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