lux diversion / Time Warner or 165 Charles as better “investment”?

not much gain for Portman
Braden Keil’s Gimme Shelter grab bag in today’s NY Post (hat tip to Curbed for pointing it out) mentions two celebrity Manhattan real estate transactions that caught me eye, though neither involves a real loft. The first ‘news’ is that Natalie Portman is selling her "convertible three bedroom, three bath apartment" (with "2,500 sq ft") at 165 Charles Street on the market for $6.55mm, but what startled me is that she reportedly paid $5.7mm in 2005. Assuming (big assumption) that she gets full ask now, her net-net gain calculation starts at $850k — before melting away. Her transaction costs on that sale will be (in round numbers and at a minimum) 5% broker commission (they are offering 2.5% to a buyer agent) and transfer fees to NYC and NYS of 1.825%, or nearly $450k. Assuming she paid transfer taxes on her way in in 2005, that’s another 1.825% on that $5.7mm purchase, or another $100k.

So, $550k of her $850k ‘gain’ is eaten up by round number big ticket transaction costs, whether she paid cash or secured a mortgage and assuming she gets 100% of her asking price on the way out. At least she won’t have to worry too much about capital gains taxes….

Costas does well
The contrast to Bob Costas experience at the Time Warner Center (reported in the same column) is remarkable. Costas has already closed on his sale of a 61st floor 3-bedroom for $8.5mm. Like Portman, he bought his unit in 2005, but he paid ‘only’ $4.95mm, so his net-net gain calculation starts at $3.55mm (four times Portman’s if she can sell at 100% of ask) and doesn’t melt away much. He will be pleased to pay his significant capital gains, I am sure.

representative values?
I have no idea if these two transactions (actually, one transaction and one marketing effort) are representative of values in their respective buildings. But the 3-year-appreciation contrast is stark: less than a 15% gain for the Stars Wars gal if she gets her ask at 165 Charles Street, vs. 70% for the Sports Guy at the Time Warner Center.

Not that you should look at your home as an investment or anything….


© Sandy Mattingly 2008


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