Bed Stuy and Bushwick Property Analysis -- Appreciation Play?
Hello BP. I am considering purchasing property and would like some opinion.
The property is located in the Bed Stuy area of Brooklyn. Brick construction - built around 2006. Very recent apartment upgrades. Newer appliances. Newer mechanicals. Newer roof. Very good condition in and out. Obviously all to be verified by an Inspector!
THE NUMBERS:
Purchase price: $1.25m
Mortgage: $4529.98 Based on 25% down. 30 year fixed at 4.1% APR (confirming rate with Lender)
Taxes: $8500 confirmed
Repairs: $1,500
Insurance: $3300
CapEx: $2400
Water/Sewer: $3120
Vacancy: $3000 Very in demand area. Vacancy % tends to be a lot lower. Figuring 1 per 18 months
Electricity: $625 For light. Tenants pay for other utilities
Misc: $1200
Rental Income: $79,200 Two apts currently have rents slightly lower than market rates for the area
I am basing the above expenses on: The property is only 10 years old. The overall condition of the apartments and building - very good. I estimated the expenses at 12% more than the yearly expenses on my other existing property (which is 9 years old, also 3 units, same # of BRs, overall same physical condition, same neighborhood).
My other property cash flows pretty well..for NYC so I was considering this new property as an appreciation play. I know pretty much all BPers would shun this deal as it has a very low cap rate; and almost non-existent cash flow. Unfortunately, I have not the skills, the time, the team or desire to take on renovation. I am considering this only as Bed-Stuy and Bushwick are very in-demand neighborhoods that still have room for really nice increase.
Let me know what you think..especially Brooklyn Bed Stuy and Bushwick investors. Thanks all.