Just how hot is the housing market above West 100th street right now? Developer Adam Mermelstein at Treetop development just flipped 12 buildings located between West 105th and 115th streets for a 67% gain — and he had just purchased them two years ago.
After buying the buildings for $36 million and upgrading some of the apartments, he just sold them to the Orbach Group for $60 million, according to the Daily News. Both Treetop and Orbach are based in New Jersey.
This kind of quick ownership turnover has been happening at lots of buildings throughout the neighborhood, as we’ve chronicled in the past.
Rents, meanwhile, are rising at a rapid pace in that area:
“Indeed, rents in the area have risen dramatically, to a median price of $1,776 a month for a one-bedroom apartment, up 7.6% from 2013. And snagging an apartment, especially a rent-stabilized pad, is trickier than ever. Less than 1% of area apartments were available in March — a low vacancy rate.”
Photo of 106th street by Michael Malecki.
There goes the neighborhood
The NYC real estate bubble crash is getting more and more likely. Conditions are very similiar to the Hong Kong real estate crash in 1997.
How are they similar?
And how exactly will NY real estate deflate?
Most buildings are co-ops, and their boards are acutely concerned with excess leverage, which is why large down payments are required, and healthier buildings expect the purchaser to have a net worth consummate with the apartment’s value. This is why the housing crash barely dented NY.
So what else can cause a crash? A sudden decrease in demand. Given the economy’s current track of focusing wealth at the top of the scale, and those people want to live in NY, I don’t see that happening.
What else? Global warming drowning Manhattan. It could happen. Scary stuff released today.
So how does this relate to Hong Kong?
These once owned by Barry Singer sold to Pinnacle in 2005, are take the money and run deals amongst friends for buildings that are close to 100 years old.
The equity extracted and financed by banks, will be used to buy more buildings. Investors will provide additional funds to cover down payments for these buildings.
Cosmetic repairs are made by affiliated contractors and realtors make commissions on sales. Government grants are used to upgrade buildings housing low income tenants to pay for upgrades. Some rental properties are converted to condos to get more equity out of the properties.
Meanwhile endangered and fragile tenants are evicted, rents go up to cover mortgage costs and money is made. If and when it all collapses, the buildings will be sold and again acquired at bankruptcy rates and the process begins again. No new or additional housing in NYC will be created as a result.
Meh. I wouldn’t say that actually “made” 24 million since he had to sink money into the renovations. But the overall point is understood.
He didn’t “Flip” the buildings.. Your confusing the term…. in real estate, flipping is associated with putting a building into contract & then selling the contract to a third party for a quick profit…. His company owned the properties & even invested in some capital improvements. Not saying what the company did was right or wrong…..