, and classic grand staircase leading to the floors above.
The owner’s unit is accessed at the rear of the entrance hall. This unique garden duplex has a spacious and open flow. The more formal oak-paneled front room with its impressive stone mantelpiece can accommodate both living and dining areas. A gourmet kitchen lies at the heart of the unit and features a sprawling L-shaped countertop with bar seating, pull-out pantries, a Fisher & Paykel double dishwasher, commercial grade drop in DCS grill-top stove and wall oven. Just off the kitchen is a luxurious full bathroom.
The rear of the floor hosts a large, light-filled bedroom that opens up to the private garden oasis. Boasting six hundred square feet, this garden is a showstopper with lovely stonework, a gazebo with poured concrete seating, and plenty of sky. There is also outdoor lighting and power and water supply for the garden hose.
Cellar Level of Owner’s Unit Duplex:
A stairwell in the foyer of the owner’s unit leads to the cellar of the townhouse. In addition to dedicated rooms for mechanicals, the front of the floor has space for a sunny home office or other ancillary use. This large room, which is currently used for storage, has two front-facing windows and can open up to 120 square feet. The rear room of the cellar has two windows and is spacious enough for a bedroom or recreational area. An exterior staircase leads up from this room to the garden above. There is also a full bath and a centrally located laundry room with radiant heat flooring.
Second, Third, Fourth, and Fifth Floors:
All apartments on these floors are gracious, floor-through three-bedrooms. The second floor can become the upper level of an owner’s triplex by constructing a small extension to contain a new interior staircase that accesses the Garden level. This could also serve as an outdoor terrace to the tenants’ floor above, increasing value further.
Each thoughtfully configured unit has elements of the original, rich building design with large windows in each room, and all street-facing windows are sound-resistant. They also contain updated kitchens and baths.
Extra Notable Features:
- There are multiple light and air shafts, as well as existing staircase structures that can be expanded and enclosed.
- New boiler and modified “smart” heating system with Ecobee controller that can control the building for a set point temperature on the top floor and therefore the building from your smart phone saving tremendous expense on over-heating.
- New gas piping from street to building to boiler and water heater.
- New gas meters and piping to stoves.
- New chimney.
- New 20-year insulated roof with silicone topcoat.
- Central vacuum on both floors, four points, in the owner’s duplex.
Scenario I: Easy Transformation into Owner’s Triplex including Garden/Basement/2nd Floor
- $6,150,000 (purchase price) + $435,000 (estimated renovation to add interior staircase in a small extension, finish 2nd floor and add upgrades to apartments above = $6,585,000
- You will need $2,500,000 in cash and you will be borrowing the balance of $4,085,000
- Pro forma income is $15,600 which allows you to pay for a mortgage of $3,550,000 (based on 30 – year amortized mortgage at 3.25%)
- Net Result: For your share, you will be paying for a $535,000 mortgage = $2,328 per month
- Additional estimated net expenses listed below (including extremely low taxes) = approximately $4,146 per month
- $2,328 mortgage + 4,146 expenses = $6,474 per month owner outlay for your Garden Triplex
- After interest charges and other tax deductions, the net cost to the owner will be much less than this. Invest in your real estate future today and watch your rock-solid townhouse equity grow.
Scenario II: Live/Invest in owner’s duplex and have income from 4, 3-bedroom floor throughs.
- With $100,000 capital to renovate unit 1 (for basement to finish the 120 square foot front room, which contains two front windows) and for units 2,3,4 and 5 to upgrade kitchen or bath if needed.
- Pro Forma Rent Roll = $249,600 (4 units)
- Current Estimated Expenses = $49,754
- First year net income is $199,846, or, $16,653 per month.
- This allows you to pay for a mortgage of $3,825,000 and you will need to borrow an additional $260,000 which will cost you $1,131 per month.
- Your total monthly outlay will be $1,131 + $4,146 = $5,277 per month.
- This favorable analysis is impacted more and more each year by the exceptionally low real estate taxes, allowing you to live in an owner’s duplex with over 2000 square foot of interior living space and 600 square foot backyard. Detailed calculations upon request.
Scenario III: Pure Investment.
- Each of the current 3 bedroom apartments can easily get $4,900 or close to it in their current finishes, however, with $100,000 investment, you can finish the basement front room, and units 2,3,4 and 5, kitchen and baths (where needed) with luxury upgrades, that can get this below market rent of $62 per square foot, or $5,200 per 3-bedroom apartment. However, nothing needs to be done to get the rents that the building is getting at the moment. If nothing is done, at the asking price, the investment returns a 6.6% annual cap rate over 10 year holding period as can be shown in our discounted cash flow analysis. If a purchaser chooses to upgrade the units as specified, the investment will return a 7.05% annual cap rate over the 10-year holding period as can also be shown in our discounted cash flow analysis. These returns are currently returning 10 times the current yield on 10-year treasury notes.
- The confluence of these investment returns and historically low rates to finance the acquisition, along with an impending premium on townhouses in this environment, may present a unique opportunity to purchase these limited Free Market Manhattan assets at great value pricing.