Thinking about buying an apartment building in the Bronx?

By
Real Estate Broker/Owner with Broad & Bailey Realty LLC

Many of my friends own apartment buildings in the Bronx. I also owned a building there several years ago. If you're unfamiliar with the area, you're probably saying to yourself "Now why would anyone want to buy a building in the Bronx!"

Well, if you're a real estate investor and live in the NYC area, then buildings in the Bronx technically qualify as real estate. Like anywhere else, the Bronx has a wide variety of real estate including warehouses, office buildings, retail centers, private homes, coops, condos and my favorite, apartment buildings.

This was the building that I once owned. It's a 5 story walk-up building with 19 apartments, 2 stores and as you can see from the photo, 2 billboards. Though a little too small, it was a great building to own. I do regret selling it, but at that time, my circumstances were such that I needed to sell it.

So, what do you think so far? Still think I'm crazy? In all honesty, owning and managing apartment buildings in the Bronx is not easy. I guess you have to be a little nutty to want to do this. Yet from another perspective, it could be very rewarding both personally and financially.

When you own an apartment building, you are housing many families, how could this not be personally rewarding? I don't make it a habit to be best friends with my tenants, but I always maintained good relations with them. For the time that I owned the building, I renovated some of the apartments, installed a new intercom system, installed a new boiler, and replaced the roof. Yes, I spent a lot of money, but I had 19 families that needed to stay warm in the winter. They needed the security of an intercom system. Their lives were more fulfilled with a cleaner more well kept building.

But this is a business, not a charity!

Yes, I spent a lot of money and time upgrading and managing the building, but I had 22 paying tenants. The money I spent came from them (at least from those who did pay their rent). These improvements made them happy to pay their rent, which in turn allowed me to make a profit.

The tenants were happy, the building was upgraded and kept clean and I was making a profit. How else can I view this, other than personally and financially rewarding?

Over the past few years, my circumstances changed, once again allowing me to own and manage apartment buildings in the Bronx. I've been looking for some time now, but so far unsuccessful. It seems that over the past few years, the Bronx was infiltrated by large scale investors and REITS. This caused the apartment building market to falsely inflate. Sort of like the rest of the real estate market across the country.

On the surface, it might seem like a good thing, but the problem with this is that many owners are having a hard time selling their buildings at realistic prices. They either sold some properties or knew someone who sold properties at much higher prices a couple of years ago. They can't seem to accept that those prices were unrealistic. For the buyers who bought at those prices, they either have deep pockets or will inevitably have financial problems. For those with deep pockets, they will be able to survive and make it up in the long run.

What is disturbing to me, is those who don't have deep pockets. Their financial problems will become personal problems for the many families that they are housing in their buildings. There is no need for this. The frenzy that lead them to overpaying, is causing problems for everyone including for those of us who are ready to buy.

Properly managing a building in the Bronx takes a lot of work, but overpaying makes it virtually impossible.

Here are a few suggestions on what to look for:

•Ø      Get a clear understanding of the income and expenses.

•Ø      Know the condition and location of the building

•Ø      Plan to spend more time than you think it will take

•Ø      Plan to make less money than you think you will make

Over the past 15+ years, I've owned and managed apartment buildings which allowed me to gain a lot of invaluable experience. In addition, I've created spread sheets which allow me to evaluate an apartment building in just a few minutes. I also learned to forecast property values, income, expenses and long term growth with excellent precision. My intention is to use this for my benefit as well as the benefits of dozens maybe hundreds or thousands of families.

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Location:
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Tags:
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Rainer
233,998
Diane Rice
Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL - Lansing, IL
SFR, SRES, CNC

Hello Peter.  I thoroughly enjoyed reading your story.  You definitely have the "landlord spirit"  and we that have it can identify with you.  I will feature this story to give it exposure.  We are experiencing the same fluctuations here in Illinois and are only attracting investors seeking to make big money... not landlords.

Diane Rice

Sep 08, 2009 01:11 AM #1
Rainer
56,978
Peter Nikic
Broad & Bailey Realty LLC - Valhalla, NY

Diane, thank you. It's too bad what is going on at this time. I do beleive that landlords are entitled to make money, but not at the expense of hurting families.

Sep 08, 2009 02:02 AM #2
Rainer
233,998
Diane Rice
Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL - Lansing, IL
SFR, SRES, CNC

I believe that also Peter.  We have to have a heart.... just not to the extent that will allow tenant abuse!

Sep 08, 2009 03:29 AM #3
Rainer
56,978
Peter Nikic
Broad & Bailey Realty LLC - Valhalla, NY

It appears that some of these companies with deep pockets and great finacing packages are beggining to see where they went wrong. It might be a good time, hopefully.

Sep 15, 2009 02:41 AM #4
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