The Real Deal New York

Investors are behind 73% of Bed-Stuy’s cheaper home sales

October 01, 2013 06:59PM
By Adam Pincus

742-559-O'Brien

From left: 742 Madison Street, 559 Decatur Street (Photo credit: PropertyShark) and Stephanie O’Brien

It’s tough out there for a Brooklyn buyer looking to land a modestly priced townhouse. But in the gentrifying area of Bedford-Stuyvesant, private buyers face even stiffer competition than elsewhere in the market for homes and small multi-family properties. Over the past year, investors have snapped up nearly three-quarters of the one-, two- and three-family houses sold at the low-end of the market in the neighborhood.

Investment firms were behind 264 of the 361 such sales — or 73 percent – closed over the past 12 months, according to a review by The Real Deal of PropertyShark data of home sales between $100,000 and $550,000, not including apartments.

Investors can beat out typical homebuyers because they can identify opportunities through longstanding relationships and intimate knowledge of the market, and can close quickly because they often buy without financing. Some of the investor buyers include the Forest Hills-based IA Investors and the Rockville Center, L.I.-based Nachmad Holdings. They could not be reached for comment.

IA Investors paid $242,500 for 559 Decatur Street, a two-family house, in October 2012, and Nachmad Holdings purchased 742 Madison Street, a two-family house, for $220,000 in May, the records show.

“The investors have more resources — being in the know, and paying all cash,” said Stephanie O’Brien, an associate broker with Douglas Elliman, and a member of the Peters-O’Brien Team, which concentrates on Brooklyn and Manhattan. “Anything within 20 minutes of Manhattan is a gold mine.”

After buying the properties, the investors either sell them or rent them out, insiders said.

Over the summer, investment funds such as the Australian US Masters Residential Property Fund were targeting Bedford-Stuyvesant homes, as the Brooklyn blog Brownstoner reported.

Some investors reject brokers when they buy properties because they can pay money under the table to save on taxes, said one broker who did not want to be identified being critical of property investors (who often become clients when they want to sell the buildings).

The buyer records a public sale price with the city, but then pays additional money in cash to the seller. Such a transaction would save the seller transfer taxes.

  • John

    Buying in Bedstuy has become impossible. Its all justified due to its awesome rental income I can attest to as a owner of a small two family in the area. Rentals there have already excceeded rents in parts of Manhattan like the Lower East side and Harlem.
    The architechture of the brownstones in the area and their charm further drive up prices to insane highs.

    • zay

      lol

  • trdman

    interesting

  • Buttman1

    Stephanie, those are not arms length transactions. They may have been insider short sales. May have been deeds and they needed to pay off the loan ect.. It is not the whole story. Those sorts of prices were not available to everyone.

  • NYC_Realist

    They are going to get hosed when De Blasio turns the city to sh*t. Those neighborhoods will crumble quickly. Manhattan will be a slow decline but Brooklyn’s favorite son will be responsible for the re-decay of Brooklyn.

    • Crian Bashman

      Laughable that people really think this is going to happen.

      • NYC_Realist

        enlighten us as to why it wouldn’t.

        • Crian Bashman

          NYC’s decline from the 50s to 70s took over twenty years and included red-lining, the interstate highway act, urban sprawl, cheap fuel…mainly federal policies. Nowadays people with a housing choice are moving TO the city not AWAY. Demographics are bigger than any mayor, whether it be deBlasio or Bloomberg. If you actually knew deBlasio’s policies with regards to development you would know it is essentially the same as Bloomberg, while Lhota thinks we have upzoned too much already. Think about that.
          And FYI, I am voting independent in November.

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