it can be flipping hard / back story on NY Post Just Sold at 260 Park Avenue South : Manhattan Loft Guy

Manhattan Loft Guy

Mar. 26, 2008 - it can be flipping hard / back story on NY Post Just Sold at 260 Park Avenue South

you say Ulysses, I say Odysseus
The odyssey of #7B at 260 Park Avenue South is given public notice of a successful conclusion in this weekend's Just Sold section of the NY Post's Real Estate Section. As noted, it took 374 days for this new Manhattan loft to close at $3.45mm off the (most recent) asking price of $3.55mm. The Post distills the loft this way:

Prewar two-bedroom, 2½-bath duplex condo, 2,525 square feet, with living/dining room with 11-foot ceilings, kitchen with marble countertops, Sub-Zero refrigerator, Viking stove and Bosch dishwasher, home office, marble bath with double sinks and soaking tub, washer/dryer, through-the-wall AC and southern exposure; building features doorman, concierge, gym, roof deck and courtyard. Common charges $2,026, taxes $2,630.

Here's what really happened.

the whole truth and nothing but
These January sellers were buyers when the building sold its first units in February 2006. They paid $2.675mm. Can't tell if they did any work of consequence in the unit (I don't see any building permits) before putting it on the market ten months later, starting that odyssey at $3.85mm.

They must have been on a quarterly tickler, as they dropped to $3.7mm in 3 months, $3.65mm after another 3 months, and $3.55mm after another 3 months before signing a contract in November and closing in January.

very rough numbers
It may be that the February-2006-buyers-turned-January-2007-sellers never moved in, as the pictures show an empty unit. Rough math goes something like this: bought for $2.675mm in February 2006, probably paying the developer's transfer taxes at about $48k and the mansion tax of about $27k -- at least $2.75mm all in. The gross sales price of $3.45mm generates gross profit of $700k, reduced by those pesky transfer taxes again (about $62k) and commission of from $172k to $207k, reducing the net to under $450k. If, in fact, they never moved in, they paid $4,626/mo for 24 months ($111k) without enjoying the health club, concierge and other high-end services. They will owe capital gains tax (federal at 15%) on the net, bringing them to something less than $290k, net, without considering what it cost to carry a mortgage on whatever loan they carried fromFebruary 2006 to January 2008. Net net, they put up at least $267,500 in cash to close, and may have carried a $2MM+ mortgage at from $13k to $16k per month for 24 months (or paid more cash and lost the investment benefit of that cash), for around another $350k or so -- a very big OUCH if they did not live there.

better if they lived there, for sure
Net net net, if they did not live there in those 2 years, they are under water, despite buying low ($2.675mm) and selling high ($3.45mm); if they got to live in and enjoy the space for those 2 years, they would havetaken out more than double their (minimal) down payment of $267,500.

duking it out at Corcoran?
Internal politics, maybe? Credit for the sale in the Post goes to Lauren Muss of Corcoran, who probably had the buyer, since the listing agents were Corcoran's Deborah Grubman, Carol Cohen and Shari Scharfer-Rollins.

© Sandy Mattingly 2008

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View more entries tagged with: Park Avenue South, New Development, 2006, Flip, Ny Post

Mar. 26, 2008 - RE: it can be flipping hard / back story on NY Post Just Sold at 260 Park Avenue South

Posted by Lofty

Saw it last summer and it was fully furnished. Lawyer from Texas who's firm was planning a NYC office that didn't fully plan out. That Crestron system (and the serious phone setup) were probably $80-$100k. They also had high-end Cityproof soundproof windows, though the location and floor probably didn't need them. As I recall, the home office was probably something that they upgraded. In the end, the two floors created a layout that was tough to take advantage of and those monthlies were painful. My broker was whispering $3.4 in my ear when I saw it back then, so I'm surprised at the walk-down in price.

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