Property Tales
"You've got to appreciate Brooklyn's scope," he says. "The borough has so many areas that are so amazingly undiscovered, so underdeveloped. Even when the economy takes an inevitable downturn, Brooklyn will continue to develop at a rapid pace because there's so much land, so many former manufacturing sites, warehouse spaces, shells and other properties with great development potential in neighborhoods that were once thriving, active immigrant communities-in the days when our grandparents lived in them-but have recently seen hard times."
Although he's primarily Massey Knakal's Brooklyn point man for Park Slope, Carroll Gardens and Red Hook, Freeman keeps tabs on the real estate market borough-wide.
"In the past six months, I've seen that the multi-unit and multi-use properties which would have been bought in the old days by a sophisticated investor to earn money, are now going to what I call "users"-by couples, young families or singles looking to live in the property and cover their nut on the mortgage with income from the building's other units," says Freeman. "In general, they'll pay higher prices because they see tremendous advantages in ownership."
Freeman points out that the investment property market is driven purely by financial considerations, with investors judging properties by whether they'll earn six or seven percent. Not so with home seekers.
"If you're home-hunting, you might accept a three-percent return-to get a large building for less than a smaller brownstone or two-family would cost. Initially you may have to live in a small apartment, but can plan to occupy additional space as tenants leave eventually."
Freeman cites the example of a Carroll Gardens building with seven apartments, one commercial space and three garages that he now has under contract.
"The buyer paid a million one for a beautiful building with a 5.6 percent return. For that price, you couldn't touch a brownstone in that neighborhood," he says. "The guy who bought it is moving in with his wife and kid, into a one bedroom, but he's hoping to take over more space in the future. When, he is unsure. He's got rent-stabilized tenants who have rights. So, he's taking a chance that some will leave, and that he'll be able to buy or kick the others out. Eventually, he'll have a dream home for a million one. Meanwhile, he's got their rents to help pay the mortgage."
That's a great deal-if you can buy in for a million. If you can't, Carroll Gardens may not be your neighborhood. But there are others.
"Lefferts Gardens, near Prospect Park, is hot," says Freeman. "The neighborhood's got charm, beautiful streets, decent subway access and lots of upside. You can get a beautiful Victorian house for $650,000 to $750,000. Mixed-use buildings can be even less." For example, a 6000-square-foot, three-story, six-apartment building with annual revenue of $35,880 is listing at $415,000.
Freeman also suggests Prospect Heights, slated for residential and commercial development that will boost property values. But there are still buys. For example, a 2200-square-foot, two-story building with
two apartments, a store and projected gross income of $50,400 is listed at $379,000.
"Prospect Park has a way to go, but is coming up fast," he says. "If you're even more adventuresome, try Bedford Stuyvesant, where beautiful turn-of-the-century brownstones are being snatched up by investors, renovated and sold to young couples. Presently, some blocks are fine, some are dicey, but they'll all improve in 10 years."
Freeman advises that the best way to check out a prospective neighborhood is to spend time there, strolling around and taking note of for-sale signs.
"Talk with people in neighborhood shops and on the streets, asking about what buildings are for sale. Walk down residential side streets and main commercial streets. If you're concerned about crime, stop at the local police precinct and ask for statistics," he suggests. o