For the fourth and final installment in our Investment Bootcamp Series, BrickUnderground asked four brokers to pinpoint one on-the-market property (not their own listing) they think is ripe for investing. Here’s what they had to say
1. The broker: Ari Harkov, The Harkov-Lewis Group, Halstead Properties
The property: $2.595 million two-bedroom, two-bath in Nolita.
The reason: First, the financials: This property is rented at $8,000 per month until September 2013, when there is an option to renew at $8,500.
In today's rental market, it may be possible to get closer to $9000 if the current tenant leaves. The current cap rate is 3.10 percent.
Starting September 2013, if the rent is $8,500 per month, the cap rate would go to 3.33 percent and at $9,000 it would be 3.56 percent. However, an investor would have to keep in mind that common charges are likely to increase over time, affecting the return.
In addition, taxes will increase 20 percent every two years until the full taxes are reached by June 30, 2020 since the building receives a 421a tax abatement. That means that the apartment will benefit from 7 ½ years of taxes below full market value.
One of the biggest advantages with this property is that the investor will collect rent from day one since the current tenant is in place. No costs for finding a renter, painting, or refurbishing are necessary.
In addition, the apartment is a good size—1,240 square feet and has two bedrooms/two baths, which appeals to a wide range of potential tenants. It features high-end appliances, a washer/dryer, central air and high ceilings (over 10 feet).
The building, designed by Gwathmey Siegel, is full-service and brand new, meaning that there are fewer repair issues to worry about. There’s also on-site staff that can handle any problems that might come up. The neighborhood, SoH/Nolita is an easy walk to the East and West Village and a quick commute to the Financial District.
This $2.595 million two-bedroom, two-bath in Nolita, currently earning $8,000/month in rental income, could be a good investment
Monday, December 10, 2012