nobody sets out to do this (right?)
Granted, outsiders to Manhattan loft sales never know why sellers or buyers do the things they do, but I will bet you a quarter the woman who just sold the “2,973 sq ft” northwest Tribeca loft #1A at 79 Laight Street (the United States Sugar Warehouse) did not intend to sell it as raw space when she bought it almost two years ago. Almost certainly, she bought it when it “need[ed] a gut renovation” to actually do that renovation, and reap the benefits as a residence, or as a fix-and-flip. Instead, what she did was more like a sit-and-flip; fortunately for her, at a $500,000 premium to what she’d paid (up 27.8%). There’s no magic in this, as the gain is right in line with the overall Manhattan residential market as represented by the StreetEasy Manhattan Condo Index (up 27.1%); it’s just odd.
After all, for the 22 months between her purchase (May 15, 2013 at $1.8mm) and sale (March 30, 2015 at $2.3mm) she had her money tied up (no way could she get a residential mortgage on an uninhabitable loft), and added whatever it took to demolish an already damaged-by-storm loft. She just never got around to rebuilding.
You hardly ever see a listing photo of a downtown Manhattan loft like this, let alone one in a prime Tribeca condo loft:
There’s no ‘before’ photo from the 2013 marketing, alas:
Please note: All pics are virtually staged.
The apartment was damaged by the hurricane and needs a full gut renovation.
(I trust that “damaged by the hurricane” is different from “demolished, after damaged by the tropical storm”.)
sound familiar? (are you a regular reader of Manhattan Loft Guy?)
If you were reading the blog when loft #1A sold in that damaged condition, you may remember that I walked through the real timing tragedy for that prior owner: she over-priced long enough to still be the owner when the storm hit, and trashed the place. In my June 18, 2013, when bad things ($605/ft!) happen to nice lofts, super storm edition at 79 Laight Street, I tabled the history and noted this distinction:
What happened to the loft (and to all flooded areas) when the storm hit was a tragedy of the Act of God variety; what happened before then was a miscalculation of The Market of the most human variety. They had 10 months to make a deal at whatever The Market would offer; instead, they asked a series of unavailable prices.
Having gotten flooded, I contrasted the #1A seller’s decision to sell as a fix-me loft with the next door loft seller, who sold loft #1B with the promise (“guarantee”!) of a renovation to a buyer’s specifications. I guessed in that post that the #1B seller spent less than the $500/ft difference between the essentially simultaneous sales of #1B (with that promise) at $1,105/ft and #1A at $605/ft needing that gut renovation.
As noted up top, the #1A history of May 2013 at $1.8mm and March 2015 at $2.3mm is very very close to the gain you’d expect to see based on the single-number proxy for the overall Manhattan residential real estate sales market that is the StreetEasy Manhattan Condo Index. By that same measure, #1B would now be worth about $3.1mm, however ($1,411/ft), compared to the $773/ft that the larger #1A just sold for.
In other words, the spread has gotten about $273/ft larger between these two neighboring lofts, though the costs of renovation have likely not increased to any significant degree.
more hints of dollar difficulties for the #1A seller, half million bucks aside
As I noted at the start of this post, the woman who was the loft #1A 2013-buyer-turned-2015-seller-without-renovating had to have planned to renovate, either for her to enjoy this large loft in a premium northwest Tribeca condominium or to flip at a profit. In retrospect, it seems clear that she could have flipped at a profit, even after renovating. But there are other hints that she ran into unexpected financial difficulties.
Those of you who can access some data on Property Shark will see that there were two lis pendens filed against the loft (but no mortgage); my subscription does not include details on lis pendens, so I have no idea who filed them, when, or in what amounts. Doesn’t really matter, as they definitely point to unexpected financial difficulties.
I can only hope that there was enough left from the $2.3mm proceeds of sale to cover those two lis pendens. Might be tough, though, as her round trip transaction costs included these ballparked big ticket expenses, each taking a bite out of the notional $500,000 gain:
$18,000 (‘mansion tax’ on purchase)
$11,000 (estimated title, on purchase)
$115,000 (sales fee, if 5%)
$42,000 (New York State and New York City transfer taxes, on sale)
$50,000 (22 months of $1,508/mo common charges and $744/mo real estate taxes)
So maybe she got out with a few dollars. Sad situation, no doubt. Perfectly consistent with that sad listing photo of a (formerly and to-be-again) deluxe loft in a prime Tribeca condo.