My First Post / NYC Analysis

[Mathew Randolph]

I found a cool building in South Harlem

The seller wants $2.6M for this 5 story, 7 apartment, 4500 square ft. residential building in Harlem. I estimated the total renovation costs at $1.1 million, NYC averages around $250/sqft for renovations. I've spoken with a contractor and he said that was reasonable. The building is assessed at just under $50K and is valued at around 600k. It last sold in Dec. 2010 for $815k. I spoke with the listing agent and he said the seller previously refused an offer for $2.5M, so the agent dropped him. I estimate rent to average $2500-3000 per unit. On the higher end if each unit gets washer and dryers, and has quality renovations. The building is currently gutted and needs a full overhaul.  I think the holding period would be about a year so the first year would hemorrhage cash flow (not included in the analysis above), but subsequent years would be fruitful. This area of Harlem is right by the top of Central Park, 2 separate subway stops, and is gentrifying rapidly. 

I'm looking for reasons someone might justify a lower offer, or if not, why the asking price is legitimate. Also, if my 1 year time frame for renovations is reasonable. 

I have no money and am not going to buy this building but I think its fun to run the numbers anyway.

Thank you

Mathew Randolph