Need help pricing a 4 family in NYC

7 Replies

I am a private seller and would like to price this house for a quick sale. It is a 4 family located near the Queens/Bklyn border. It is considered Glendale/Ridgewood. It is a short walk to the M train with easy access to Brooklyn and Manhattan and 1 block away from express buses to NYC.

Each 2 bedroom apartment was renovated in the last 10 years and all are in great condition. They are about 800 sqft each. 3 apartments will be vacant on title.  Fully finished basement. 2 apartments have access to a backyard patio.  1 apartment has central air. Average rent for this area is $1800-$2200.

What would be a good selling price for this house? 

Thanks in advance!

Hi Anthony - 

Happy to help you value this property, but I would need a few more things to accurately value the property. Here are a few questions that any investor is going to ask when analyzing your property:

  1. How many square feet is the property? (price per square foot is arguably the most common metric to value an investment, especially a property that will be delivered mostly vacant)
  2. What are the current taxes, and who is responsible for paying utilities?
  3. What is the current condition of the property's structural components? (the state of roof, siding, windows, etc can significantly affect the value of your property)
  4. What is the current condition of the interior units? (you mentioned that the units have been renovated in the last 10 years, but in a hyper competitive market like Brooklyn or Queens, 10 year old renovations are considered outdated by most investors and renters. Also, 10 year old renovations will most likely not achieve market rents, which means that any buyer will need to invest in renovating the units)
  5. Is the basement unit a "legal" basement unit? (does it have two means of egress and windows?)

These are the main questions that most investors will ask when analyzing your property. If you don't feel comfortable sharing detailed information on the public forum feel free to PM me and I would be happy to help you arrive at a fair market value for this property. I also know of a few investors in this sub-market who may be interested in such an opportunity.

Looking forward to hearing from you.

Nick

Check online what similar properties have sold for in the past few months.

Hey Nick, thanks for the awesome reply!

  1. How many square feet is the property? (price per square foot is arguably the most common metric to value an investment, especially a property that will be delivered mostly vacant) - property is 3000sq ft
  2. What are the current taxes, and who is responsible for paying utilities? taxes are about $5k, tenant pays electric and cooking gas.
  3. What is the current condition of the property's structural components? (the state of roof, siding, windows, etc can significantly affect the value of your property) Roof, boiler, siding were serviced/inspected in the last year and in great condition. I can get exact dates for an interested seller when things were replaced. Windows are in great condition.
  4. What is the current condition of the interior units? (you mentioned that the units have been renovated in the last 10 years, but in a hyper competitive market like Brooklyn or Queens, 10 year old renovations are considered outdated by most investors and renters. Also, 10 year old renovations will most likely not achieve market rents, which means that any buyer will need to invest in renovating the units) 3 of the units are in perfect condition and can achieve market rent without issue. 1 unit will need a reno to bring it up to modern standards.
  5. Is the basement unit a "legal" basement unit? (does it have two means of egress and windows?) We've never tried to legalize the basement but it does have two means of egress and windows. 

Hi Anthony. I actually have property in that area. One on Wyckoff Ave and Weirfield st (Ridgewood) and another near by. I lived in the area for years. My wife is a realtor and I'm an investor. I very familiar with the area. Give me a call and I can definitely help you out. 9179129548

Thank you all for the responses and messages. The house is only being shown to preapproved buyers and we are not interested in listing with an agent at the moment.

Account Closed I would say 1.3-1.5M. The lower you go the faster you sell it. Don't go above 1.6M. You will be on the market from many months. Those houses sit on the market for months. Good luck, brother!

Hey Anthony,

There are many ways of valuating a property and Nick has asked many important questions. If you don't mind, I'm going to share with you a step-by-step guide that commercial brokers in NYC like myself would use:

1) Check market demands: 

Before anything, you'd need to find sales and rentals reports for your neighborhood and check the current inventory. How long are comparable properties on the market? How is the competition? And how was it 3 months ago? That way, you can understand if yours is a seller's market and predict fluctuations in order to adjust your timing when listing your property (spoiler alert: we can't really predict the future, but we can certainly identify trends and be more prepared than others);

2) Consider potential uses: 

Depending on the demand in your area, converting a 4-family into a 2-family or single family home before selling might translate into higher and more profitable offers. Here's an example of a recent valuation in BK Heights:

The townhouse is 6,000sqft and has 8 units in total.

If kept as is, there will be 8 1br apartments of 650sqft each
$3,350 x8 x12 = 321k is the annual income

Now if renovation costs allow, seller could convert it into 6 big 2br apartments that would collect a much higher rent:
$5,000 x6 x12 = 360k would be the newer annual income

There's a high demand for 2br in the area, so he could fill the vacancies quickly and sell at a considerably higher NOI.

Also, an appealing configuration is legalizing the basement, keep it as a rental unit and convert the remaining space into a single unit. Again, you'd have to check the demand, but many end users like to purchase a townhouse and have one single unit at the top or bottom to help them pay their mortgage.

3) Use at least two approaches to understand your property value

Find out the price per square foot and cap rate that comparable properties are being sold within 1/2 mile in the past 6 months

Those two approaches complement each other. While the cap rate is only useful if you're dealing with an income producing property at it's fullest or with achievable upside, the price psf can help you understand the variations according to size, location, and condition.

4) To renovate or not to renovate?

Given your price bracket, it may or may not be reasonable to assume that investors would want to renovate themselves to their own taste. To help prospective buyers envision possibilities, a great approach is to virtually stage the place, and also offer alternate floor plans. You may also consider hiring a professional cleaning service and doing some minor cosmetic work such as painting walls off-white. Buyers prefer it light, bright, and spacious and painting an apartment gives the highest return on investment. Other minor cosmetic work may include new light fixtures, switches, and outlet covers, carpeting removal and shiny hardwood floors. How much will it cost to spruce up the place? It’s usually about 0.5-1.5% of the selling price.

5) Consider hiring a broker 
A good broker will get you a higher offer by giving you property the maximum exposure while sparing you from a lot of headache. There are many qualified buyers out there just kicking tires and wasting seller's time and patience. And a good broker will be able to assess your property value in a comprehensive way, which alone could set you at ease knowing you are making the right decision whenever you need to pull the trigger.

6) Do the math

Estimate renovation costs, if any, and closing costs when coming down to your ARV. And remember the rule of thumb: if you're not renovating your property, you should expect any rehabber to pay no more than 70% of the perceived after repair value, less any repair costs or other profit needed.

I hope I have helped. Feel free to reach out if you have any questions or whenever you're ready to sell, as I work with a group of investors who are constantly looking for opportunities.

Good luck!

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